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McCain has made the statement that he believes the country is in a recession, well sort of. Then he admitted he doesn’t want to quibble over the “definition” of a recession.
Report on it from The Hill:
Sen. John McCain (R-Ariz.) said Monday that he believes the country is in a recession.
“Americans are hurting today,†McCain said at an Associated Press forum in Washington, D.C., adding, “These are very, very tough times in America.â€
While McCain, the presumptive Republican presidential nominee, said he thinks the country is in a recession, he noted that he is more worried about helping people who are facing “enormous challenges,†rather than figuring out what the technical definition of a recession is.
Call me crazy, but I’d like to have presidential candidates know what constitutes a recession and what constitutes an economic downturn.
I will help school McCain in this area, from the all-knowing Investopedia:
A significant decline in activity spread across the economy, lasting longer than a few months. It is visible in industrial production, employment, real income and wholesale-retail trade. The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country’s gross domestic product (GDP).
Recession is a normal (albeit unpleasant) part of the business cycle. A recession generally lasts from six to 18 months.
Interest rates usually fall in recessionary times to stimulate the economy by offering cheap rates at which to borrow money.
Very simple, two consecutive quarters of negative economic growth equates to a recession. Therefore, by definition, McCain is wrong. It doesn’t matter though because politicians like to toss words around. Plus, most voters don’t actually know what constitutes a recession so candidates never get called on it.
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I concur. I would argue however, that the growing issue of peak oil and the political distress caused by it is drawing us into uncharted waters, economically speaking. To simply stop at the general defenition of a recession does not do our current situation justice. The last time the business cycle brought us into uncharted waters was during the great depression. Of course, we now have taken a great deal of measures to combat the causes of the great depression, but how will we combat the issue of peak oil and the dramatic rises in commodity prices that follow?
Josh,
We can combat issue of peak oil in a number of ways.
Increase energy supply:
1) Build nuclear plants. The last plant was licensed in 1978
2) Invest in coal gasification and solar energy
3) Allow offshore drilling
4) Open ANWR
On the other end, you can encourage energy savings through economic incentives.
This is the kind of debate I love to see, and bravo to both of you for being so savvy! Stalin, thank you for pointing out that we need to increase our energy supply, I wholeheartedly agree. With this country sitting on more oil than Saudi Arabia one has to wonder why were not drilling. If we can just distract the “green peacers” long enough to build a few refineries it would take care of our problems for a while, and allow us time to create resources that will be effective such as solar power.
As for John McCain, this only strengthens my argument that he will be an awful president. The man’s lack of leadership skills have been shinning bright lately. One could make the argument (if desperate) that Hillary Clinton maybe do a better job with economic policy then McCain, but I won’t go that far. Clearly he needs to be schooled in macro-economics, maybe Mitt can give him a few lessons in exchange for the VP slot. Either way I think we know who balances the check book in the McCain household.
If Republicans elect John McCain as our next president then our party better not complain that he’s a big flaming liberal for years to come. I just wounder how it had come to this? There were much better candidates than John McCain for sure.
I love conservative Gal!
I acutally took a Micreconomics class in college and know what a recession is! Wish Washington and the rest of the country could take the time to be informed and know the same.
Actually Michelle, it’s macroeconomics that deals with the aggregate economy. Stalin makes some good points, but unfortunately most of them reflect the conservative agenda point-on. Continuing reliance on oil is no solution at all. Opening the Alaska reserves and using coal gasification will only shift the problem of peak oil down the road a few years. While some of these solutions will likely be neccessary as stop-gaps in the coming years, they will not solve our energy woes. Neither will ethanol, for that matter! I’ve been learning of late all I can about hydrogen and the fuel cell, and I have to say I’m quite intrigued. The greatest thing I see about hydrogen is the fact that when burned, it turns right back into water, which in turn becomes the source of new hydrogen…quite the perfect energy source if we can figure it out. I’m actually planning on visiting Iceland in the next few years to see exactly how this system might be set up, as they have quite a developed hydrogen distribution system there. The real problem here, however, is that the electricity that is necessary for hydrogen production is still produced in the U.S.A. using mainly fossil fuel sources. Iceland’s power comes mainly from geothermal energy. California has started a distribution experiment of it’s own, so we’ll have to see how that pans out.
Josh,
My points were not generated from conservative talking points but rather from being a business owner and engineer. The truth is that no matter what course we take regarding alternative fuels we are going to need oil for the next 50 years at a minimum. If we keep squeezing the oil supply and allowing outside forces to control it we will see further increases in oil which translates to a higher cost of living all across the board.
Hydrogen fuel has some merit, but unless the massive amount of electricity used to separete the hydrogen and oxygen atoms is coming from a clean source, there really is no benefit as you said. Since solar is not a viable solution yet, the only way to produce enough clean energy is nuclear. Look at France, they are 80% nuclear.
