Elizabeth Warren slams Trump for looming financial crisis but has a plan to fight it

Elizabeth Warren speaking in New Hampshire in January. Photo by Mark Nozell, license CC attribution 2.0 via Flickr

Sen. Elizabeth Warren (D-Mass.) has some rather unpleasant news: If President Donald Trump’s administration and Congress don’t take action to reduce household debt and strengthen manufacturing, we’re headed for another economic crash similar to the one that devastated the U.S. in 2008.

And she issued the warning in her post “The Coming Economic Crash — And How To Stop It.”

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“Warning lights are flashing. Whether it’s this year or next year, the odds of another economic downturn are high — and growing,” she wrote.

She noted that in her post she predicted the 2008 recession before it happened, Mediaite reports.

“I warned about an economic crash years before the 2008 crash, but the people in power wouldn’t listen. Now I’m seeing serious warning signs in the economy again.”

She also warned the administration may breach the debt ceiling as early as September. That, she said, could be more catastrophic than the Lehman Brothers collapse in 2008.

Warren supported her evidence by citing a survey of 300 business economists, and at least three-quarters of those surveyed say they see a recession happening by the end of 2021.

“I see a manufacturing sector in recession,” she wrote. “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.”

A generation’s worth of stalled wages and rising costs for even the most basic goods means that Americans are taking on more debt than ever before. At least 30 percent have debts that are in collection.

“Families may be able to afford these debt payments now, but an increase in interest rates or a slowdown in income could push families over a cliff,” she wrote.

And Trump has contributed to the problem, she added. Lending to companies already in serious debt has jumped by 40 percent since he became president and the loans resemble the pre-2008 subprime mortgages. Warren said she’s notified regulators about her concerns but their response has been tepid.

The president’s trade war with China is hurting American manufacturing and creating an economic slowdown in China that may cause “dramatic ripple effects” on the U.S. economy.

Last week she introduced a plan to curb Wall Street. The senator is pushing to fix the economy before the second round of Democratic presidential debates which will be hosted by CNN. What she’d really like to see is the reinstatement of a modern version of the Glass-Steagall Act as part of the plan, CNN reports.

This isn’t the first time Warren has written about these plans, but this time she offered them in a group as a more effective way to combat a looming economic crisis.

“The country’s economic foundation is fragile,” she wrote. “A single shock could bring it all down. And yes, the Trump administration’s reckless behavior is increasing the odds of just such a shock.”

So she has introduced a plan to decrease household debt by raising the minimum wage, canceling student loan debt, making childcare more affordable and making tuition free for technical school, two-year, and four-year colleges.

Warren is also calling for monitoring and leveraging reduced corporate lending. This would limit potential shocks to the economy. She cited Trump’s trade war with China and his “goading the U.K. toward a no-deal Brexit.”

“Warning lights are flashing,” she wrote. “Whether it’s this year or next year, the odds of another economic downturn are high — and growing. Congress and regulators should act immediately to tamp down these threats before its too late.”

And the concerned among us can also help — by voting Trump out of office. That alone will almost certainly make a difference.

Featured image by Mark Nozell, license CC attribution 2.0 via Flickr