As the Economy Screams: A Forum with Presidential Campaign Economic Advisers

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The Fed just dropped the fed funds rate by 75 basis points — the largest such Fed move since 1982 and the market barely noticed.
No matter what the issues were yesterday, it is clear that the economy — domestic and global — is now the biggest political issue today and tomorrow. . .at least for a while.
So, tomorrow morning — from 8 am til 9:30 am — the New America Foundation/Economic Growth Program will host a forum with economic policy advisers to the various political campaigns.
Thus far, the campaigns included are Obama, McCain, Clinton, Huckabee and Edwards. The Romney campaign has been working very hard to send someone but after back and forth, the campaign was not able to produce someone for the meeting but hopes to work with us in the future. Senator Fred Thompson’s campaign and Rudy Giuliani’s team are also still trying to find someone at this point.
RSVP directly to me if you can make it at clemons@newamerica.net. If you have media questions, please call Erin Drankoski at 202-986-4901.
This event will be digitally recorded — and we’ll have the file on the web immediately after the event tomorrow — but also are happy to send the link direcly to anyone who requests it, particularly those outside of Washington or abroad.
As the Economy Screams:
Perspectives and Proposals from the Presidential Campaigns
Wednesday, January 23, 2008
8:00 a.m. – 9:30 a.m.


New America Foundation
1630 Connecticut Ave, NW, 7th Floor
Washington, DC

RSVP to STEVEN CLEMONS directly at clemons@newamerica.net or 202-986-2700, ext. 307
Join us on Wednesday, January 23 at 8:00 a.m. for a morning briefing with advisers to the presidential campaigns.
This event will be on the record.
Austan Goolsbee
Senior Economic Advisor, Barack Obama for President
Robert P. Gwinn Professor of Economics, University of Chicago Graduate School of Business
Leo Hindery
Senior Economic Advisor, John Edwards for President
Managing Director, InterMedia Partners, L.P.

Kevin Hassett

Senior Advisor, John McCain for President
Director of Economic Policy Studies and Resident Scholar, American Enterprise Institute
Gary Gensler
Senior Advisor, Hillary Clinton for President
Former Under Secretary of the Treasury for Domestic Finance
Former Assistant Secretary of the Treasury for Financial Markets
Craig W. England*
Economic Policy Advisor, , Mike Huckabee for President
Managing Director & President, England & Co.
Former Principal, Legg Mason Investment Banking Group
moderator
Steven Clemons
Director, American Strategy Program, New America Foundation
Publisher, The Washington Note
*invited

Comments

14 comments on “As the Economy Screams: A Forum with Presidential Campaign Economic Advisers

  1. Frank says:

    When you leaverage subprime mtg packaged stock purchases using assets which have embedded within them leaveraged subprime mtg packaged stocks, with most insured with embedded leaveraged asset reserves….makes understandable why financial institutions just can’t figure out how much of an impact deliquent mtg payments has on their bottom line. This is a tribute to wall street’s creative abilities, and this recession has mow made a place for itself in the pantheon of the creative arts.
    George Elliot had it right:
    Between the idea and the reality,
    (Between the borrower and the lender)
    Falls the shadow.
    (Falls the stock purchaser.)
    Leaving lots of rich shodowy stock brokers.

    Reply

  2. pauline says:

    FLASHBACK: Economists Predicted That A Prolonged U.S. Presence In Iraq Could Lead To A Recession
    “In yesterday’s press briefing, a reporter asked White House Press Secretary Dana Perino about the tie between the current U.S. economy and the Iraq war. Perino quickly dismissed the reporter’s question, insisting that the U.S. economy has been “very strong” and adding that the money was necessary to “take the fight to the enemy” after 9/11.”
    “Oil prices are at approximately $88 a barrel, although they have dropped from the record high of $100 earlier this month. As Nobel laureate Joseph Stiglitz recently noted in Vanity Fair, “The soaring price of oil is clearly related to the Iraq war. The issue is not whether to blame the war for this but simply how much to blame it.”
    Before the war, economists were predicting that oil prices at just $75 a barrel could potentially send the U.S. economy into a recession. Therefore, the current economic situation should not come as a complete shock to the Bush administration. A look at economists’ pre-war predictions:
    “A war against Iraq could cost the United States hundreds of billions of dollars, play havoc with an already depressed domestic economy and tip the world into recession because of the adverse effect on oil prices, inflation and interest rates, an academic study [by William Nordhaus, Sterling professor of economics at Yale University] has warned.” [Independent, 11/16/02]
    “If war with Iraq drags on longer than the few weeks or months most are predicting, corporate revenues will be flat for the coming year and will put the U.S. economy at risk of recession, according to a poll of chief financial officers.” [CBS MarketWatch, 3/20/03]
    “If the conflict wears on or, worse, spreads, the economic consequences become very serious. Late last year, George Perry at the Brookings Institution ran some simulations and found that after taking into account a reasonable use of oil reserves, a cut in world oil production of just 6.5 percent a year would send the United States and the world into recession.” [Robert Shapiro, former undersecretary of commerce in the Clinton administration, 10/2/02]
    “Gerd Husler, the IMF’s director of international capital markets, said that “purely from a financial markets perspective, a serious conflict with Iraq would not be a very healthy development.”” Husler said there could be a repeat of what happened in 1990 following the Iraqi invasion of Kuwait, when there was a sharp rise in oil prices.” [World Bank, 9/02]
    see —
    http://thinkprogress.org/

