Obama: tax cuts, stimulus needed
Posted: Friday, September 19, 2008 1:45 PM by Domenico Montanaro
From NBC/NJ’s Athena Jones
CORAL GABLES, Fla. -- Tax cuts for the middle class are more important than ever in the face of the financial crisis on Wall Street, Obama told reporters during a brief press conference Friday morning.
Video: Presidential candidate Barack Obama calls for taxpayers to share in the upside, not just the downside, of the government bailout of struggling financial firms.
“There is a relationship between economic stimulus that I think needs to take place right now and long term-tax cuts for the middle class,” he said. “The more that we’ve got broad-based prosperity and families have higher wages and incomes -- the better off the economy’s gonna be as a whole, and that’s especially true at a time when we’ve got recessionary tendencies. So I think now more than ever, we’ve gotta have the kind of broad-based middle class tax cut that I talked about for 95% of working families.”
Flanked by seven of his economic advisers, the senator read a statement in support of efforts by the Federal Reserve, the Treasury Department and Congress to find a bipartisan solution to the financial crisis, that largely echoed the one his campaign put out early this morning.
That plan would likely involve a government purchase of bad mortgages from banks and other institutions and would cost billions of dollars in taxpayer money, potentially making it difficult for either candidate to deliver on promises to cut taxes and on various other programs and policy proposals. Congress is aiming to complete the legislation to allow the rescue by the end of next week.
Obama said a properly structured plan to rescue the financial system would not encourage banks and financial institutions to gamble on bad loans in the future, reiterated the need for an updated market regulations and repeated his call for McCain and both parties in Congress to support an economic stimulus to help struggling families.
Such a plan would “help folks cope with rising gas and food prices, spark job creation through repair of our schools and roads, help states and cities avoid painful budget cuts and tax increases, help homeowners stay in their homes, and provide retooling assistance for America’s auto industry”, Obama said.
The senator has said the economic crisis was a time not for fear or panic but for leadership and argued today that he was not sitting on the sidelines by not offering a more detailed plan for how he would handle the problems facing the economy and Wall Street.
“In my conversations with Secretary Paulson, Bernanke, as well as my advisors, what is absolutely clear is that you don't put something like that together on the come. You don't do it in a day,” he said. “We've got to do it in an intelligent, systematic thoughtful fashion and you know I'm much less interested at this point in scoring political points, than I am in making sure that we have a structure in place that is sound and that is actually going to work.”
The markets will stabilize once a plan is put in place, Obama said, saying concerns among lenders that routine, short-term loans would not be repaid had “locked up” the system.
“Everybody is hesitant about making what used to be routine loans and the job then of the Treasury and the Federal Reserve is to break through that psychology and let people know -- you know -- if you make this loan today, then tomorrow folks are going to be able to pay it back and to bring this self fulfilling prophecy that has griped the market at this point,” he said. “It’s not just a problem of underlying assets and values but it’s also the market psychology.”
The press conference followed Obama’s meeting with top economic advisors and his running mate Biden, who participate d by phone.
The meeting participants included former Treasury Secretary Robert Rubin; Gene Sperling, former National Economic Advisor for Pres. Bill Clinton; former Treasury Secretary Lawrence Summers; Laura Tyson, the former Chairman of the Council of Economic Advisors and former Fed Chair Paul Volcker; Berkshire Hathaway Chairman and CEO Warren Buffett; former Commerce Secretary William Daley; former Treasury Secretary Paul O’Neill; and Joseph Stiglitz, former chairman of the Council of Economic Advisers.