I very much agree with you on the nuclear power thing. Another article I was reading recently was talking about the reasons behind the lack of nuclear power in the U.S. The article attributed this lack to a law that is on the books banning a certain kind of spent-fuel recycling process. This process was very unsafe in the seventies, but has been perfected over time. This process allows us to re-use spent fuel, nearly eliminating the amount of waste that comes from the fission process. The problem is, however, is that there is an antiquated law (or maybe NRC regulation, can’t remember) on the books banning this type of procedure.
Josh,
I’m not surprised about some antiquated law preventing progress in this country. If the green light were to be given, you would see the oil companies dump billions of dollars into nuclear power to hedge against the oil backlash. If we really wanted to, we could have this country on 100% nuclear power in 5 years.
My perspective is definitely a Conservative talking point, my own! And I would argue Josh that it is crucial to have a sound foundational understanding in Micro-economics, then one can view the relationship that exist between Micro and Macro economics. The main point is John McCain does not have the educational foundation in economics that is absolutely critical when your running for President of the United States during an economic downturn. You would think that serving as a Senator for 20 something years you would have taken a moment to research economic policy and the inner workings of the economy.
He’s a poor excuse for a republican candidate, have you ever noticed that he always has to try and work it into the conversation that he was a Reagan supporter, its too bad he failed to pay attention to Reaganomics. His wife is more qualified to run the economy then he, she does run a multi-billion dollar company.
Josh I totally forgot to pick a bone with you. Why does it make someone a “conservative talking point” when they mention solutions to the problem? Why is it that we shouldn’t drill in ANWR? Are you afraid that the poor caribou will be run out of a certain area? What’s the concern? Or how about offshore drilling, what could possibly be wrong with exploring our own natural resources? 40 miles off the cost of Cuba, Russia and China are drilling for oil. Now doesn’t it make you wonder who’s land and riparian rights come into question. It makes me fighting mad that Russia and China are drilling off the cost of Florida. However, we can’t use our own resources b/c we’re being held hostage by left wing loons who make it nearly impossible to pull the permits needed drill. We are our own worst enemy!!!
CG,
Just watch, as soon as people have to start paying twice as much for everything, there will be a shift in attitudes. Unfortunately, it will kill our economy in the interim. You can already see it happening with food. Food is on the rise. Why is this, we’ll because the farmer has to pay more to fuel his tractors and then the truckers have to pay more to get the crops to market. Most packaging is polymer based, which is derived from oil. Everything that we own had to be transported at some point. I don’t know, we may see a return to local economies. The old Farm to Market roads may get the use they were intended for. Will liberals still be against drilling when they are paying $15.00 for a gallon of milk to feed their baby?
I agree, Stalin, and there’s more to the cycle you outline. The farmer has to pay more to fuel his tractors, true, so he compensates for that by hiring illegal immigrants to work his plantation for a fraction of what he has previously paid to locals, putting unemployed locals on welfare and food stamps that we pay for as taxpayers so the farmer could keep the cost of crops as low as possible. Then the truckers pay more to get the crops to market, and on and on as you stated. And our farmers are going bankrupt every day from continued failed crops every season due to droughts, floods, and unseasonal freezes. There’s a domino effect from bottom to top, no matter what sector you’re discussing. The enormity of all the factors involved in repairing the economy will not happen quickly, probably not even in one president’s term in office. No matter how well schooled you are in economics - micro, macro, or otherwise - this challenge is enormous. Remember the movie “Dave” where the standin for the President calls in his local accountant to balance the budget? Well, this ain’t that.
Babs,
That is one of my favorite movies. The best part is when Dave and his accountant start slashing pointless government programs. Too bad the Republicans didn’t do this while they had the chance
Stalin,
Mine, too. And what they were slashing was pork (the line items snuck into legitimate legislation), and that’s the soapbox McCain has been preaching from for years. His record is plain on the subject. And on his website he promises to not only get rid of pork barrel spending, but he promises to “make their authors famous”. I’m looking forward to it, myself. 13.2 billion dollars in 2007, down from previous years but still ridiculous. I could debate pork barrel spending all day, I have tons of names and figures. And both democratic candidates are on the list.
Nate,
I’d like to have presidential candidates know what constitutes a recession and what constitutes an economic downturn.
Honestly, and I do mean honestly, do you actually believe McCain doesn’t know the difference? This “doesn’t know anything about economics” meme is just ridiculous, and it makes his opponents look like liars or just plain ignorant.
Even just looking at the most superficial things, it would seem that McCain knows more about the economy than Obama or Clinton, just by virtue of his career on the Hill. And that’s saying nothing of his decades of dedication to cutting wasteful spending and bureaucrazy.
I suppose McCain can be faulted for a poor choice of words while being frank–he could have been like any other pol, padding his resume, saying he’s an expert on everything, but he conceded that he’s not as knowledgeable on little details (that might have supplied the answer to the question he was asked) as he’d like, as he is w/r/t foreign policy. Clearly, he was doing the “straight talk” thing–something woefully rare among politicians.
