Former Federal Reserve Chairman Alan Greenspan sounded like a Las Vegas oddmaker this week, telling the Wall Street Journal the odds are better than 50-50 that the U.S. is in a recession, or about to be.
For Democratic presidential hopefuls campaigning in Las Vegas in advance of Saturday's Nevada caucuses, that was no surprise. They've been calling on the federal government to take action to stimulate the economy.
"I was the first candidate to come out with an aggressive stimulus to get this economy moving again," John Edwards said last night. The former North Carolina Senator told union members in Las Vegas the federal government should invest billions in alternative energy, and put the resulting jobs in places where they're needed most.
Edwards also wants the government to create a "home rescue fund," to deal with what he called, "this terrible mortgage crisis that exists across America and is most intense right here in your state."
Nevada has the nation's highest home foreclosure rate. Although many of the homes in foreclosure were owned not by local workers but out-of-state speculators, abandoned houses can create problems for many Nevada neighborhoods.
"Pretty soon the weeds start to grow," New York Sen. Hillary Clinton said Tuesday, during a campaign rally in Las Vegas. "And then property taxes decrease. Then police can't have the same level of patrol because they can't be paid. So this is all interconnected."
Clinton has proposed a three-month moratorium on home foreclosures and a five-year freeze on adjustable interest rates. She has also suggesting that the federal government pump an extra $25 billion into the economy in the form of emergency assistance with home heating costs.
"I also want to put money in American's pocketbooks to pay their energy bills," Clinton said.
Clinton unveiled her economic stimulus plan last Friday. Illinois Sen. Barack Obama countered with his own plan two days later, and he's been talking about economics wherever he goes in Nevada.
"People are working harder and harder for less," Obama said Wednesday, during a town hall meeting in Henderson, Nevada. "They've never paid more for health care, college, gas at the pump."
Obama's plan differs from Clinton's and Edwards' by offering an immediate payment of $250 to nearly every worker and Social Security recipient in America. Those payments, totaling $45 billion, could be doubled if the economy continued to worsen.
"There are two basic yardsticks that virtually all the experts agree a stimulus package must include," said University of Chicago economist Austan Goolsbee, an Obama adviser. "They must get the money out the door immediately and they must put it in the hands of people who can use it right away."
Goolsbee argued that Obama's proposed tax rebates and Social Security payments would put the money in the hands of consumers more quickly than Clinton's home heating assistance. Today, Clinton added her own call for direct tax rebates, citing worsening economic conditions.
The plans Democrats have been touting on the campaign trail in Nevada have now reached the policy-making corridors of Washington. President Bush and Federal Reserve Chairman Ben Bernanke now agree some sort of stimulus is wararanted. Economist Goolsbee said deciding when stimulus is needed is like choosing when to apply sunscreen. "If you really wait until it's completely obvious, it's going to be very painful."
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