The Recession Test for Leaders

It looks like we are headed for a recession, might already be in one. OK, so technically a recession is a decline in GDP for two or more consecutive quarters, but all the media seems to be saying we are in a recession, so let’s say we are in one.

This election has many issues, but the Economy is the big one so far. That being the case, it seems reasonable to ask how Barack Obama, Hillary Clinton, or John McCain would suggest we address this recession. So, let’s see what a Google search with the candidate name and the word ‘recession’ brings up:

Barack Obama – Google News did not have much, except to say that Obama believes we are in a recession; no comment on what he would do as President to deal with that. So, on to Obama’s website, barackobama.com. Under his ‘Economy’ section, Barack tells us

“I believe that America's free market has been the engine of America's great progress. It's created a prosperity that is the envy of the world”.

Well, no one would argue with that, but it’s, well, kind of vague. I clicked on a promising tab, titled “Provide Middle Class Americans Tax Relief”. Obama plans to give a tax credit of $500 a person or $1,000 a family to about the lowest half of taxable income. Obama also likes the idea of having the IRS create “pre-filled” forms for us to sign and return. Of course, that ignores that most savings real people get from filing their taxes intelligently involves declaring deductions, and that small businesses would not benefit from this plan.

Not much there that addresses the macro economy, though. Looking through the rest of his economic proposals, Obama wants federal regulation of energy providers, internet service, and mortgage companies, preferential treatment of unions, indexing the minimum wage to inflation and to set collection limits on medical bills and mortgages. Heh, there goes that “free market” he said was so great, hmm?

In the end, I can’t say I saw much that would help end a recession. And several things that could precipitate or aggravate one.

On now to Hillary Clinton. Like Obama, Clinton does not say much about recessions, except that she is sure we are in one. At her site, hillaryclinton.com, I found even more vague platitudes than at Obama’s site. For example, Hillary wants us to know that

“Hillary has a plan to restore America's middle class”

Uh huh. I think the problem there, is that a lawyer who can turn $1,000 of someone else’s loaned money into a hundred thousand dollars in a few months, who can 'donate' book revenue to charity and yet somehow become a multi-millionaire on the salary of a public servant, probably lost sight of us in the middle class a long time ago, and is just assuming we disappeared. Anyway, Hillary promises to “lower taxes for the Middle Class”. Hey, waddaya know, she found us! So, clicking on that link to find out how she plans to lower taxes, I found 2,523 words to describe how unfair things are for Americans, but the only specific mentions of taxes were how Bush is about “tax cuts for the rich”, how the national debt amounts to a “birth tax” (not that Hillary voted against spending while she was a Senator, I note), tax credits for Gore-friendly energy practices, health tax credits for individuals to be funded by new taxes on employers, and higher taxes on “the rich”. Turns out Hillary has no real plans to lower taxes for regular people after all. Can’t say that sounds like a smart way to address a recession. Like Obama, Hillary sounds like she would make things worse, not better.

On to McCain. Well, McCain stubbed his toe this week, admitting the country is “very likely in a recession” after repeatedly saying he did not think one was on the way. Oops. Then again, we are not technically in a recession – yet – so perhaps Senator McCain was transiting between the formal definition and the subjective opinion. But it does not help for a leader to look confused about the situation. At his site, johnmccain.com, there is nothing specific about recessions, so I clicked on ‘taxes and economics”. Well, there is another plan for middle class tax cuts. Seems to be de riguer to promise to watch out for the middle class, hmm? Let’s see, McCain’s tax cut would come from eliminating the AMT. Ah, so it’s not really a tax cut, but something else. McCain wants to make it harder for Congress to raise taxes, but last I heard that was up to Congress, not the President. McCain does want to lower the corporate tax rate from 35 percent to 25 percent, but again that would be something Congress does, and while President could propose it I don’t see John McCain getting that one to fly. I like McCain’s plans better than Obama’s or Clinton’s, but then I would say that as a Republican. I have to say that I don’t see any specific plan to addressing a recession. Seems as though McCain, just like Obama and Clinton, has not given that question a lot of thought, which bothers me considering how important everyone says the Economy is to this election.

It’s not as though fighting a recession is all that complicated. The Economy basically runs on one prime fuel: Confidence. If folks have faith in the Economy, they buy things and that drives production and revenue, which gets companies to hire folks and spend money on materials and investment, which in turn gives folks the money to buy things. All a recession really is, is confidence stumbling for a bit of time. No surprise these things happen a lot around election seasons. And no surprise that every President in a recession talks up confidence, tries to get folks to feel good about the Economy. And when you get into it, most of the time the President can’t really prevent a recession, unless he’s Jimmy Carter. All he can do is react when it hits and try to lessen its duration and depth. It’s not easy, not at all easy for a President to admit something that important could be out of his hands. I’m not sure a President ever really does admit that, even to himself. Then again, I want a President who knows what he means to do about the situation, and so it’s a problem that we’re not hearing it from the three people closest to the office.