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."

Nation's Mayors

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."

"We need to jump-start and infuse our economy right now," he said. "It's my hope that while everyone has their own stimulus package that there really is the urgency on behalf of the White House and Congress to put something together right now and not bog it down."

Palmer said that he believes that the country is "definitely" heading toward a recession.

"I think our mortgage crisis, our trade deficit, the deficit that we have, the slowdown in job growth, we're definitely heading that way," he said.

Palmer pleaded with the Bush administration and Congress to come up with a stimulus package fast.

"Get it done right now. Our citizens need the help. Our country needs the help. Right now!"

Mayor Frank Ortis of Pembroke Pines, Fla., describing how he sees foreclosure notices arriving "in droves" at his city hall, said that his town needed a stimulus "a year ago."

"It needs to be done now," said Ortis. "It can't be long-term. We need a long-term solution, but we need help now. People need help now. And so I hope it happens right away."

He wants leaders in the White House and on Capitol Hill to overcome their differences for the good of the American people.

"I'm saying put aside your partisanship," he said. "We represent the same people. People need help. Put aside your partisanship and come up with a plan that all Americans deserve and can use immediately."

Even mayors of cities with economies far better off than Trenton or Pembroke Pines acknowledged that there was widespread concern among their residents about the economy's struggles.

"Whether it's Seattle, where we haven't felt real downturn yet, or the Midwest, where they have felt it, or the Northeast, we all are a little jittery," said Seattle Mayor Gregory Nickels. "We're all concerned."

Future

In his speech, Rubin chose not to focus on a short-term stimulus package, but instead on America's long-term economic future.

"I think the longer-run is where an enormous amount of our focus should be," he said, noting that "the global economy and the global competitive environment are undergoing a transformation of truly historic proportions."

Rubin cautioned that "very few investors or policymakers have truly internalized how profound this transformation and its ramifications are likely to be."

While he noted that "our country has a history of resilience in rising to meet difficult challenges," Rubin said that "today's transforming global economy creates a powerful imperative that our political system once again rise to meet difficult challenges."