Obama sees dire economy

Calls situation an 'emergency' as he meets with advisers

Campaign 2008

July 29, 2008|By New York Times News Service

WASHINGTON - Democratic presidential hopeful Barack Obama declared the U.S. economy in a state of "emergency" yesterday as he convened a meeting of high-powered economic advisers, a summit that aides to Republican rival John McCain dismissed as little more than political theater.

Although Obama stressed the urgency of the deteriorating economy, his talks with some of the country's leading economic figures focused more on the faltering financial markets and rising energy costs than on an announcement from the Bush administration earlier in the day - that the next president will inherit a record budget deficit of $482 billion.

Despite the latest budget deficit figures, which do not include another $80 billion for the war in Iraq, Obama remains committed to paying for all his campaign proposals, including expanded health care, and paying for them through the expiration of Bush tax cuts rather than new taxes, economist Laura Tyson told reporters.

Obama "remains committed to fiscal discipline," said Tyson, who led the Council of Economic Advisers during the Clinton presidency and was selected by the Obama campaign to brief reporters on the economic summit, which was conducted privately after the presumptive Democratic presidential nominee delivered a few remarks for the small pool of reporters allowed to attend the opening of the gathering.

Tyson's comments were intended, in part, as a response to earlier ones from Carly Fiorina, a key McCain lieutenant and former boss of computing giant Hewlett-Packard, who had suggested during a conference call with reporters that Obama's economic policies of higher taxes and trade barriers could plunge the United States into a 1930s-style depression.

"The reality is when an economy is slowing, if you raise taxes and you curtail free trade through isolationist policies, bad economic times become worse," Fiorina said. "We know this from history ... and that is precisely the proposal that Barack Obama is making."

She added: "I think the American people are getting treated to yet another photo op by Barack Obama, but meanwhile John McCain has been talking about the economy, understanding the economy, taking advice on the economy for many, many months."

Noting job losses, declining wages and a deepening credit crunch, Obama said, "The economic emergency is growing more severe. And this is an emergency that you feel not only just from reading The Wall Street Journal but from traveling across Ohio and Michigan into New Mexico and Nevada, where you meet people day after day who are one foreclosure notice or one illness or one pink slip away from economic disaster."

Obama blamed Wall Street and the Bush administration for the current economic woes. "There were some irresponsible decisions that were made on Wall Street and in Washington."

Obama suggested another round of "stimulus" measures from Congress to provide a short-term improvement in the economy while longer term fixes are pursued, including universal health care and renewable energy.

In addition to Tyson and Bradley, the gathering included former Clinton Treasury Secretaries Robert E. Rubin and Lawrence Summers; ex-Federal Reserve Chairman Paul A. Volcker; New Jersey Gov. Jon Corzine, a onetime Wall Street captain who was among Hillary Clinton's biggest supporters in the 2008 presidential campaign; billionaire investor Warren Buffett; Google Chairman Eric Schmidt; and two officials from President Bush's first term - former Treasury Secretary Paul H. O'Neill and Securities and Exchange Commissioner William Donaldson.

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