Economic Woes Worry Nation's Mayors

Jan. 23, 2008 — -- With the nation's economy teetering on the brink of a possible recession, the nation's mayors and former Treasury Secretary Robert Rubin called on policymakers Wednesday to take action.

"We are at the present time experiencing significant risk with respect to the shorter-term economic conditions," Rubin said, adding that "the risk of more serious difficulty is sufficient so that policymakers should be highly proactive in working to reduce that risk."

Speaking at the Conference of Mayors in Washington, D.C., Rubin said he hoped that the Bush administration and congressional leaders can come to an agreement on an economic stimulus package to stave off a possible recession.

"I agree with the broadly held view that we should now put in place a substantial stimulus, involving temporary spending, temporary tax rebates well-targeted to maximize impact on a timely basis," said Rubin, a Clinton administration Treasury chief from 1995-1999.

Rubin applauded the Federal Reserve Board's moves in recent weeks, such as Tuesday's slashing of a key interest rate by three-quarters of a percentage point.

Rubin, attempting to answer what he called "the one major question unresolved," believes any stimulus package should include tax rebates for individuals who don't pay income taxes.

"These workers will spend the largest amount of what they receive," he said.

Rubin, currently the chairman of the executive committee at Citigroup, also called on Congress to take actions such as "increasing and broadening use of the Federal Housing Authority, temporarily increasing jumbo loan limits with respect to Freddie Mac and Fannie Mae, and putting in place various measures to catalyze renegotiations with respect to subprime and other mortgages."

Many mayors at the conference shared Rubin's interest in seeing a stimulus package put into place as soon as possible.

"People are in a panic," said Mayor Douglas Palmer of Trenton, N.J., the president of the Conference of Mayors. "But I believe the solution resides within the leadership: the mayors, the president, the Congress, and the mortgage bankers and our other economists. We need money on the streets right away."