Responding to a rising tide of foreclosures nationwide and growing fears of a recession, the presidential candidates have turned their attention to the struggling U.S. economy as a dominant issue in the race to win the White House.
As America’s economic woes take center stage in the battle for the White House, Democrats and Republicans alike are scrambling to present new economic stimulus plans to voters including plans to stem the growing foreclosure crisis.
Polls are showing that voters are deeply concerned that a recession may be looming. Already, several of the presidential candidates in the race have unveiled ambitious plans to give the economy a lift. The top two Democratic candidates have called for various foreclosure prevention measures that move beyond the Bush administration’s effort to get lenders to voluntarily modify troubled loans, while the top GOP candidates toe the party line of limited government intervention.
Here are their ideas:
Pocketbook Politics: Hillary Rodham Clinton
No candidate may be benefiting more from talk of a looming recession in the U.S. than the apparent Democratic front-runner Sen. Hillary Rodham Clinton, whose message that she is the candidate with the experience and plans to deal with the downturn seems to be attracting voters.
“We have an economy that – despite the happy talk from the White House and the Republicans – is not working for most Americans,” said Clinton, who called for enactment of a $70 billion emergency spending package, with an additional $40 billion tax rebate if the economy worsens. “This economy may be working for some people, but it sure isn’t working for everybody. The economy is the number-one issue.”
Added Clinton: “We have to stimulate the economy. I have a package of $110 billion; $70 billion of that would go towards dealing with the mortgage crisis, which, unfortunately, I don’t think that President Bush has really taken seriously enough. I would have a moratorium on home foreclosures for 90 days to try to help families work it out so that they don’t lose their homes.”
President George W. Bush in January called on Congress to speed through some $145 billion in emergency tax relief to individuals and businesses to provide an immediate jolt to consumer spending and keep the U.S. economy from sliding into recession. Acknowledging the risk of a downturn, Bush pushed on Jan. 18 for immediate but temporary tax incentives to give the U.S. economy a “shot in the arm.” Two-thirds of the stimulus would directly target consumers, and most of that would be doled out through tax rebates of $800 to individuals and $1,600 to households.
Criticizing the Bush administration’s economic plan, Clinton said that “the president’s proposed stimulus package is not adequate. It is too little, too late and it doesn’t give enough money to the people who are hardest hit by the increased costs of energy and everything else.”
Responding to Recession: Barack Obama
Not to be outdone by his democratic rival, Illinois Sen. Barack Obama released a fiscal stimulus plan two days after Clinton released her plan. Obama’s $75 billion plan, for instance, wants everyone to get a $250 tax cut, which would double if economic indicators continue to worsen.
“She has caught up with what I had originally said, which is we’ve got to get tax cuts into the pockets of hard-working Americans right away,” said Obama, criticizing Clinton’s plan. “We need that middle-class tax cut now more than ever – not five months from now or five weeks from now, but now. I’m announcing a plan to jumpstart the economy by putting money in the pockets of those who need it most and will spend it quickly.”
He added: “The American dream is slipping out of reach for many families whose pay checks aren’t meeting the increased costs of their medical bills and tuition payments.”
So far, calls for government action by Democratic presidential candidates have caught many Republican presidential candidates off guard. By contrast, the leading Republican candidates are much more skeptical about short-term government rescues.
Indeed, recent statements by GOP candidates about the economy are quite revealing.
Spending Restraint: John McCain
“One of the major reasons why we are where we are today is (failure to) restrain the spending,” said GOP front-runner, Arizona Sen. John McCain, who is generally opposed to federal intervention. McCain’s own stimulus plan is more modest than the Democrats’ – or than Bush’s call for tax rebates for individuals and families. He believes tax cuts are the remedy for the current economic slowdown and sounded a skeptical note about the short-term stimulus plans that are being weighed in Washington and proposed by some Democratic candidates.
“My friends, you’re going to hear from the Democrats, let’s pump $70 billion, let’s pump $80 billion, let’s do this, let’s do that,” said McCain, coming off victories in New Hampshire and South Carolina. “My friends, remember who is going to pay that. It doesn’t come off a printing press. It comes out of your pockets.”
“I believe that government action is the last resort and not the first resort,” said McCain, who is notably calling for a cut in the U.S. corporate tax rate from 35 to 25 percent. “Whenever there is government intervention, there are unintended consequences.”
Minimize Government Intervention: Mike Huckabee
Republican candidate Mike Huckabee opposes any further action by the president and Congress in combating the issue of mortgages, saying the issue is a market-based one better left without government intervention. Huckabee told National Public Radio that the government bailing out individuals is not in the best interest of the people. He places the blame on overambitious borrowers and greedy lenders.
“What we don’t need is a government bailout,” Huckabee said. “That is not the purpose of government, to prop people up from every poor decision they make.
In fact, when you do that – whether it’s in the world of finance or the world of drug addiction – it creates an enabling codependency. It’s the last thing that really helps people.” In response to the Bush administration’s plan to helpfamilies in jeopardy of losing their homes in foreclosure by freezing interest rates for some sub-prime borrowers, Huckabee warned that Bush’s plan would make those in the lending industry wary of loaning money.
“The one problem with the (Bush) plan,” said Huckabee, “is it freezes banks from being able to foreclose. If this trend should continue, you really do create a chilling effect on the lending industry because who’s going to want to lend money if they don’t have the capacity to get their asset back if there’s a default on the loan.”
Added Huckabee: “The only thing that can make it worse is to get government involved in over-regulating. This is a market issue and I think, once again, I’m far more for less government regulation and the more the government gets in it, the more it gets messed up.”
Two months ago, a few economists and academics were calling for Congress to kick start the economy. Now, politicians of all stripes have jumped on the bailout bandwagon.
Will voters be able to sort out which economic proposals are superior? Probably not, most economists agree.
But momentum is always fleeting in presidential politics, and now it’s unclear who controls it. With no clear winner in either party, candidates are rushing to win the few votes that could put them over the top in what has become a year-long campaign. They’re hoping that their domestic economic plans and promises to help struggling families will help provide that edge.