Battling recession

Our view: More federal aid to create new jobs and put money in consumers' pockets is needed to challenge a national economic crisis that threatens to be long and deep

October 20, 2008

Sen. John McCain likes to compare his Democratic opponent Sen. Barack Obama to Herbert Hoover, the conservative Republican president whose tax hikes and restrictive trade policies have been blamed for deepening America's Great Depression in the early 1930s. But a closer look at Mr. McCain's economic proposals -- aiming to reduce the deficit and cut government spending in the midst of a serious financial crisis -- make him sound more like Mr. Hoover.

Senator Obama's proposals to seek more public spending to reverse the current economic decline are more reminiscent of President Franklin Delano Roosevelt, the honored warrior against the Great Depression. Mr. Obama wants to raise the minimum wage and tie it to inflation, extend the period of unemployment benefits, cut taxes for low- and moderate income families, increase government spending on needed infrastructure projects and set a 90-day moratorium on home foreclosures. His ideas, among other measures, are more likely to spur growth.

Mr. McCain's proposals rely on tax cuts for the nation's wealthiest citizens and largest corporations and spending cuts to balance the federal budget. Add to that his plan to cut capital gains taxes and these are grossly inadequate and largely irrelevant when compared to the scope the country's economic problems.

The stark contrast between the candidates' proposals reflects a deep philosophical divide reaching back to 1932 when voters rejected President Hoover's conservative policies and elected Mr. Roosevelt whose robust use of deficit spending to provide jobs and spark a recovery were successful, though the depression didn't conclusively end until the start of World War II.

Now, a similar struggle is likely to begin with a new president and under difficult circumstances. America faces a seriously damaged financial system, a continuing downward spiral in home values, rising unemployment, a looming federal deficit and the evaporation of more than a trillion dollars in personal wealth due to a breathtaking stock market decline. There is a consensus that the nation has come to grief because of an epidemic of reckless borrowing and now individuals, corporations and governments are paring back spending and starting to save in pursuit of balanced budgets.

But if ending an addiction to debt is the right long term cure to the nation's economic problems, more short term spending is needed to revive a Main Street economy on life support. Thoughtful cuts in wasteful programs should help pay for this assistance and make a start toward trimming the deficit. It's vital that the new president and Congress balance those two needs to limit the pain of a recession that threatens to be lengthy and ugly.

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