ANDREA SEABROOK, host:
It's ALL THINGS CONSIDERED from NPR News. I'm Andrea Seabrook.
Well, it's been a lousy week for the U.S. economy. Fed Chairman Ben Bernanke joined many leading economists in saying he's very worried about economic growth. And there's been a grim flow of economic data, pointing increasingly towards that R-word. Congressional leaders and the president say they're poised to do something to avert a recession, but what?
We called up Timothy Taylor, the managing editor of the Journal of Economic Perspectives for a little perspective.
Mr. TIMOTHY TAYLOR (Managing Editor, Journal of Economic Perspectives): There are two big tools that the government always has to fight recession. One is fiscal policy. And fiscal policy just means cutting taxes or increasing spending. And the other big tool is monetary policy, which means cutting interest rates in effect. And so - then there's disputes about which of those tools and in what order would make the most sense.
SEABROOK: But that's the basic ingredients in the cake, huh?
Mr. TAYLOR: Well, those are the basic ingredients in government policy. I guess what I'd like to say sometimes is that the economy is what happens when 150 million people get up and go to work in the morning for hundreds of thousands of different employers. And that's a giant, you know, $13-trillion enterprise. So when the government does something like it has a tax cut or changes the interest rates, it affects the overall economy. But it would be mistaken to think that the government can sort of come along and steer us carefully out of every downturn and make everything smooth all the time. The economy is just too big an ocean liner for anybody to steer it with precision.
SEABROOK: And yet that ocean liner is headed off course in the middle of an intense presidential campaign. And so all of the candidates are touting what they would do if made captain of the ship.
NPR's Adam Davidson covers the economy, and is listening carefully to the economic platforms of the candidates. Adam joins us from New York.
Hello.
ADAM DAVIDSON: Hi, Andrea.
SEABROOK: Let's start with John Edwards. He's probably the candidate who's paid the most attention to economic distress. And let's listen to him from this debate here in January.
Mr. JOHN EDWARDS (Former Democratic Senator, North Carolina; Democratic Presidential Candidate): What's at stake here is a fight for the future of the middle class, and we do have different perspectives on how we fight for the middle class, how we fight for jobs, how we fight for health care.
SEABROOK: So Adam, are there big differences between Edwards and the other Democrats as he says?
DAVIDSON: Rhetorically, they are radically different. When you actually get into the substance of their policies, the differences start to go away. All three of the leading Democratic presidential candidates hope that President Bush's big tax cuts that are due to end in 2010 will just go away. They don't want those tax cuts made permanent. All have various ways to increase taxes on wealthier people and to lower the tax burden on middle class and lower-income people. All have very large spending plans for health care.
I would say that Edwards probably has more aggressive tax cuts for the poor and middle class, has more aggressive tax increases for the wealthier people. But on spending - his spending plan seem to be even less than Hillary Clinton's or Barack Obama's.
SEABROOK: Now, yesterday, Hillary Clinton made a proposal that she says will stimulate the economy. Let's listen to her for a moment.
Senator HILLARY CLINTON (Democrat, New York; Democratic Presidential Candidate): I want to get back to where we see millions of new good jobs created in America. I know we can do that. But I don't think we can wait until January 20th of next year. Too many people will be hurt. Too many jobs will be lost. Too many homes will be foreclosed on.
SEABROOK: Adam, what is she proposing?
DAVIDSON: Well, she has a big spending proposal. We're talking about 25 billion that would go to help poor people pay for their energy bills. There's more than $30 billion to help people pay for their mortgages, who might otherwise go into default. We're talking about a huge spending plan.
SEABROOK: So we've talked about Edwards. We talked about Hillary Clinton. What about Barack Obama?
DAVIDSON: Obama has not released his fiscal stimulus package yet. But in the specifics that he has released, when it comes to taxes, when it comes to spending, it's pretty standard stuff. Probably, Obama's unique idea is this idea that senior citizens will pay no taxes at all if they make less than $50,000 a year. Now, that's obviously an idea that's going to be extremely popular among seniors who make less than $50,000. But the people I talked to, the policy wonks told me this is not a fiscally prudent policy. It will be very hard to afford it.
SEABROOK: Adam, let's go now to the Republicans. Here's an ad from former New York Mayor Rudy Giuliani.
(Soundbite of campaign ad)
Mr. RUDY GIULIANI (Former Republican Mayor, New York; Republican Presidential Candidate): Let's have a president that will look at spending and set up systems of accountability where we measure how affective is the spending. We need accountability in the spending of our money, so that people will have confidence in government again.
SEABROOK: Now, Giuliani here is clearly defining himself as the most fiscally responsible candidate. Is he?
DAVIDSON: This is the really interesting battle among the Republicans on economic issues. Giuliani and Thompson and Mitt Romney and McCain are battling for this idea that they are the standard bearer of the Ronald Reagan-fiscally-conservative-small-government vision. When you look at Giuliani's specifics, he's very aggressive on cutting corporate income taxes, on cutting capital gains taxes that - those are obviously taxes that benefit wealthier Americans. He is quite unspecific when it comes to what spending he will cut. He simply says he's going to look through the federal budget and cut everything that shouldn't be there.
Mitt Romney is pretty similar. He wants to lower the corporate tax rate. He also wants to eliminate the tax on capital gains and dividends for taxpayers who make less than $200,000 a year. Not a lot of specifics on the spending he'll cut.
McCain is actually kind of the flipside of this. McCain is very specific on the spending he'll cut. He's the only candidate willing to take on what many see as one of the biggest boondoggles that Congress involves itself in, which is the farm subsidies. But he doesn't get too excited about tax cuts. McCain voted against President Bush's tax cuts, although he's become a convert and now says he wants to extend them past 2010.
I talked to a lot of fiscal conservatives this week, sort of saying who excites you. And the truth is none of these guys are exciting them. They all have real problems. The only guy who has, on the Republican side, who has some radical new ideas is, I would say, Mike Huckabee. His ideas really are out there.
SEABROOK: Let's listen to Huckabee.
Mr. MIKE HUCKABEE (Former Republican Governor, Arkansas; Republican Presidential Candidate): Dr. Martin Luther King gave a magnificent speech in which he spoke of having a dream. Ladies and gentlemen, I, too, have a dream. I have a dream that one day as president of the United States, I would be able to put a going-out-of-business sign on the front door of the Internal Revenue Service.
(Soundbite of cheering crowd)
SEABROOK: He wants to close the IRS. That's pretty radical, huh?
DAVIDSON: Yeah. This is an idea that probably gained most of its popularity through conservative talk radio. There's been a whole bunch of talk radio hosts who have been promoting this idea. They call it a fare tax. Huckabee calls it a fair tax.
SEABROOK: This is the idea of putting a flat sales tax, right?
DAVIDSON: Exactly. Economists would call it a consumption tax; and you get to keep the money you make and you get to earn interest on it tax-free. But as soon as you spend it on anything that's when you pay your tax. You - when you…
SEABROOK: Twenty, 25, 30 percent.
DAVIDSON: Or some economists argue it has to go up to 40 or 50 or 60 percent. And that's the real problem with it. Anytime sales taxes go up, above, say, 10 percent you see a big black market, and that causes all sorts of problems. So Huckabee's idea has not gained a lot of traction among serious policy people I talked to. But you do have to give Huckabee credit. Of the leading candidates, he's the one guy who's come up with something that radically changes the debate.
SEABROOK: NPR's Adam Davidson.
Thanks very much, Adam.
DAVIDSON: Thank you, Andrea.