U.S. Not Out Of The Woods Yet, Says Economist

By Benny Martinez - University of New Mexico/Talk Radio News Service

In his State of the Union address on Wednesday, President Barack Obama said, “The worst of the storm has passed.” But according to Chief Economist of Moody’s Corporation Mark Zandi, the country remains at high risk of revisiting a recessionary period.

Evidence of a 5.7 percent increase in the nation’s Gross Domestic Product (GDP) proves that the “Great Recession” is over, Zandi said on Friday. He applauded and credited policy initiatives produced by Federal Reserve Chariman Ben Bernanke.

According to Zandi, the President’s 2009 stimulus package pumped billions of dollars into the economy and is partly responsible for its recent growth. It is evident now, however, that the stimulus package will eventually become an opposing force against efforts to expand the efficiency of the economy, Zandi said.

Although signs of economic expansion are evident, Zandi admitted that the country is still susceptible to falling back into a recession.

“The recovery is fragile,” Zandi said. “I don’t think that the coast is clear, I don’t think there is any guarantee that the recovery is going to evolve into a self-sustaining economic expansion...there are high odds [indicating] that it won’t.”

Zandi blamed the high-risk situation on the nation's ten percent unemployment rate for the U.S., saying that without net job creation, the country will not have the income growth to support consumer spending. He said that small business expansion will serve as the backbone for this effort and applauded the President for initiating tax breaks for those businesses.

New polls gage likely outcome of Election 2008

George Washington University held a conference call to release the findings of a new Battleground Poll that tested national attitudes on race, the economy, and the Iraq War in relation to the candidates involved in the 2008 presidential election.

Brian Nienaber, vice president of the Republican polling firm the Tarrance Group, said that with three out of four voters disapproving of the direction the country is headed, “you’d certainly be well-positioned to think that the Republican Party and its presidential nominee would be in a nearly hopeless position, even at this early stage in the electoral process.” He went on to enumerate what he believed to be presumed presidential nominee Sen. John McCain’s (R-Ariz.) strengths on issues like Iraq and national security, saying that he has his own “brand of change” to sell that will distance him from anti-incumbent sentiment without “repudiating” the Republican Party. Citing statistics from the poll analysis that support this, Nienaber said that 40 percent of Americans still believe the U.S. should maintain a presence in Iraq until military officials say it is safe to leave. He said that 56 percent of voters still like President Bush as a person, even if they do not approve of his Administration. Nienaber also cited the Democratic Party’s weaknesses, saying that 1 in 5 supporters of each major nominee did not plan to vote for the other if their candidate was not elected. Nienaber said that “as bad as things are right now,” the Republican Party can still look forward to “successes” in November.

Celinda Lake, president of the Democratic polling firm Lake Research Partners, said “there’s no question that there are enormous challenges to the Republican brand,” but that McCain is a “formidable candidate” that Democrats should not underestimate. However, she said that Democratic presidential candidate Sen. Barack Obama (D-Ill.) is “overwhelmingly” winning over independent voters compared to McCain. Lake said that 87 percent of Democratic voters say that the Iraq war was not worth the cost, while 75 percent of Republicans still think it was. Lake also said that Republicans in Congress have even lower approval ratings than Bush, emphasizing the strength of voters motivated by a desire for a change of the party in power. While she said that the general presidential election “bodes well for the Obama ticket,” Lake maintained that “it’s not over until the fall.” She also said she thinks Obama can “bring home” Hillary supporters to the Democratic Party if he is the nominee.

Senate urges pressure on Saudi Arabia to increase oil production

Five senators held a press conference today immediately following a vote on a Democratic proposal to “suspend filling the nearly full Strategic Petroleum Reserve (SPR) in order to increase supply and lower energy prices,” the official release said. Sen. Charles Schumer (D-NY) said that Saudi Arabia currently produces nearly two million barrels of oil per day below capacity, and said that prices would likely lower by 50 cents per gallon in the next month or two if they increased production by just one million barrels per day. Schumer said that himself and the other senators wanted to present President Bush with a “motion of disapproval” of the Saudi arms deal, and urge him to put pressure on the Saudis to increase productivity and lower prices as he leaves for his trip to the Middle East today. “We are saying to the Saudis that ‘if you don’t help us, why should we be helping you?’” Schumer said. “You need our arms, but we need you to cooperate and not strangle American consumers.”

Sen. Bernard Sanders (D-VT) said that OPEC functions as a cartel, and that it is time for Pres. Bush to say to OPEC that “we are going to challenge their very existence,” so they can no longer “limit production and artificially raise prices.” Sen. Bob Casey (D-PA) said that Bush “needs to demonstrate leadership,” and while he is “talking to the Saudis about oil production as he should, he should have done it long ago.”

Sen. Amy Klobuchar (D-MN) said that she is “pleased” that the Senate was able to pass the amendment today, but she “would rather see a comprehensive package.” She added, “but if we’re going to have to do it one scrap at a time, that’s how we’ll do it.”

Senators urge passage of Colombia Free Trade Agreement

Today the Brookings Institution held a discussion on “The Economic and National Security Implications of the U.S.-Colombia Free Trade Agreement,” featuring addresses by Senators Chuck Grassley (R-Iowa) and Kit Bond (R-Mo.). Both senators advocated passage of the agreement, with Grassley emphasizing that there was “no downside.” He supported his claim by stating that 39 of the top 50 U.S. newspapers have published editorials in favor of the agreement, while the other 11 have not expressed opinions and none have said that Congress’s refusal to vote on the issue and put it in “cold storage” was favorable.

Grassley said that with U.S. exports accounting for 40 percent of economic growth last year, the nation should do everything in its power to increase exports--especially in the face of a declining economy. Bond displayed a chart that demonstrated that the U.S. pays 5 to 35 percent in duties on all exports to Colombia, while Colombia pays zero to 4 percent on its exports to the U.S. If the agreement were passed, Bond said, the U.S. would no longer pay any tariffs on items like automobiles, furniture, fuel and coal, cotton, metal products, and computer products.

The senators addressed concerns about violence in Colombia, especially towards union members, that some opponents of the agreement have cited as a reason to delay its passage. Grassley said that President Uribe has made “massive strides” towards decreasing violence, and Bond said that murders have decreased by 40 percent from 2001 to 2007, and 80 percent among union members. Grassley said that there is “no reason” that striking down the agreement would reduce violence, and that it might do the opposite by creating more job opportunities.

When asked about the possibility of waiting for a broader free trade agreement negotiated by the World Trade Organization, Bond said that “ultimately we’d love to see the WTO function,” but the current bilateral agreement is “the best we’ve got.” Grassley added, “if you’re for free trade, you take it wherever you can get it.”