In a new public post, Democratic presidential candidate Sen. Elizabeth Warren warns that just a decade after the 2008 financial crisis, the nation is on the brink of another "economic collapse." It is still preventable, Warren says. And yes, she offers up a plan to do so.
Warren is not an outlier in her assessment of the precariousness of the current economy. As she points out, an inverted U.S. Treasury yield curve has been a reliable signal of oncoming recession; it did so in March. Numerous economists have been giving warnings of their own, due to escalating household and corporate debt levels, the industry-punching effects of Trump's various tariff wars, and persistent Wall Street efforts to re-craft the same high-risk loan shenanigans that drove the 2008 collapse. The 2020 elections may yet take place in a full-fledged recession, or the next president may find themselves combatting one before they can so much as fill out their top administration ranks.
Warren's fixes, which she describes as needing congressional and regulatory attention "immediately," are similarly not far afield from what other economic experts have been prescribing. Regulators need to crack down hard on "leveraged" corporate lending, the again-rampant high-risk bank scheme of writing high-risk loans, all of it passed on to investors with little disclosure of their sketchily-premised origins. This was a core cause of the 2008 economic meltdown, in which toxic assets sold by each Wall Street firm to the others all turned sour at the same time, with multiplicative effects that threatened numerous of the "too big to fail" firms at once.
But Warren also identifies household debt as being at dangerous, economy-threatening levels. Her prescriptions there are to pay people more money, in the form of a $15 minimum wage, and cancel up to $50,000 of student loan debt per American. Universal affordable child care, rent reforms, tuition-free higher education, and new rules to boost worker influence on corporate boards are also offered as debt-reducing plans.
A new Green Manufacturing Plan seeks to spur the still-mouldering sector by investing $2 trillion into sustainable energy manufacturing efforts, which Warren estimates could create over 1 million new jobs.
The last plank of the plan: halting Trump's numerous economy-threatening trade wars, replacing those with "a coherent strategy" on Chinese trade rather than "trade-war-by-tweet." That stop doing things that are self-evidently stupid needs to be a presidential plan is admittedly depressing. In the current era, however, it also appears necessary.