    Reply

  3. Robert M says:

    What I find amazing is the Republicans supporting a stimulus. Hasn’t it been their mantra no interference from the government in the economy. Even more interesting is no Democrats calling them on it.
    The stimulus itself will not work because the structural changes in the economy preclude it from cleaning up the debacle in the credit market. To many derivatives were written with no rules for backing them(look a “insurance for municipal bonds”). Risk spreads were crushed for short term profit and borrowers of dubious credit were given credit. You cannot correct these excess by lowering interest rates and finding money for individuals to spend.
    To much of the economy in the last five years has been based inflating home values with cheap credit money(no document loans?!) and subsquent withdrawal of equity again based on cheap credit and tax policy(home loan interest can be written off). If your earnings could provide you w/ a standard of living this ponzi scheme could. And now you are going to fix it by forwarding an individual their tax refund.
    As to the credit markets; Ask yourself are you willing as a bond holder to forego your interest rate return to unwind SIV’s repackage each component into a CDO w/ only that component in it? As to tracking each mortgage(whether subprime, jumbo or standard unerwriting) to determine whether it is in default(and figure out when and how) and who takes the hit on it as it is repackaged who is going to determine this?
    The only way this is repaired is that “all” the mortgages and mortgage deritatives except FNMA/GMNA ones go into a pool. There they will have to be taken apart repackaged and sold.(The markets can determine risk to defaults, late payments, etal-perhaps dig up Mike Milliken(sic?) to help). Banks, mortgage companies and yes us the taxpayers will have to take the hit.
    This I believe will take the fear out of the credit markets and allow them to lend in a more normalized fashion without fear of counter party failure. As to the economies growth it will remain slow until the next PONZI scheme to get it going. I have no faith in either party to make the structural changes in fiscal and educational policy to grow the economy organically

    Reply

  4. Skulz Fontaine says:

    As the global economy tanks a question occurs, cui bono? Won’t be me and won’t be you so, cui bono? You see, it’s all a vast Chinese red wing conspiracy. Yup, dang Chinese will be the death of us all.

    Reply

  5. Kathleen says:

    JohnH… a couple earning 25,000 shouldn’t have to pay any taxes nor should a single person earning that amount.. it’s barely a livable income, yet we tax a single person who earns $5,500. Who can live on that?
    It’s not the answer to all the ills but it is an immediate remedy that won’t require any new bureacracy, administration, etc. and it makes more sense than a rebate. For me, the operative principle is not taxing anyone who does not earn a REALISTIC LIVABLE INCOME. Why take money from people and then go to the trouble and cost to give some back??? It’s stupid and wasteful and is only a temp fix.

    Reply

  6. Ajaz Haque says:

    The interest rate cut by Fed today is not a surprise at all, perhaps the quantum was. It did help the markets as yesterday’s trend in European & Canadian markets was revrsed and Dow cut a major chunk of its early morning losses too.
    In my view this is too little too late. Had the Fed gradually started cutting rates six months ago and brought it down to 3% by now, perhaps the mortgage crisis would have been averted. The sub prime problems would still have surfaced but the challenges would not have been this great.
    The question is, can the markets reverse the losses of last week or will they start another decline in a week or so.

    Reply

  7. Jack Krupansky says:

    “There is an old saying, or should be, that it is a wise economist who recognizes the scope of his own generalizations” — John Kenneth Galbraith

    I was careful not to suggest that I was a “wise economist”, so I do not feel bound by Professor Galbraith’s admonition. I am a self-proclaimed “armchair amateur economist” with the lack of credentials to prove it!
    I would propose the following questions to the panel:
    1.Are you comfortable with the current congressional mandate for the Federal Reserve?
    2. Are you comfortable with the “division of labor” between the Federal Reserve and the U.S. Treasury.
    3. Since the concept of an overall economy being in “recession” does not reflect difficulties in individual economic sectors or for particular demographic groups, what metrics would your candidate propose to be used for measuring the health of the U.S. economy?
    4. Is the traditional concept of a “middle class” (that is financially secure and very confident in its future and the futures of its children) all but dead? What will replace it?
    5. Would you be willing to sponsor an investigation into the role of hedge funds and investment bank proprietary trading in the rise of crude oil futures to $100?
    And if Ron Paul sends somebody, you can ask whether “the gold standard” would have prevented the current “crisis” while also enhancing living standards for what used to be called “the middle class.”
    — Jack Krupansky

