Do what it takes to avoid a deep recession, then deal with the deficit pileup: the national debt.
Since the Wall Street crisis hit, voters – and debate moderators – have demanded an update of the presidential candidates' economic plans. This week, they got the latest version. But a persistent question accompanies that demand: How will Barack Obama and John McCain square their plans with the ballooning federal deficit?
In the debate over how to rein in red-ink spending, a distinction must be made between the short and long term. At the moment, the US risks a deep recession. Boosting the economy has to take priority over deficit reduction, especially because the deficit remains historically low as a percentage of the economy.
The US Treasury is moving ahead with a $250 billion injection of capital into the banking system to unlock borrowing. Both candidates wisely endorse this first dip into the Treasury's $700 billion rescue pot. But that still leaves the task of stimulating investment, job creation, and consumer spending, and that's where the candidates' plans come in.
A speedy, but temporary, push is needed – and one with heft. Better too much of an effort, than too little or one that is drawn out, as America learned in the Depression.
In his first term, Franklin D. Roosevelt began major job-creation programs, but they took time to develop. It was the US entry into World War II in 1941 and the economy's massive gear-up that ended the Depression, and quickly.