Editor’s Note: Senator Barack Obama made history this week after being elected America’s next president. Jeffrey Kling considers what efforts Obama will take to save the ailing US economy and unstable financial industry on CNBC. Partial transcript below. Follow link at bottom to watch full interview.
Onto policy now, and having made history this week, Barack Obama must now get down to fundamental business of policy making. The senator was elected 44th president of the United States sharing a momentous night where he pinched almost all battleground states including Florida and Ohio, but the president elect inherits an economy on the brink of recession and a financial system in dire need of some stability.
For even as we celebrate tonight we know the challenges that tomorrow will bring are the greatest of our lifetime. Two wars a planet in peril the worst financial crisis in a century.
So is Obama a boon doom sorry to disappoint and can a president elect guide the economy through what is expected by many to be a deep and protracted recession. Jeffrey Kling is deputy director of Economic Studies at the Brookings Institution. He joins us now. Jeffrey thank you very much for coming to talk to us what do think his priority is going to be? Is it going to be big all singing New Deal style fiscal package?
Well I think the first thing that president elect will need to do is work with Congress on a series of stimulus packages and there will be probably one that will have to do with unemployment insurance food stamps and aid to the states and they will come back around and see what else might be needed after that.
Some of the data we have seen this week of course well as it has been for sometime been pretty negative some people have talked in the past about how the western economies don’t have these big super cycles they use to have the great moderation I think it was referred to as um, do you think we’ve the back of that now headed for another big downturn. Just how deep will the trough be?
Well I think anytime you’ve seen a big jump up in the unemployment rate and we’ve got an even stronger signal of that it would today there has been a recession that has followed, and so I think there is no question we are going into a downturn of that type, and how deep it’s going to be depends a lot on how government is going to respond. If we are successful and able having monetary policy that promotes lending and if we have a new stimulus package then it doesn’t necessarily have to be so deep.