Republican South Carolina debate: on Budget & Economy

Fred Thompson: Consider stimulus package targeted to low-income people

A: Unemployment is up to five percent. That used to be considered full employment, but we’re going in the wrong direction with regard to that. It’s not just the subprime market now. It’s poured over into the general housing market. Credit is scarce. It’s affected the consumer credit market in general. If you’re talking about automobile loans or you’re talking about credit card thieves or anything like that, the money is getting tighter and tighter. We still have a bunch of two-handed economists in Washington. On the one hand, we may go into recession, and, on the other hand, we may not. Nobody knows. We had a stimulus package back in ‘01. It’s targeted toward the lower income people. I think that has to be considered somewhere along the line if the economy calls for it, not today, but perhaps a little later on.

John McCain: To avoid recession, stop out-of-control spending

A: The first thing we need to do is stop the out-of-control spending. Out-of-control spending is what caused the interest rates to rise. It causes people to be less able to afford to own their own homes. We need to stop the spending And the way we can get our budget under control is to have strong, fundamental fiscal underpinnings. The second thing that we need to do, of course, is stop spending $400 billion a year overseas to oil-producing countries that come right out of our economy immediately. Some of that money goes, unfortunately, to fund terrorist organizations. We’ve got to develop technologies to reduce this dependency on foreign oil, and eventually eliminate it, and stop this outflow of some $400 billion a year.

Mike Huckabee: Fuel prices & subprime mortgages possibly cause recession

1. Fuel prices: Everything costs more because it took more money to transport it. With our dependency upon foreign oil, if we don’t begin to revers that and become energy independent, we well could continue this enslavement to foreign oil, and ultimately wreck our economy.
2. Subprime mortgages: Two million people today in America risk losing their homes. Now, there’s culpability on both lender, as well as a lot of borrowers who bought more home than they could.
3. Health care costs
4. Education costs. All those factors together.

Mitt Romney: To avoid recession, deal with housing crisis & gas prices

1. We’re going to have to make sure that we stop the housing crisis.
2. We’re going to have to reduce taxes on middle-income Americans immediately.
3. We’re going to have to deal with gas prices. We’re going to have to finally become energy independent and make the investments in new technology that will allow us to get there.
4. And, finally, R&D, investments in science and technology. That’s an area where America can continue to lead the world.

Ron Paul: Lower interest rates CAUSED housing bubble & can’t solve it

And what is being offered? Lower interest rates. Well, lower interest rates is the problem. Artificially low interest rates is the artificial stimulus which causes the bubble, which allows the inevitable recession to come.

We need to deal with monetary policy and not pretend that artificial stimulus by more spending is going to help.

Ron Paul: The longer the Fed delays recession, the worse the recession

The recession has been predictable. We just don’t know exactly when it will come. If you do the wrong thing, it’s going to last for a long time. The boom period comes when they just pour out easy credit and it teaches people to do the wrong things. There’s a lot of malinvestment, debt that goes in the wrong direction, consumers who do the wrong things, and businessmen who do the wrong thing.

So we have to attack this and understand the importance of Austrian theory of the business cycle. If you don’t, we’re going to continue to do this and the longer you delay the recession, the worse the recession is, and we’ve delayed a serious recession for a long time.