Candidates now focus on financial crisis
Obama and McCain hope to jump-start the economy, but their plans clearly differ.
Job 1 for the next US president now seems obvious. But how to do it – how to actually get the economy running normally – is the tough part.Skip to next paragraph
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From Midwestern assembly lines to high desert construction sites, America faces more than just a recession. It’s the aftermath of a historic debt binge that stretched from Wall Street to Main Street, leaving key parts of the economy now in a tailspin. Even with the extraordinary efforts under way in Washington to stabilize financial markets, the recovery could be slow, economists warn, stretching well past the election.
In many ways, the candidates offer a classic divergence between Republican trust in private markets and more interventionist Democratic policies.
Senator McCain emphasizes tax cuts and federal spending cuts with targeted tax breaks to spur business investment. Senator Obama is more eclectic, embracing tax cuts for the middle class but also calling for a stronger federal role in a host of areas, from a short-term stimulus spending to programs that redistribute income to low- and moderate-income workers.
Yet the rivals also echo each other on some long-term goals, from fostering high-tech innovation to creating a more skilled work force.
If the next president has a recipe for growth, that’s a change that can’t come too soon for many people here, in the state that leads the nation in joblessness.
“Most of my customers, they’re dispirited,” says Rob Markus, a barber who’s kept his scissors busy for 30 years in this suburb just north of Detroit. “They’re losing their jobs, they’re losing their overtime, they’re losing their extras.... This is about as rough as I’ve seen.”
Although an automotive slump has hit the region hard, many of the problems here – from foreclosures to tightening credit supply – are squeezing the economy nationwide. “Whether we have a shallow recession or a deep recession, we’re going to have a difficult recovery period,” predicts Robert Litan, an economic policy expert at the Kauffman Foundation in Kansas City, Kan. “We do need to have a growth strategy for the long run.”
In effect, some of the nation’s short-run challenges – getting out of a slump, affording gasoline, getting debt under control – may blend into long-run challenges: nurturing industries of the future, finding new sources of energy, resolving the strain of healthcare costs.
What would McCain or Obama do?
They both say they’ll keep taxes low, but beyond that lies a clear philosophical divide. Where Obama has called for a second stimulus package worth $50 billion plus other new spending programs, McCain is more prone to reduce government spending and rely on the private sector for job creation.