Monday, January 14, 2008

How do you deal with a recession?

By Michael J.W. Stickings

In his NYT column today, Paul Krugman begins by making the following point: "Suddenly, the economic consensus seems to be that the implosion of the housing market will indeed push the U.S. economy into a recession, and that it’s quite possible that we’re already in one." Given this consensus, the question -- the question for the presidential candidates in both parties -- is this: What is the best way to deal with this current/coming recession? Put another way, what is the best way to stimulate the economy out of recession? Krugman spends the rest of the column examining, in brief, the policy positions of each of the major candidates.

For the Republicans, the answer is the usual right-wing pablum: tax cuts and pro-business initiatives. Giuliani is taking the most extreme line, but Romney and Huckabee share his views, more or less. The latter even supports the Scientologist-inspired National Sales Tax, a disaster-in-waiting. As for McCain, he admits that economics isn't his strength. As Krugman notes, however, it is rather disturbing that he is taking his cues from no less a right-wing ideologue than Alan Greenspan.

The Democrats, thankfully, are taking more nuanced, more sophisticated, and ultimately more progressive policy positions with respect to economic stimulation. Both Edwards and Clinton, for example, have proposed detailed stimulus packages. Edwards's package includes "aid to unemployed workers, aid to cash-strapped state and local governments, public investment in alternative energy, and other measures" -- sound proposals that, unlike what the Republicans are proposing, would actually help those who suffer most in times of recession (and that would actually stimulate the economy without disastrous consequences -- while Clinton's is "broadly similar but somewhat larger". After focusing mostly on tax cuts throughout the campaign, Obama has finally proposed his own stimulus package, but it "appears to contain none of the alternative energy initiatives that are in both the Edwards and Clinton proposals, and emphasizes across-the-board tax cuts over both aid to the hardest-hit families and help for state and local governments".

Krugman is right that Obama "really is less progressive than his rivals on matters of domestic policy," but at least he has a workable stimulus plan that relies on more than tax cuts and deregulation. With the Republicans turning again to their bankrupt pro-rich, pro-business agenda for trickle-down insanity, the Democrats -- all three of the leading candidates -- have proposed plans that would help working families, support the environment, promote sensible energy policy, and offer a long-term to a troubled economy. Edwards, the most broadly progressive of the three, has the best plan, but Clinton's is solid. Obama, alas, trails well behind on this issue -- and this should be cause for concern as we contemplate our options going forward.

What is clear, however, is that America -- and the American economy, which means also the global economy -- needs a Democrat in the White House.

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