Really, what do Hillary and Obama have in their “resumes” that would indicate any greater grasp of economic issues? What, because Obama worked as a community organizer and saw lots of poor people, he knows better? Is that like his claim that he knows more about foreign policy because he lived and vacationed in foreign countries? (Yay, I’m qualified to be President too, then!) Is Hillary more knowledgeable because her husband was Governor and then President? (Yay, let’s nominate Laura Bush!) Certainly their Senate experiences don’t make them more qualified to talk about the economy than McCain, considering their relative inexperience.
One may not agree with McCain’s economic philosophy, and that’s fine. But to push this silly meme that he knows nothing completely destroys the meme-pusher’s credibility.
Beth,
I’m just singling out McCain because he admitted he didn’t want to figure “out what the technical definition of a recession is.” I just think it’s sloppy to say he thinks we’re in a recession and then digress and say he doesn’t want to figure out what a recession technically is. I’d mention any presidential candidate who said that, including Obama or Clinton. They too have said we’re in a recession, and they too are wrong.
I would just like presidential candidates that don’t mislead people on economic issues, be they Republican or Democrat.
So no, I am not saying Obama or Clinton has better economic policies than McCain, I actually am closer to thinking the opposite. I just want a nominee who knows definitively what a recession is and isn’t going to distort it simply because it’s politically expedient to do so.
Also, I never said he knows nothing on the economy, just that people toss around the “recession” term, including all presidential candidates, and technically they’re wrong.
Sorry, I wasn’t clear–I didn’t actually mean YOU say he doesn’t know anything, I was referring to one of the big memes of the Left. It really grates on my nerves, because it’s absolutely dishonest.
I agree, though–calling it a “recession” is absolutely incorrect. I just don’t think he doesn’t know the difference. And yes, it may have been politically expedient to imply it was, although I personally think such talk ultimately undermines the economy, when it’s done so often as it has been in this election season (esp. by the Democrats).
Actually, accoring to Keynesian analysis, we’ve been in a recession for a couple of months. After April is over, the Monatarist view will also report recession, unless things really, really look up in the next couple of weeks. Employment data, the stock market, the dollar, consumer outlook, business outlook, consumer spending, investment spending, and Federal Reserve reactions also all indicate that we are in a recession. I’d bet you that McCain couldn’t even tell you what ONE of those figures currently sits at, or even IS for that matter. This guy’s been riding on his POW status for his entire political career. While his service is certainly admirable, it doesn’t make him an economist. The fact is that McCain has done NOTHING in his lifetime that points to him being credentialed in anything but war…but then that’s the perfect Republican candidate nowadays, isn’t it?
Josh you make some really good points, I actually agree. The only thing that I don’t agree with in your argument is “The fact is that McCain has done NOTHING in his lifetime that points to him being credentialed in anything but war…but then that’s the perfect Republican candidate nowadays, isn’t it?”. He doesn’t speak for half the republican party. I just wish the story back in 01′ where he inquired about the process of becoming a democrat received more attention. Then 9-11 happened and he saw a way to milk it. The man is one of the weakest republican candidates for president in history. You know where a republican candidate stands on issues when he DOESN’T make a democrats skin crawl.
Conservative Gal, the Republican party seems to be two separate parties nowadays, one made up of fiscal conservatives (I mean no disrespect to these ones, particularly) and one made up of social conservatives. The Republican party was founded on the former, but the latter seems to be the ideal that dominates, and largely personifies, the Republican party today. These “social Republicans” don’t seem to understand, or care, about economic issues. They only seem to care about abortion, gay rights (or rather the eradication them, in this case), school prayer, and killing people who don’t look like them (though they seem to think an awful lot alike). I don’t think that you are part of this group, and I haven’t seen any on this site at all, but they’re out there! Maybe it’s time for the Republican party to “schism”, as it were.
Josh, I actually am both. I’m to the right of Rush and the left of God!
My back ground in education is in Law and Business Economics, soon I will be working on a Law Degree. So there it is, if my education doesn’t scream conservative then I don’t know what does. I’m a very religious person who strongly believes, and my husband Nate agrees (the man who runs this site), that our children (when we have some) will never see the walls of a public school. So I’m the total conservative package. Rooted in social conservatism, and educated in fiscal conservatism. I will tell you that my background in both has made life easier. I might only be in my mid 20’s but I don’t have the chaos in my life that my friends and family have in theirs. Mainly b/c I’m foundationally grounded. I deal all the time with family members who call themselves “republican conservatives” but know nothing about fiscal conservatism. These people also thought that Mike Huckabee would have made a good president. It didn’t matter that he was a liberal spender. But then again I never have tried to cover up the fact that I was a strong Fred Thompson supporter.