Marty Feldstein Warns Of "Severe Recession"

I'm no economist, but when Marty Feldstein and Larry Summers both agree that the coming recession is likely to be more severe than most...

I post this mostly to ask a question for readers to answer.

Why doesn't the White House acknowledge the seriousness of what virtually everyone seems to see except for them? (A speech in NYC doesn't cut it.) Do they not want to talk down the economy? (Isn't it already down?) Do they not want to make things more difficult for John McCain in the fall? (But wouldn't a feckless White House response do that anyway?)

When the rebate checks hit mailboxes and people discover that they'll be good for paying the difference between what gas costs now and what gas will cost this summer, what then?

When will the Democratic presidential candidates begin to acknowledge that the economic conditions may well delay universal health care and all of their other spending projects?

Comments

LOL, all of those "Over $100,000 per annum" Obama supporters are going to be "Under $60,000 per annum" Clinton supporters by the end of the summer.

There is a silver lining in every cloud.

Posted by robert ethan | March 14, 2008 4:59 PM

Maybe the Democratic candidates should instead state that Universal Healthcare is the cure? I mean, think of all the money put back in citizen's pockets and business' budgets? Yeah more taxes and debt, but people would perhaps feel like they're getting something for their tax dollar at least. And hey, tax the rich!

Gas is troubling though, and likely spells doom for McCain. All a Democratic candidate need do is trumpet "$5k+/minute in Iraq."

Posted by N M | March 14, 2008 5:00 PM

And there's a troll in every thread.

Posted by goethean | March 14, 2008 5:01 PM

Marty Feldstein and Larry Summers had their day years ago. Get over it.

Posted by Michael Ramirez | March 14, 2008 5:06 PM

Face it.

No political leader in the Executive or Legislative Branch in the last 8 years have the courage to tell Americans the truth:

Americans have spent lavishly not only personally, but governments expanded public spending and cut taxes while fighting not one, but two wars: Anti-terrorist war domestically / Afghanistan, and then Iraq.

On top of these issues, natural resources like petroleum that use to be plentiful and cheap are now increasingly expensive with production peaking / plateauing.

Few Americans complained when ultra low interest rates drove up the value of their homes, and many small investors made money in real estate.

Well, with any bubble, there will be a hangover, and a reckoning.

The severity of the bubble is the best sign of how big the correction have to be to bring averages back to the long term average trend line.

Given how big the bubbles are, the bust will have to be commensurate in size.

No politician, Not McCain, Not Hillbilly, nor OBammBamm, will tell the electorate the truth until they are safely sworn in office.

Posted by D | March 14, 2008 5:18 PM

"Why doesn't the White House acknowledge the seriousness of what virtually everyone seems to see except for them?"

Marc - seriously - What in the hell are you talking about? If you haven't heard them 'acknowledge' this then you must have extensive wax buildup.

Tell you what, Marc - write down for me exactly what you want them to say that would satisfy you and I'll be sure to send it along. It sure seems reasonable that they should be castigated unless they say exactly what you want them to about every issue.

Divorced from reality much yourself?

Posted by sbj | March 14, 2008 5:25 PM

He was good in Young Frankenstein, but I don't know that I trust him on economic policy.

Posted by 1970s Abraham Lincoln | March 14, 2008 7:06 PM

When will the Democratic presidential candidates begin to acknowledge that the economic conditions may well delay universal health care and all of their other spending projects?

Probably about the time Bill Clinton came to grips with the economic reality he inhertited from Bush Sr.: After the election, but before his oath of office. Does anyone remember how President-elect Clinton hosted a series of policy seminars with various academics and business leaders during the two-month, post-election interim period? (Relevantly, the country was in a recession during the Bush Sr.-Clinton campaign, but coming out of recession just at the time votes were cast, although no one new this fact at the time.) I recall (a little fuzzily to be sure) that Clinton used this interim period to pivot from his expansive campaign rhetoric to begin to establish a woe-is-me narrative to the American public that the Bush Sr. administration had saddled him with a recession and a much bigger than advertised budget deficit that would require his unexpected, immediate, first-order attention and temper his ability to deliver on excessive campaign rhetoric.

Of course, in the irony or ironies, Clinton then sent a budget up to the Hill in the Spring of 1993 that was widely panned by the at-the-time Republican minority for its wild liberal spending excesses and heavy taxes (including an energy BTU tax) - even though it was this country's last sane budget plan. The Clinton administration was immediatley put on the defensive by Newt Gingrinch, Dick Armey, Tom Delay, et al and Bill Clinton almost had his Presidency derailed in the first 100 days. That is, until heavy concessions (i.e., parred down stimulus spending package and no more energy taxes), major-league Democratic leadership arm-twisting, and a midnight tiebreaking vote by VP Al Gore set the stage for our country's last sane budget (as previously mentioned). The upshot: fiscal sanity.

Couple this moment with Hillary's atrocious attempt to bureacratically mandate a form of single-payer health care the next year (an attempt that squelched other, passable Democratic proposals on the table - hello Rep. Jim Wright - and poisoned the well for health care reform for twenty years and counting) which resulted in Democrats getting run from Congress in a historic way (that they have only partially recovered from) which resulted in split party control of the executive and legislative branches and Bill Clinton tacking heavily to the center, which resulted in budget gridlock, which resulted in balanced budgets set up by the original 1993 budget and unparalleled growth during the dawn of the internet age. Whew.

Can anyone tell that it is Friday and I am bored at work? Yes? Sorry about that.

Posted by Flashback | March 14, 2008 7:07 PM

And is it me or is the US looking more and more like Britian post WWI?

Posted by coomaraswamee | March 15, 2008 1:22 PM

As I'm learning in my college intro econ class, a lot of the business cycle is based on people's expectations, particularly investors. There tend to be a lot of self-fulfilling prophesies, so perhaps the Bush strategy is that by pretending it doesn't exist or won't be so bad, they can actually make it so.

The problem is that an even bigger part of how a nation's overall economy does is based on trust in government and government policies, so I think what we are seeing and will see is that as more and more people see the inevitability of the recession while the Bush administration denies it, his actions will be compounding the problem, not helping.

Posted by czwheeler | March 15, 2008 2:02 PM

"It isn't a recession" is the new "It's not a civil war."

Posted by socctty | March 16, 2008 6:03 PM