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July 20, 2008

Next President Faces Major Burdens: Housing Recession, Bank Failures, Sinking Dollar, $4 Gas, Job Loss, 2 Wars…

 When George W. Bush became president in 2001, his main goals included restoring ‘honor and dignity to the White House’ after the Monica Lewinsky scandal, raising school-test scores and figuring out how to spend a record budget surplus – which he has decimated!

The next White House occupant will inherit the deepest housing recession in a generation, growing fears of bank failures, a sinking dollar, $4 gasoline and an economy bleeding jobs. He’ll confront wars in Iraq and Afghanistan, mounting tensions with Iran and the U.S.’s flagging international reputation.

Historians say the economic and foreign policy crises in Bush’s wake will present either Democrat Barack Obama or Republican John McCain with the biggest challenges to a new president since Herbert Hoover left office during the Great Depression.

‘What a burden the next president is going to confront,’ says Robert Dallek, a presidential historian and biographer of Presidents John F. Kennedy and Lyndon Johnson. ‘It’ll be like Franklin Roosevelt coming in, in 1933.’

The list of problems facing the nation means that campaign promises — Obama’s universal health care, middle-class tax cut and immigration overhaul, or McCain’s corporate and individual tax reductions and energy-independence plan — will likely be put on hold while the president focuses on more immediate concerns, especially the economy.

Waking Up Quickly

The next president is ‘going to wake up very quickly to the fact that the economy so overwhelms everything else,’ says Stephen Hess, a presidential scholar at the Brookings Institution in Washington.

In 2000, the last time no incumbent was running, consumer confidence was at record levels and the economy had created 1.3 million jobs in the year’s first six months. In August 2000, 89 percent of Americans said the economy was doing well, according to a Los Angeles Times poll.

With the expansion then in its 10th year, the contest between Bush and Vice President Al Gore centered on topics like education, prescription-drug coverage for the elderly and — with President Bill Clinton‘s affair with a White House intern fresh in voters’ minds — morality in the Oval Office.

The Times survey showed that, after education, the issues that concerned Americans most were Social Security and health care, as the nation debated how to use a $5.6 trillion surplus the Congressional Budget Office projected the government would generate over the next decade. During the campaign, Bush promised to return the surplus to taxpayers through broad-based tax cuts; when the nation entered a recession in 2001, he shifted gears and said the reductions would stimulate the economy.

Wiped-Out Surplus

After that recession, some $2 trillion in tax cuts and military spending in Iraq and Afghanistan, the government has produced only deficits since 2002. Bush’s budgets have added $1.7 trillion to the national debt. The CBO, which estimates this year’s shortfall will reach $396 billion, projects the red ink will flow through at least 2011.

Today, 82 percent of Americans say the economy is doing badly, and voters consider it the most important issue, followed by the Iraq War, health care, terrorism and illegal immigration. Education ranks sixth. ‘People tend to ignore the economy when it’s doing well and pay a lot of attention to it when it’s not,’ says Arthur Miller, a political science professor at the University of Iowa and author of a research paper on issues in the 2000 election.

Job Losses

In June, employers cut jobs for a sixth straight month and the unemployment rate stood at 5.5 percent, a four-year high. Home prices in 20 cities dropped 15.3 percent in April from a year earlier, according to the S&P/Case-Shiller index.

Oil prices have set records due to global demand and tensions in the Middle East. That’s pushed gasoline prices up 92 percent since January 2007 and increased the cost of filling the tank of a Chevrolet Suburban by $62, to $131.

Consumer confidence has fallen to its lowest level since 1992. Many economists expect a recession to begin later this year and continue into the first quarter of 2009, when the next president takes office.

The top economists on both presidential campaigns agree the economy is the priority, and each seek to affix their domestic agendas to that goal.

McCain’s top economic adviser, Douglas Holtz-Eakin, touts the Republican candidate’s energy-independence plan, the “Lexington Project,” as one key to jumpstarting growth. Obama adviser Jason Furman says his candidate’s energy, health and tax plans represent a pro-growth blueprint: “If you can bring down the cost of health care, that can help the economy. If you bring fairness back to the tax system, that can be expansionary.” Read full article here:


To contact the reporters on this story: Matthew Benjamin in Washington at mbenjamin2@bloomberg.net. Heidi Przybyla in Detroit at hprzybyla@bloomberg.net.




  1. Paulette,
    Just for you: I once had a problem getting a post to show up on wordpress tag pages. I emailed their support and they told me that if you list x amount of similar-related tags, then your posts won’t show up. In other words, if you have too many tags that are all politics-related, then you need to go back to your post and delete some of your tags. Does that make sense? If so, then try it and see if it makes a difference. And if you still have problems, contact WordPress for help. Good luck.

    Comment by Bruce — July 20, 2008 @ 10:05 pm | Reply

  2. Bush has sunk us so far down that Obama is going to have his work cut out for him. But it’s good news that al-Maliki supports Obama’s withdrawl plan. If we can reduce some military costs and restore some faith, that will be a good first step. But I don’t envy anyone stepping into the job. It’s going to take years to correct Bush’s damage.

    Comment by Bruce — July 20, 2008 @ 10:08 pm | Reply

  3. Thanks Bruce — I’ll try that. I emailed them this AM but since it’s Sunday I recvd an automatic response. Thanks Mate!

    Comment by Paulette — July 20, 2008 @ 10:14 pm | Reply

  4. Bruce — I think Obama has a brilliant mind and will do what he can to set things right. I have no confidence that McCain will be able to sort it out. It will be a difficult job and we will have to be patient but it has to be done.

    Comment by Paulette — July 20, 2008 @ 10:16 pm | Reply

  5. Good thread.
    Paulette, use the link utility on the tool bar for linking the report from bloomberg news.

    One other request, can you change your settings to accept my posts without awaiting moderation? I think we can trust each other at this point. Thanks.
    ~ Cats

    Comment by Cats r Flyfishn — July 20, 2008 @ 11:08 pm | Reply

  6. I don’t mean to thrust myself into the conversation about wordpress tags, but I will. I find it better to put as many tags as possible.

    Example. you put the words PUMA idiots into the google search engine and my page will appear in the search results, put the same thing into the wordpress search engine it wont appear for some reason. Even though the words PUMA and idiots are tags for that post.

    The point being more people use google. People in wordpress community probably already know about your blog so they are going to visit it nearly everyday, at least I do cause you blog rocks. More traffic from my blog comes from people entering stuff in the google search engine.

    Comment by sensico — July 21, 2008 @ 10:30 am | Reply

  7. Sensico, there seems to have been a glitch over the weekend – none of my posts reached any tag pages. Problem seems to be resolved now. I agree I think the more tags — the merrier! I get most of my traffic from searches and I love it! Thanks for the comp — I LOVE you page as well!

    Comment by Paulette — July 21, 2008 @ 10:48 am | Reply

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