Sen. Elizabeth Warren of Massachusetts said on Monday that “warning lights are flashing” signaling an economic downturn and called for federal action to mitigate its impact.
Warren has been critical of President Donald Trump’s economic policies, arguing they only benefit the wealthiest Americans.
A CBS News poll published in May found that 71 percent of respondents think the economy is in good shape.
Among those who reported that the economy is good, 85 percent gave Trump at least partial credit for it.
The president received his highest marks for handling the economy in the poll, as the country currently is experiencing its lowest unemployment figures since 1969 and more Americans are at work than at any point in U.S. history.
Warren is doubtful the good times will last long.
The Democratic presidential candidate wrote in a blog post published on Medium, “I warned about an economic crash years before the 2008 crisis, but the people in power wouldn’t listen.”
“I see a precarious economy that is built on debt — both household debt and corporate debt — and that is vulnerable to shocks,” she added. “And I see a number of serious shocks on the horizon that could cause our economy’s shaky foundation to crumble.”
Warren went on to describe the manufacturing sector as being in recession. She sees the economy overall as being built on too much personal and corporate debt.
The senator pointed out that American credit card debt matches levels seen in 2008, citing a report released in February by the Federal Reserve Bank of New York.
The senator also noted that auto loan debt is the highest ever recorded and a record 7 million Americans are behind on their car payments.
Warren argued that corporations are also carrying too much debt, writing that the dollar figure has gone up 40 percent since President Donald Trump took office.
The lawmaker believes too many of these loans are risky, which could precipitate another 2008-style financial meltdown.
Additionally, Warren highlighted in her blog post that the U.S. Treasury bond yield curve has inverted for the first time since 2007, meaning short term bonds are paying better rates than long term ones.
The inversion is an indication investors believe interest rates will go down over time, which generally happens when the economy is in recession. The curve has inverted before nearly every recession over the past half-century.
“The country’s economic foundation is fragile,” Warren wrote. “A single shock could bring it all down. And the Trump Administration’s reckless behavior is increasing the odds of just such a shock.”
“Warning lights are flashing. Whether it’s this year or next year, the odds of another economic downturn are high — and growing,” she added. “Congress and regulators should act immediately to tamp down these threats before it’s too late.”
The senator said the federal government should take the following steps to help mitigate the impending potential economic shock: institute a $15 an hour nationwide mandatory minimum wage, cancel up to $50,000 in student loan debt per person, and make undergraduate and technical schools tuition free. The latter two would be paid by the taxpayers.
All these acts would help reduce personal debt, Warren stated.
She also called for federal regulators to tighten the reins on banks, so they do not make riskier loans to corporations.
Finally, Warren wants to implement her $2 trillion Green Manufacturing Plan.
“This will create more than a million high-quality jobs and help address the existential threat of climate change,” the senator said.
Trump has taken exactly the opposite approach to growing the economy than what Warren is advocating.
The twin pillars of the president’s policies have been cutting taxes and regulations.
Warren has advocated for rolling back the Trump tax cuts.
The Wall Street Journal reported the strong economic growth sparked by the cuts has led to higher revenues coming into the Treasury.
Fox News personality Steve Hilton on “The Next Revolution” Sunday night stated that the tax cuts have also led to higher wages, including wages of the bottom quarter of earners growing the fastest.
Further, the Gross Domestic Product crested 3 percent growth, approximately double President Barack Obama’s last year in office.
Trump tweeted a segment of the program on Monday.
— Donald J. Trump (@realDonaldTrump) July 22, 2019
Employers created 264,000 manufacturing jobs in 2018, which was the highest number since 1997.
“Establishment idiots say the Trump tax cut only helped the rich. Don’t they understand anything about economics?” Hilton asked.