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Economy Enters Campaign Banter

March 19, 2008

Analysis

A Washington Post story that ran in the Grand Rapids Press makes the claim that both of the Democratic presidential candidates will be shifting their focus from Iraq to the US economy. The article states “Clinton’s policy address on Iraq at George Washington University yesterday was immediately followed by a news conference dominated by economic questions.” So, why was there no reporting on the speech that Senator Clinton gave on Iraq? Readers are led to believe that the news conference questions determined the shift in focus, but no where are we told who organized the press conference, nor who was asking the questions about the economy.
The article continues with statements from both Clinton and Obama that vaguely refer to the current economic crisis, but the Washington Post reporters never bother to ask fundamental questions about both candidates and their relationship to Wall Street nor their voting records on investment issues, banking, or homeowner mortgages. A visit to the Center for Responsive Politics’ database enables one to find that both Clinton and Obama have received over $6 million in campaign contributions from the Securities & Investment sector. Both of the Democratic presidential candidates have each also received over $1 million in campaign contributions from the Commercial Banking sector and from the Real Estate sector. Hillary Clinton has received over $5 million and Barak Obama over $3 million. What influence do just these levels of campaign contributions have on how the candidates would perform on economic issues? The reporters could also have gone to Project Vote Smart to provide readers with some background on their voting records as it relates to Wall Street or Housing issues.
Instead, the article cites former economic advisor to Senator John Kerry’s 2004 presidential race Jason Furman, with the Brookings Institute. Why did the reporters use a source that seems to have a history of partisan bias? Why not have an independent, non-partisan perspective from someone like Dean Baker with the Center for Economic and Policy Research? Baker said in a recent article that appeared in The Guardian Unlimited:

“Why did the Federal Reserve, an agency of the US government, use our tax dollars to keep Bear Stearns and its rich managers and shareholders above water? After all, the government supposedly doesn’t have enough money to provide kids with healthcare and child care, to guarantee families decent housing or to meet a long list of other needs. Why do we have the money to lend tens of billions of dollars to prop up Bear Stearns at discounted interest rates?”

These comments are significantly different from those of Jason Furman of the Brookings Institute.
The only information that readers are provided in regards to the economic policy positions that both Clinton and Obama are taking was to say “Both candidates have now endorsed legislation unveiled last week by Senate Banking Committee Chairman Christopher Dodd (D-Conn.) and House Financial Services Committee Chairman Barney Frank (D-Mass.) that would allow the Federal Housing Administration to guarantee new mortgages for lenders willing to help homeowners facing foreclosure.” Unfortunately, there are no details of what this new legislation would actually achieve.

Washington Post story in the GR Press 3/18/2008 – Economy enters campaign banter

The contenders for the Democratic presidential nomination raced to inject themselves into the debate over the credit and housing crisis yesterday, slamming the Bush administration’s failure to do more to avoid a crisis as the economy once again surged to the forefront of the campaign.
Sens. Hillary Rodham Clinton (N.Y.) and Barack Obama (Ill.) had expected to focus on Iraq this week, marking the fifth anniversary of the U.S. invasion with a renewed debate over which candidate foresaw the war’s consequences and who could end it more effectively. But Clinton’s policy address on Iraq at George Washington University yesterday was immediately followed by a news conference dominated by economic questions.
“I am reminded every day as I meet with families and listen to their stories that the effective functioning of our financial markets isn’t just about Wall Street. It’s about Main Street,” Clinton said before reeling off examples of voters ranging from construction workers to college students she had met who were struggling to make ends meet.
Obama, campaigning in Monaca, Pa., was also peppered with questions about the Federal Reserve Board’s intervention this weekend in the collapse of the Wall Street investment firm Bear Stearns and a second emergency interest rate cut.
“I think there is no doubt we are teetering on a potential crisis on Wall Street that could have ramifications all over the country. We have a credit market that is locked up,” he said. “Until people have a sense that there is a floor, until they have a sense that the existing debt that’s out there has all been accounted for, we’re going to continue to have some very, very severe problems.”
For Obama, Clinton and the presumptive Republican nominee, Sen. John McCain (Ariz.), the gyrations of the credit crisis have helped to reshape the playing field for the campaign season. In January, Obama and Clinton were prepared for a detailed debate on their respective universal health-care proposals, noted Jason Furman, a Brookings Institution economist and former economic adviser to Sen. John F. Kerry’s 2004 campaign. Instead, they argued about economic stimulus proposals. McCain’s surprise visit to Iraq this weekend, meanwhile, was virtually lost amid coverage of J.P. Morgan Chase’s fire-sale purchase of Bear Stearns under Fed supervision.
“This is clearly the biggest substantive issue of the campaign right now,” Furman said.
“The red phone is ringing at 3 a.m.,” Sen. Charles E. Schumer (D-N.Y.) quipped yesterday, referring to Clinton’s controversial television advertisement that questioned Obama’s readiness to deal with a foreign policy crisis.
Both campaigns began the week attempting to bolster their candidates’ economic credentials — at times pushing the boundaries of fact. Both candidates have now endorsed legislation unveiled last week by Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.) and House Financial Services Committee Chairman Barney Frank (D-Mass.) that would allow the Federal Housing Administration to guarantee new mortgages for lenders willing to help homeowners facing foreclosure.
Clinton tossed in that she had spoken yesterday morning to Fed Chairman Ben S. Bernanke and Timothy Geithner, president of the Federal Reserve Bank of New York, about the Fed’s actions.
“Those 3 a.m. calls can be about economic crises as well as national security ones, because it’s all intertwined today,” she said.
The housing crisis has been the subject of a simmering dispute between Clinton and Obama for weeks. Obama has criticized Clinton’s proposal to freeze foreclosures for 90 days and subprime mortgage rates for five years, saying her plan would send interest rates for new and refinanced mortgages skyrocketing.
But to the surprise of many Democratic campaign strategists, neither candidate has consistently sustained a focus on the economy — despite a barrage of polling data showing it has vaulted over the Iraq war in the past four months as the most pressing concern of voters. Last Thursday, both Obama and Clinton were on Capitol Hill when Dodd and Frank unveiled their legislation that would expand the government’s intervention in the crumbling housing market. Neither of them showed up at the news conference, nor have they come forward with new proposals since the contagion in the mortgage market spread to Wall Street.
“Our campaign for over a year has been very worried about how severe the housing crisis would be and its impact on the general economy,” said Gene Sperling, a Clinton economic adviser. But he added: “It’s been more of a continuing series of discussions and decisions about when to put forward proposals.”

Omitted portion of the WP story
Clinton stuck with her Iraq speech yesterday morning, castigating what she described as the “Bush-McCain Iraq philosophy” of “keeping troops in Iraq for up to 100 years if necessary.” She also continued her criticism of Obama as a rhetorical foe of the Iraq invasion who was reluctant to go beyond speeches until it became politically expedient to do so.
Obama fired back, saying, “The truth is, the judgment of Hillary Clinton and John McCain gave President Bush a blank check for war.” He, too, will shift his focus from the economy today with an address on race in Philadelphia, where he will explore his relationship with the Rev. Jeremiah Wright, a controversial Chicago pastor.

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