11.01.2008 10:00 Real Estate
At a debate on Thursday of Republican presidential contenders, the first question posed was on the "R" word.
New Hampshire primary winner John McCain expects a recession will be avoided; Mitt Romney thinks one could happen; Mike Huckabee, winner in last week's Iowa caucuses, says he hopes it won't but sees factors that could trigger one; Rudy Giuliani says one is possible, and Fred Thompson says "nobody knows."
Long-shot candidate Ron Paul of Texas says recession is inevitable for an economy with a housing market in a "depression."
But nearly all the candidates agreed on the need to cut spending and preserve the 2001 and 2003 tax cuts enacted by President George W. Bush.
Fox News' Chris Wallace opened the debate by noting "growing concerns" about a recession, echoing a chorus of recent assessments from economists that the U.S. economy is on the brink of, or perhaps already in, such a downturn.
A recession is commonly defined as two consecutive quarters of back-to-back negative readings on gross domestic product, the broadest measure of the total output of goods and services within U.S. borders.
McCain, a senator from Arizona, said the U.S. economy had just hit a "rough patch."
"I don't believe we're headed into a recession," he said.
"I believe the fundamentals of this economy are strong, and I believe they will remain strong," McCain said. But he said some jobs that have been lost won't be coming back.
"Let's have a little straight talk. There are some jobs that aren't coming back to Michigan. There are some jobs that won't come back here to South Carolina. But we're going to take care of them," he said.
Former Massachusetts Gov. Romney said the world's largest economy could avoid a recession by halting a crisis in the housing market, cutting taxes, investing in energy independence and spending more on science and technology.
"Could we be headed for a recession? Absolutely. Do we have to be headed for a recession? Absolutely not," said the multimillionaire former venture capitalist, whose campaign is struggling after losses in Iowa and New Hampshire.
Former Arkansas Gov. Mike Huckabee, whose insurgent campaign rallied evangelical Christians to win in Iowa, said high oil prices were rippling through the economy.
"I hope we're not headed toward recession, but if we are, there's four factors that will be the reason," he said.
Those factors are high oil prices, a surge in foreclosures, the cost of health-care and the price of education, he said.
Former TennesseeSen. Fred Thompson hedged his bets.
"We still have a bunch of two-handed economists in Washington," he said. "On the one hand, we may go into recession, and, on the other hand, we may not. Nobody knows."
He said the country should count on the U.S. Federal Reserve, which is widely expected to cut interest rates this month "doing the right thing."
Former New York Mayor Rudy Giuliani suggested cutting spending and lowering the corporate tax rate from 35 percent to 25 percent as one way to reverse a "possible" recession.
"You have to be willing to impose cutbacks on each one of the federal agencies, the civilian agencies," he said.
In Las Vegas, Democratic presidential contender New YorkSen. Hillary Clinton said she would lay out her plans on Friday for jump-starting the U.S. economy, repeating that she believed it was heading into a recession.
(Editing by Patricia Zengerle)
