Who do you believe: Bush, or Obama?

The president says the U.S. isn't headed towards a recession. The candidate disagrees. As part of his answer, Ben Bernanke quotes Leo Tolstoy

Published February 28, 2008 6:40PM (EST)

In a press conference on Thursday morning, President George Bush declared "there's no question the economy has slowed down," but "I don't think we're headed to recession."

To which point, moments later, campaigning in Austin, Texas, Barack Obama responded by asserting the opposite: the United States is on "the brink of a recession."

From the Associated Press:

"We are not standing on the brink of recession because of forces beyond our control," Obama told a town hall forum in Austin. "This was not an inevitable part of the business cycle. It was a failure of leadership in Washington -- a Washington where George Bush hands out billions of tax cuts to the wealthiest few for eight long years, and John McCain promises to make those same tax cuts permanent, embracing the central principle of the Bush economic program."

A growing number of economists do think a recession is imminent or has even already started. And there was no encouragement for optimists in today's revision of last year's dismal fourth quarter GDP statistics -- because there was no revision. The original estimate of 0.6 percent GDP growth, remained unchanged.

But let's give the president the benefit of the doubt. We can't say yet with absolute certainty that the U.S. is in a recession or headed towards one. So maybe the optimist-in-chief is right.

But what we can say, with little doubt, is that if the U.S. economy is slipping into hard times, it's likely not to be as mild as the first recession President Bush presided over. That's because, as Federal Reserve chairman Ben Bernanke told the Senate Banking Committee on Thursday morning, there are some important differences between then and now.

First, he observed that "the decline in home prices is creating a much broader set of issues, both for borrowers and homeowners, but also for the credit markets," than did the tech stock crash of 2000. Second, inflation is worse. (The price of oil in 2001, by the way, was $20 a barrel. Today: $100.). Third, "the deficit is certainly higher."

Altogether: "I agree we're in a less advantageous situation than we were.... It is a difficult situation."

Bernanke then called upon the ghost of Leo Tolstoy in an effort to minimize comparisons with 2001 and 2008, by noting that "a Russian novelist once said, unhappy families are all unhappy in their own way, and every period of financial and economic stress has unique characteristics."

But the implications of Bernanke's comments lend a little more support to Obama's position on the economy than Bush's. As the Wall Street Journal summed up: "In 2001, the federal government had a sizable projected surplus; it now has a deficit. In early 2001, inflation was 3.7 percent. Now, it's 4.3 percent."

We'll be kind and refrain from blaming Bush for inflation. But the deficit is entirely on him, and will make dealing with any kind of extended economic trouble in the future more of a challenge, for whoever occupies the White House in 2009.

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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2008 Elections Ben Bernanke Globalization Great Recession How The World Works U.s. Economy