    Reply

  8. JohnH says:

    Kathleen–The big problem is not income taxes. A married couple earning $25K pays about $750 after standard deduction and exemptions. Meanwhile Social Security and Medicare take about $1900. A real tax cut for working Americans would target SSI and Medicare taxes.
    Some would say that we can’t afford to raid Social Security because Boomers are starting to retire. Well, Bush and Co. have already raided Social Security to the tune of $2 Trillion to fund Defense Budgets, Iraqi Occupation, and tax cuts for the wealthy. Personally, if SSI is going to be raided, I’d rather have the money go to the working poor.

    Reply

  9. Kathleen says:

    Well I haven’t been reading all the economic reports and I have been basing my opinions on what is being reported and observing what is going on around me with many little families waging losing struggles to stay above water.
    IMO, all the economic proposals are too wonky, too cumbersome, too fraught with aspects that one faction or another can successfully obstruct all adding up to another glorious gridlock…and they only address homewners, not renters at the point of eviction.
    There is no rapid way to competantly weigh the consequences of these proposals, so rushing in to these goose the market emergency measures is fraught with potential unintended conquences, especially from the current crew. Just because Busholini and Capt’n Ahab are at the helm, does not mean they know Jack Swat about navigation and judging by the flotsam and jetsam floating by, I’d say there’s much wreckage in their wake.
    Why not do what is immediate and uncomplicated? The Federal gov’t has no business exacting taxes from anyone unless and until they earn MORE THAN a livable income. No one can live on the current standard deduction. This needs to be raised to a true cost of living figure and an automatic COL increase factored in. This would provide the people on the bottom of the boat with a life saver, plus, it would benefit everyone else, so who would be left to object?
    Repugs are fond of saying,”It’s your money.,..you should get to keep it”. Agreed, but we should start with the people who have the least in their pockets. No one should have to pay taxes until they’ve eartned more than the cost of living and they shouldn’t have to pay 10-15%. 1% is enough to ask for those just one rung up from the bottom.
    Rebates are bogus… they give the least to those who need it the most and vice versa. One bandaid for two slit wrists.
    Raise the standard deduction and make that RETROACTIVE. All taxes paid for earnings under, say $25,000 be refunded. That would forestall a lot of homelessness and goose the market.
    Kaching.

    Reply

  10. erichwwk says:

    Jack Krupansky writes:
    “Sorry, but I read all the economic reports and at *worst* the real economy is merely whimpering, not screaming.”
    Care to share your secrets? I thought I was a fast and devoted reader, and I am able to read just a minuscule proportion of “all the economic reports”. And the ones I am able read tell a different story.
    “There is an old saying, or should be, that it is a wise economist who recognizes the scope of his own generalizations” — John Kenneth Galbraith

    Reply

  11. JohnH says:

    Here’s hoping that your forum thoroughly dismembers the Bush administration’s two pronged solution to every problem: war and tax cuts for the wealthy. Problem is that these two economic stimuli are currently in place, driving massive budget deficits, and are in fact part of the problem. Another war will only drive oil prices higher. And more tax cuts for the wealthy will only add to the worldwide “savings glut” and possibly to more investment in China. More deficits will only make the US more dependent on China, Japan, Saudi Arabia, etc. Fact is that the Bush administration has painted the US economy into a very tight corner and getting out will be tricky, very tricky.

    Reply

  12. ckrantz says:

    There’s no chance the event will be broadcasted live online via some service like http://www.ustream.tv/?

    Reply

  13. Stern says:

    The market reacted well so far to the rate reduction. It has comeback 300 points from its lows and will end the day on an up note. Don’t lead your note of concern, which is well founded, with non-reaction of the markets to the Fed cut. The markets have responded well and will continue to improve through the day.

    Reply

  14. Jack Krupansky says:

    “the Economy Screams”???

    Sorry, but I read all the economic reports and at *worst* the real economy is merely whimpering, not screaming.
    It is the media that is **SCREAMING**. They ought to be embarrassed and ashamed of themselves, but welcome to media in America in the 21st century.
    Even the Democratic presidential hopefuls are not screaming about the economy as badly as the media, so that puts the media in a very bad place.
    That said, I wish I could be there for your discussion. I am sure it will be quite thoughtful and put the **SCREAMING** media to shame.
    — Jack Krupansky – “Screaming” for Sensibility In The Media

    Reply

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