Sen. Barack Obama (D., Ill.) returned from his travels abroad only to receive sour economic news here at home.
The White House
that the federal deficit for fiscal year 2009 would hit $482 billion, which would total 3.3% of gross domestic product. An increasing deficit could hamper economic growth.
Responding to the challenges, Obama organized a bipartisan meeting of economic leaders to find solutions. The meeting focused on short-term economic stimulus and long-term plans to improve productivity and wage growth.
Obama and presidential rival Sen. John McCain (R., Ariz.) have traded barbs over how to jumpstart the economy. Obama favors more government intervention, such as a stimulus package, housing bailout and middle class tax cuts. He would pay for his programs by raising taxes on those earning more than $250,000.
Obama's economic plans have paid off with voters in two respects. A recent MSNBC/Wall Street Journal
had him leading McCain on optimism about the future and being compassionate enough to understand the average individual's problems.
At his economic summit, Obama kicked things off by acknowledging the complexity of the situation:
"American families are facing tough economic times as the costs of healthcare, gas and even basic groceries skyrocket but wages remain stagnant, the dollar remains weak and the housing market continues to decline. Our economic problems are so interconnected and complex that we cannot focus on just a single economic problem in isolation or consider policies from just a single perspective - instead America needs a broad-based strategy to jumpstart the economy in the short run while addressing our long-run challenges."
Obama's solutions include nearly universal health care, a housing rescue plan and another economic stimulus package.
McCain prefers a different road. He often speaks in favor of free markets and free trade. He has endorsed President Bush's tax cuts -- after opposing them in 2001 and 2003 -- and is now suggesting additional cuts. According to an
by the non-partisan Tax Policy Center, his tax policies favor the wealthy. The analysis also noted that his tax cuts add to the deficit, though McCain has spoken strongly against deficit spending. He commented on the deficit numbers on Monday:
"Today the administration released another reminder of the dire fiscal condition of the federal government -- a budget deficit for this year of $389 billion and a sad legacy for the American taxpayer: a deficit estimated at $482 billion next year. There is no more striking reminder of the need to reverse the profligate spending that has characterized this administration's fiscal policy."
Those are the strongest terms he has used to criticize the Bush administration. Many conservatives, especially fiscal conservatives, would like to hear McCain do more to assure them that he plans to reduce the size of government.
Looking at the MSNBC/WSJ poll, McCain has garnered an advantage with voters perceiving him as better to lead the country. Another Rasmussen
showed the two candidates statistically tied in their ability to be trusted on the economy.
McCain had strong words opposing Obama's economic agenda:
"Senator Obama will not commit to balancing our budget, does not propose to control spending, and has only one answer to every challenge: raise taxes. His plan is to increase tax rates on investment, income, and above all on the small businesses that drive our economic growth and create jobs."
The campaigns also traded shots on energy policy, not surprisingly, and the high price of gas. Marty Feldstein, a McCain economic adviser, said on a conference call with reporters about the high price of oil:
"It reduces the real income of households. It reduces their ability to spend on other things and that is dragging down overall economic activity. And what Senator McCain has proposed is a long-term strategy with a number of different parts, but the emphasis is both on increasing supply and reducing the demand for gasoline used in automobiles."
McCain has made two controversial suggestions on gas prices, including a gas-tax cut and offshore drilling.
Hari Sevugan, an Obama spokesman, returned fire on McCain's energy proposals:
"By handing out $4 billion in tax breaks to the biggest oil companies and proposing gimmicks like offshore drilling that won't produce a drop of oil for seven years, Senator McCain's energy plan fails to provide short-term relief to consumers or long-term independence from foreign oil."
Obama's economic meeting included a who's who of economic leaders. Wall Street CEOs headlined the meeting. They included: Warren Buffett of
, James Dimon of
, Indra Nooyi of
, and Eric Schmidt of
Joining the CEOs were former advisers to Presidents Carter, Reagan, Clinton and G.W. Bush: Paul O'Neill of the Bush administration and special adviser to
The Blackstone Group
, Robert Reich, Lawrence Summers, Paul Volcker and Robert Rubin. Obama acknowledged that attendance didn't signal an endorsement of his campaign. Labor leaders from the AFL-CIO and the Services Employee International Union also joined the meeting.
No matter who wins the White House in November, this style of bipartisan brainstorming will be needed to solve difficult problems on the economy, health care, and Social Security.