As the stock market tumbled toward a recession yesterday, the Federal Reserve slashed the Fed funds rate three-quarters of a point to 5% in an effort to bring comsumers back into the market place. The Fed funds rate is the rate at which banks lend one another money each night, and it also helps determine all other interest rates. (For more on how the Fed manages the Fed funds target, see this Explainer.) (thanks to Michelle Tsai of Slate.com).
If a recession is where we’re headed, as many pundits and economists believe, who benefits politically. On Sunday’s “The Chris Matthews Show,” Kathleen Parker of The Washington Post Writers Group said,
Romney may be helped by this because he is–he talked economics in Michigan, and it worked for him. That was the message. And he is the one candidate who can really talk about business with authority. So I’m not sure it’s a necessarily–necessarily going to work for the Democrats.
Howard Fineman of Newsweek disagreed,
If there’s a recession, I think the Democrats will win.
It’s hard not to see a weak economy benefitting the Democrats. In fact, you’ve seen all three candidates on the Democratic side re-calibrate their messages to focus on the economy and away from the war.
President Bush and leaders on Capitol Hill quickly came together to put a $150 billion stimlulus package on the table. Len Burman of the Urban-Brookings Tax Policy Center has an op-ed in today’s New York Times on the issues. He advocates for a repeal of the permanent Bush tax cuts.
This is not only a sensitive national and international issue, but a political one as well. Bill Clinton ran against the George H.W. Bush economy in 1992 and won. Is a similar scenario setting up for the Democrats in 2008?
