Sen. Elizabeth Warren (D., Mass.) on Monday warned that the country faces an imminent economic crisis if the government fails to quickly pass legislation to “regulate the financial sector and significantly reduce middle class household debt.”
In a post published on Medium, the Democratic presidential candidate said that she has identified “warning signs” in the American economy, just as she did in the years prior to the 2008 financial crisis.
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“When I look at the economy today, I see a lot to worry about again,” Warren wrote. “I see a manufacturing sector in recession. I see a precarious economy that is built on debt—both household debt and corporate debt—and that is vulnerable to shocks. And I see a number of serious shocks on the horizon that could cause our economy’s shaky foundation to crumble.”
The prevalence of debt features prominently in Warren’s negative prognosis of the American economy. She writes that stagnant wages and rising costs have led to record levels of several forms of debt in American households: student loan debt, credit card debt, and auto loan debt.
“Families may be able to afford these debt payments now,” Warren said, “but an increase in interest rates or a slowdown in income could plunge families over a cliff.”
Warren argues that corporate debt also presents a major financial danger, writing that the number of high-risk loans for already-indebted corporations has skyrocketed under the Trump administration and drawing parallels to the lead-up to the 2008 financial crisis.
To address corporate debt, Warren writes that federal regulators should be more strict in overseeing corporate lending.
Warren’s economic agenda calls for reducing household debt by raising the minimum wage and strengthening unions in order to increase incomes. Her plan would also entail the government canceling much of the county’s student debt, investing in child care and education, providing tuition-free public technical school, as well as the constructing millions of housing units.
Warren emphasized the country’s manufacturing recession, an issue not all Democratic candidates have stressed in their policy platforms. To rebuild the manufacturing sector, she suggests a “$2 trillion investment in American green research, manufacturing, and exporting over the next decade.”
Acknowledging the massive spending required by such a major investment in the economy, Warren recommends elimination of the debt ceiling or automatically raising it.