Republican vice presidential candidate and Alaska Gov. Sarah Palin said Wednesday the United States could be headed toward another Great Depression that would drastically affect the country, especially younger generations.
As talks about a proposed $700 billion government bailout of the financial system heated up, politicians and economists stopped short of labeling the economy with such an apocalyptic term — but they have varying views on how to revive the economy.
Paul Menchik, an MSU economics professor, said the country is in a recession, but not near a depression. He said politicians and analysts today are better equipped to deal with financial crises and have more information available to them than in the 1920s.
Menchik said the Federal Reserve and U.S. Treasury’s actions during the past two weeks should be applauded.
“The fact that they’re proactive to try to head off a major collapse is a good sign,” he said.
But U.S. Sen. Debbie Stabenow, D-Mich., said she doesn’t see much of a difference between the Bush administration and Herbert Hoover’s tenure as president leading up to and during the Great Depression.
Rep. Jack Hoogendyk, R-Kalamazoo, who is challenging Sen. Carl Levin, D-Mich., for a senate seat this year, said tax policies and bigger government in Michigan has led to the nation’s highest unemployment rate, 8.9 percent, about 50 percent higher than the national average.
“It’s just interesting because what we do is increase the burden of taxes and regulation and they lose jobs and then we throw them the bone of unemployment insurance,” Hoogendyk said. “People want a job, not an unemployment check.”
Stabenow has advocated extending unemployment benefits, her efforts paying off in a 13-week extension of such benefits in July. Still, she said another 13-week extension is necessary. And in times of financial crisis, she said the government needs to provide for its citizens more — much like during the Great Depression.
“(President Franklin Roosevelt) put into place certain protections for American people and tools that could be used to help,” she said. “The challenge right now though is the Republican philosophy of deregulation and no accountability has rolled back some of those protections.”
Stabenow said the growing income gap between upper and lower classes and the evaporation of the middle class are products of irresponsible policy. She said a more progressive income tax to help redistribute wealth would expedite recovery.
Hoogendyk, though, said the middle class is only shrinking because it is joining the upper class. He points to increases in average income as proof of this. He said raising taxes would impose a $2,000 financial burden on the average Michigan family.
Whatever the proper course, Stabenow said November’s election will be the final assessment.
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