The Dismal Questions
By JOSEPH E. STIGLITZ, R. GLENN HUBBARD and MYRON S. SCHOLES
NYT
John McCain and Barack Obama will meet tonight in Nashville for the second presidential debate. As Americans worry about a confusing federal rescue plan, a falling stock market and a financial crisis that is spreading across the globe, the editors of the Op-Ed page asked three economists to suggest the questions they would most like to hear the candidates answer.
1. When the current bailout of Wall Street fails to turn around the economy and reinvigorate credit markets, will you propose another one? How large should it be? Henry Paulson and Ben Bernanke have said what is needed is a restoration of confidence in the economy. But won’t the failure of this bailout destroy confidence, with disastrous consequences — as happened in Indonesia and other East Asian countries when similar bailouts failed 10 years ago?
2. More than a million people have lost their homes in the past two years. A million more are expected to lose their homes in the next 12 months or so. Do you support a more direct program of relief for homeowners? The government pays more of the mortgage costs of rich homeowners, through larger tax deductions, than of poorer homeowners. What would you do to correct this injustice?
3. President Bush pushed tougher bankruptcy laws that were supposed to reduce bankruptcy and lower lending costs. But the new laws made it more difficult for ordinary Americans to discharge their debts, and encouraged reckless lending on the part of lenders, who thought they could more easily force poor borrowers to repay. Would you make any changes in the bankruptcy laws? Currently, it is more difficult to restructure a mortgage on a primary residence than other debts. Do you support bankruptcy reforms that would make it easier for people to stay in their homes?
(Continued here.)
NYT
John McCain and Barack Obama will meet tonight in Nashville for the second presidential debate. As Americans worry about a confusing federal rescue plan, a falling stock market and a financial crisis that is spreading across the globe, the editors of the Op-Ed page asked three economists to suggest the questions they would most like to hear the candidates answer.
1. When the current bailout of Wall Street fails to turn around the economy and reinvigorate credit markets, will you propose another one? How large should it be? Henry Paulson and Ben Bernanke have said what is needed is a restoration of confidence in the economy. But won’t the failure of this bailout destroy confidence, with disastrous consequences — as happened in Indonesia and other East Asian countries when similar bailouts failed 10 years ago?
2. More than a million people have lost their homes in the past two years. A million more are expected to lose their homes in the next 12 months or so. Do you support a more direct program of relief for homeowners? The government pays more of the mortgage costs of rich homeowners, through larger tax deductions, than of poorer homeowners. What would you do to correct this injustice?
3. President Bush pushed tougher bankruptcy laws that were supposed to reduce bankruptcy and lower lending costs. But the new laws made it more difficult for ordinary Americans to discharge their debts, and encouraged reckless lending on the part of lenders, who thought they could more easily force poor borrowers to repay. Would you make any changes in the bankruptcy laws? Currently, it is more difficult to restructure a mortgage on a primary residence than other debts. Do you support bankruptcy reforms that would make it easier for people to stay in their homes?
(Continued here.)
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