[Editor's note: Glorified timeline with head shots and key issues and economic conditions facing the past three democratic presidents near the beginning of their terms, and the conditions Sen. Obama would face if elected. Republished from the Wall Street Journal. View full size graphic.]
Stocks and Housing Falter as Democrats’ Convention Opens
By BOB DAVIS and T.W. FARNAM
August 26, 2008; Page A1
Democrats convened in Denver on Monday with the economy’s woes muscling to the top of political concerns, as reflected in further drops in stocks and housing prices.
The Dow Jones Industrial Average tumbled 241.81 points, or 2.1%, to 11386.25, amid continuing worry over the economic and credit problems. Inventories of unsold homes rose to a record, while prices continued to slip, threatening to delay the housing market’s recovery.
Sen. Barack Obama, whom the party will nominate for president this week, addressed one of the key issues, the parlous state of the government-sponsored buyers of mortgages. “I don’t think we can allow Fannie Mae and Freddie Mac to collapse,” he said at a town-hall meeting in Davenport, Iowa, adding that their shareholders “shouldn’t be protected.”
Against this backdrop, Sen. Obama is proposing to use the government to remake economic policies in a way that hasn’t been seen in Washington in decades.
The last two Democratic presidents, Jimmy Carter and Bill Clinton, were hamstrung by rising deficits, feuds with Democrats in Congress and antigovernment sentiment in Washington. Sen. Obama’s advisers argue that he would be largely free from those constraints, easing the way for him to put in place big government programs, tax increases on the wealthy and trade restraints.
An Obama victory would be nearly certain to usher in a larger Democratic majority, which could give his proposals smoother sailing through Congress. If the economy is faltering if and when he takes office — as most economists and policy experts predict it will be — Mr. Obama would push for a stimulus plan with a price tag of $115 billion, his aides say. The plan would include $1,000 rebates for moderate-income and middle-class families, aid to state and local governments and heavy spending on roads, ports and levees and other infrastructure to create jobs.
Sen. Obama, in campaign appearances and discussions with staff, has said that he would start his term in office with three big economic priorities, apart from a possible stimulus plan. One would be a government health-care plan to cover millions without insurance. Another would be a system of tradable pollution permits to reduce emissions and bankroll alternative-energy projects. He’d also push the first increases in income-tax rates since 1993 and in capital-gains taxes since 1986.
In total, his top priorities would cost hundreds of billions of dollars a year, and some of them might require a stiff increase in regulation.
Rice University presidential historian Douglas Brinkley compares Sen. Obama’s approach on economic issues to the last Democrat to occupy the White House before Mr. Carter: Lyndon Johnson. But, he says, “it would be a Great Society with a small ‘g’ and a small ‘s’” because Sen. Obama isn’t planning anything as sweeping as the creation of Medicare, Medicaid and antipoverty agencies.
No matter what he plans, he might confront circumstances that divert him from his agenda, whether foreign threats from Iraq, Iran or Russia or a recession. Any such contingencies could consume his attention and divert many billions of dollars he would rather use otherwise.
Still, many presidents have pushed through their priorities despite major setbacks. President George W. Bush drove through two rounds of tax cuts while pursuing an unanticipated global war on terror. Ronald Reagan won tax cuts and deregulation despite years of Soviet challenges.