ROBERT SIEGEL, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
Monday, it was Hillary Clinton; Tuesday, John McCain; and today, Barack Obama took his turn addressing the housing and financial crisis. Among other things, Obama proposed $30 billion in new economic stimulus, and greater oversight of financial markets. All week, helping homeowners and fixing the economy have been the dominant issues in the presidential campaign.
Senator BARACK OBAMA (Democrat, Illinois; Presidential Candidate): As president, I will be committed to putting the American dream on a firmer footing.
Senator HILLARY CLINTON (Democrat, New York; Presidential Candidate): I will start by facing our economic situation as it is, not as we wish it would be.
Senator JOHN McCAIN (Republican, Arizona; Presidential Candidate): It's not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers.
SIEGEL: All the talk about the housing and financial troubles gives us the opportunity to lay out the candidates' positions, and get a sense of how they think about the problems and potential solutions to those problems.
And to help us do that, NPR economics correspondent Adam Davidson is with me, and he's gone over the three candidates' positions.
Adam, obviously, there's a lot less difference between the Obama and Clinton positions than there is between the two Democrats and John McCain. But I want you to start off by telling us how they diagnose the current crisis. Whom do they blame for the situation we're now in?
ADAM DAVIDSON: Let's start with John McCain. He doesn't really blame any person. He says this is simply a market event, a bubble.
Sen. McCAIN: A bubble occurs when prices are driven up too quickly, speculators move into markets, and these players begin to suspend the normal rules of risk, and assume that prices can only move up but never down.
DAVIDSON: So he's saying investors went nuts. Now, they're learning their lesson - problem solved - more or less. There's a market problem, a market solution - the government doesn't need to get involved.
SIEGEL: Kind of sort of stuff happens is the analysis there in the market. What about what the Democrats say?
DAVIDSON: Senator Clinton really does have one villain here.
Sen. CLINTON: When people lose confidence in the economy and our president's ability to manage it, problems becomes crises, and crises lead to more crises.
DAVIDSON: It's a crisis of presidential leadership. Obvious solution? Get a better president. And she, of course, said she would be that better president.
SIEGEL: And today, when Senator Obama spoke, how did he analyze the blame? Where did he affix it?
DAVIDSON: He went all the way back to the very founding of the United States, to our first Treasury Secretary Alexander Hamilton, who believed in free and open markets.
Sen. OBAMA: Hamilton met fierce opposition from Thomas Jefferson, who worried that this brand of capitalism would favor the interests of the few over the many.
DAVIDSON: I found it sort of crazy. They - you've got this in the middle of this heated campaign, a long discourse on the history of U.S. financial policy. But that's exactly what Obama did this morning. He said that throughout U.S. history, there's been a tension between free and open markets and government regulation, and sometimes it swings too far one way, sometimes the other, and that right now, we've swung too far away from regulation and we need to revise our regulation. And that is the problem. He doesn't place the blame on any one person.
SIEGEL: Let's move on from dueling diagnoses to different remedies that have been proposed.
DAVIDSON: Obama and Clinton are very similar, as you said, in their response to the housing problems. They both roughly follow the solution proposed by Senator Chris Dodd and Congressman Barney Frank, a series of government programs that they believe will help homeowners keep the homes that they might lose and get lenders, at least, some of the money that they need from those homeowners. Clinton was particularly impassioned on the need for this program.
Sen. CLINTON: How can you tell a family about to lose their home that there's nothing we can do to help them? How can you tell them that there's nothing we can do rebuild the American dream?
DAVIDSON: There are some nuances between Clinton and Obama's plans, but basically they're quite similar. But Obama does go quite a bit farther than Senator Clinton does. I was surprised that Senator Clinton did not address the financial regulation issues, the Federal Reserve and the other financial regulation issues that are a hot topic in Washington and on Wall Street. I talked to one of her economic advisers today. He said they're working on those plans and they'll bring those out soon when they're ready.
Obama did go straight to that issue and came out with his broad brush of what he would do to improve financial markets.
Sen. OBAMA: We need a shift in the cultures of our financial institutions and our regulatory agencies. Financial institutions have to do a better job at managing risk.
DAVIDSON: I'd say that Obama's views are pretty close to the center - maybe a tiny bit to the left of the center for lack of a better word - to the mainstream proposals on Wall Street and in Washington, basically ways of updating our financial regulation that was created in the 1930s to a much different economy today.
SIEGEL: Yes. Treasury Secretary Paulson has talked about the need for greater regulation. What about the presumptive Republican nominee John McCain?
DAVIDSON: He really shocked a lot of people because he went in a completely different direction. He went far - I guess you would say - to the right, to the free market side, away from the current administration, away from many Republicans.
Sen. McCAIN: Our financial market approach should include encouraging increased capital in financial institutions by removing regulatory accounting and tax impediments to raising capital.
DAVIDSON: If you heard that phrase, he said removing regulatory impediments, that is the opposite of most of the debates happening in Washington and on Wall Street. Today, his key economic advisers had a press conference and issued a press release, saying, well, he didn't completely mean we have to remove regulation from Wall Street. He does accept the idea that there can be some reforms, but he really surprised people by having such a staunchly pro-market solution.
SIEGEL: So in the Democratic primary contest that continues, differences of emphasis and of argument, but as for the fall, the differences between the Democratic candidate - whichever it is - and John McCain are pretty broad.
DAVIDSON: Very stark, very stark differences.
SIEGEL: Adam Davidson, thanks a lot for talking with us.
DAVIDSON: Thank you, Robert. Transcript provided by NPR, Copyright NPR.
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