Home Delivery

Bush tells New York economists he's optimistic

BY KEIKO MORRIS | keiko.morris@newsday.com

9:53 PM EDT, March 14, 2008

Article tools

E-mail

Share
- Digg
- Del.icio.us
- Facebook
- Fark
- Google
- Newsvine
- Reddit
- Yahoo

President George W. Bush came to Manhattan Friday and began ticking off a list of the country's most recent difficult moments. There was a recession in 2001 and the Sept. 11 attacks. There were corporate scandals, the start of wars that are still continuing on two fronts and natural disasters that devastated some regions of the country. And then there is the state of the economy, which he described as "going through a tough time," a "slowdown."

His point, however, is that the sun will come out tomorrow.

"The interesting thing, every time, this economy has bounced back better and stronger than before," said Bush, who spoke at an Economic Club of New York luncheon at the Hilton New York. "So I'm coming to you as an optimistic fellow. I've seen what happens when America deals with difficulty. I believe that we're a resilient economy."

But economists, many of whom say the recession is already here, questioned whether it was appropriate to compare the present economic condition and previous recessions and whether Bush's stimulus package and Federal Reserve actions are enough.

"I don't think you can draw an analogy between what's happening in the economy today and what happened in 2001," said Pearl Kamer, chief economist at the Long Island Association. Kamer, who was not at the luncheon, said "the causes of today's crisis -- namely falling home prices and tight credit markets -- are much more serious than the causes of the 2001 recession. That's why analysts, including myself, fear that the current recession can be longer and deeper than most post-war recessions."

In his speech, Bush cautioned against the urge of government officials to "over correct," while praising the various strategies the government has used to generate growth and ease the pains of the subprime mortgage crisis.

He said the Fed has cut interest rates several times and has a plan to add liquidity to ease the stress of credit markets. He said his administration worked with Congress to provide a temporary package of incentives for businesses and rebates for more than 130 million households. And he mentioned the Federal Housing Administration's program that has helped 120,000 families refinance about $17 billion of mortgages.

But economists like Kamer wondered whether the Fed is equipped to deal with such a complex and widespread crisis. "The truth of the matter is, despite all the Fed has done, we still have parts of the credit market frozen," Kamer said.

The federal government can do more to help the economy, said Martin Melkonian, adjunct associate professor of economics at Hofstra University. Melkonian, who also was not at the luncheon, suggested extending unemployment benefits and infusing money into distressed state and local governments to prevent job loss and higher taxes. The trick, he said, is to raise demand without generating inflation. And the government can ease inflation by cutting spending on the war and oil imports.

Get breaking news | Most popular stories | Dining and Travel deals all via e-mail!

Would you recommend this?

Rate it: