Obama's Economic Plan is Unworkable

From the IHT:

Democrat Barack Obama said Wednesday that as president he would spend $210 billion to create jobs in construction and environmental industries, as he tried to win over economically struggling voters.

Obama's investment would be over 10 years as part of two programs. The larger is $150 billion to create 5 million so-called "green collar" jobs to develop more environmentally friendly energy sources.

Sixty-billion dollars would go to a National Infrastructure Reinvestment Bank to rebuild highways, bridges, airports and other public projects. Obama estimated that could generate nearly 2 million jobs, many of them in the construction industry that's been hit by the housing crisis.

"This agenda is paid for," Obama said as the Republican National Committee promoted an "Obama Spend-O-Meter" online to track his proposals and portray him as a tax-and-spend liberal. Obama explained that the money for his spending proposals will come from ending the Iraq war, cutting tax breaks for corporations, taxing carbon pollution and raising taxes on high income earners.

I would love to tell everyone that this is possible; that the US has the money to spend and that we can use major federal initiatives to minimize the impact to the housing mess.

But we don't.

And this is not a problem only faced by Obama -- it's faced by every major candidate. After 7 years of Republican dominated politics the US just doesn't have the money to spend. The damage has already been done.

Let's start with the fiscal history of the last 7 years. This information is from the Treasury Department and it shows the total federal debt outstanding at the end of the federal government's fiscal year.

09/30/2007 $9,007,653,372,262.48
09/30/2006 $8,506,973,899,215.23
09/30/2005 $7,932,709,661,723.50
09/30/2004 $7,379,052,696,330.32
09/30/2003 $6,783,231,062,743.62
09/30/2002 $6,228,235,965,597.16
09/30/2001 $5,807,463,412,200.06
09/30/2000 $5,674,178,209,886.86

Currently, the total debt outstanding is $9,250,932,577,938.04.

To put that in perspective, debt as a percentage of GDP has increased from 57.29% in 2001 to 64.47% in 2007. That's a solid and steady increase.

Now -- the Republicans have created a meter on their website to track the increases in government spending. You guys ran the government for 6 years. You had complete control. YOU GOT US INTO THIS MESS IN THE FIRST PLACE. SHUT THE HELL UP.

And no -- this is not some ephemeral concept that means nothing the real world. Take a look at a chart of the US dollar:

The dollar has been dropping for the better part of the last 6 years. Over the last few years we've seen competition from the euro start to knock the dollar out of it once dominate reserve status -- which has helped to continue the dollar's downward spiral. If we don't start seriously dealing with the deficit soon, we can expect further declines in the dollar which will seriously hurt us in the long run.

No candidate will run on a cleaning up the deficit platform. It's not an economic winner -- especially during a period of economic problems. In addition, the way to clean-up the mess -- raising taxes and asking people who benefited from the last 7 years to now pay their fair share of that growth -- is a politically dicey proposition at best. So what is actually in the interest of the country in the long-run just isn't going to work politically.

And some of Obama's plan is really good -- especially the green-collar jobs idea. That makes great sense, especially in the long-run.

But the money just ain't there.

Comments

[MaynardGK]

I regret to report, there is tweedledee and tweedledum, and black tweedledee. Of the three tweedles, however, Obama may be the one least sunk in concrete. Perhaps he can be dragged into more reasonable policies that are not myopic.
Until Obama incorporates the elephant in the room, our improbably large military expense - then tax rearrangements will do little to ease our debt or deficits. If he really intends to do something in a responsible manner, this is job 1.
He wont, though - he can't, doesnt have the power, hasn't campaigned for it. So it will all be insignificant marginal policies creating ultimately failure building on the momentum established by the neo-cons. Obama is a get-along guy. We need to throw the bums out, not get along.

[DavidJames]

Hale,

I guess I just do not follow your argument. Why can't Barack do what he plans?

A $100 per ton carbon tax would allow us to eliminate the deficit, fund Barack's programs, keep our commitments to our veterans and engage the free market to develop energy independence.

The increase in gasoline(oil) prices from $1.50 to $3 per gallon, over the last 7 years, is extracting about $1 Trillion dollars a year from our economy. Why shouldn't we tax this insane outflow of cash from our country?

This web site on implementing a carbon(dioxide) tax:

http://www.carbontax.org/issues/implementing-carbon-taxes/

The site indicates that a $100 per ton of carbon dioxide would bring in about $600 billion per year.

Comparing the $600 Billion per year that a carbon tax would bring in, to the current $500 Billion per year deficit, why can't Barack's plan be implemented?

[Guitarsandmore]

It is there and its going to work.

Hale is so cheap he can't aford to PAY attention. He needs to pay attention to the facts that you have pointed out.

If we can squeeae out a couple trillion for the war in Iraq we can certainly implement Obama's plan.

[themodernleader]

The American Prospect claims to be a liberal voice. They tout American free trade as sacrosanct. Conservative voices virtually all brag how free trade is transforming the world.
My two "liberal" senators both explain the merits of free trade over my radical call for fair or balanced trade and protection of basic industries and technologies and jobs that protect national security and economic sustenance.
I talk to Republicans and Democrats of every description and they all agree that trade is a main culprit for our decline and fall. Who is supporting this outrageous trade system except for the vultures who are benefiting from it and their foreign benefactors? Our present trade arrangements is a policy without any sponsors except our corporate managers and emerging aristocracy.

[avicenna]

Maybe Obama is planning to remove the $20 billion plus subsidies that American tax payers give to oil industries every year. In 10 years (not counting inflation) - you'll have your $200 billion and then some. If I were American, I'd be a tad pissed about that given their profit margin. Amazing what the country has money for (billions on war, ridiculous "star wars" weapons, spying on citizens) and what it doesn't have money for (health care, educational investment, research and development in innovation); the characteristic of the government is clearly drawn by its priorities, and it definitely looks like the citizens are otherwise preoccupied by inane distractions to be paying attention to the way they have been short-changed.

[realitytrumpsbull]

If Obama wants to help this country, then the way to do it is to go micro-scale on energy. Take one house off the grid at a time, take one more car out of the line at the gas station, alternative fuels, independent producers,
car-free zones, 'green' buildings, the whole 9 yards, but it needs to be locally driven, meaning 'not a federal handout program'. The United States is drowning in debt, the only way to turn that around is to get into exports, and that's not gonna happen as long as deep-pockets parties in other countries are playing 'break the bank' on our stock market. 'Foreign-owned' will be truth in advertising unless people start thinking about macro-trends...nevermind the sideshow, back up and try and take in the Big Picture. Another form of 'alternative energy' is to cut waaaay back on energy use.
The oil biz all but owns this country, they might practice some appeasement for a while, but give em time and they'll be right back at work...the GOP is their favorite toy...now that our military's been over there farting around all this time, getting fat on govbuxx...fat lazy people rarely question...Hallicheney laid out the red carpet for em...corruption on the march, coming soon to a neighborhood near you...Blackwater eviction squads...

[realitytrumpsbull]

Barack can try to run around inflating people with sunshine to 35PSI all he wants, but the truth comes out...our national financial picture is hosed, at the moment, and it's going to take years of frugal fiscal management to spin things around, here. Meanwhile, while the Internets is still on, be sure to reference wagon-building...ya never know. Soup IS good food...

[victorberry]

Ah, yes, Alan Greenspan's infamous theory of substitution. If we can no longer afford steak, then we can eat hamburger instead and be no worse off. If we can no longer afford hamburger, then we can eat soup .... I wonder what Alan expects us to eat after soup becomes unaffordable.

[themodernleader]

JinnRikki and Research: You misread my questions. Both the power ellite of both parties support "free trade" or have supported "free trade" as our working people and middle class have lost their influence, competnnce and wherewithal to make a living.
The root of the problem is predatory, mercantelistic trade policies that are tearing apart the economic sustenance of thie country. Both liberals and conservatives do not wish such a calumny, yet continue to go down this path of national suicide. Therefore the questions. I am regretful for being such a poor communicator.

[olephart]

"Both liberals and conservatives do not wish such a calumny, yet continue to go down this path of national suicide."

Actually, I believe the Dennis Kucinich and Ron Paul factions are actively against this (John Edwards to a lesser extent). It's the DLC Centrists and Chamber of Commerce Republicans who are actively destroying the Country. The Corporate Media is the handmaiden to this destruction. Lou Dobbs, warts and all, is about the only voice against flushing 270 million Americans down the drain. It is instructive that the most Liberal and most Conservative factions are in closest agreement on many topics. Those in the middle are best characterized by Jim Hightower as "There's Nothing in the Middle of the Road but Yellow Stripes and Dead Armadillos ".

[research]

Modern: Best to respond under our responses, if you expect a response!

Olephart above has got most of it. It's the DLC.ORG half of the Dems that have infiltrated the dems with Conservatives values.

Government is the only defense the average person has from predatory corporations.

The Best Capitalism is Fettered.

[dukeitout]

Hale Stewart: You state "I would love to tell everyone that this is possible; that the US has the money to spend and that we can use major federal initiatives to minimize the impact to the housing mess. But we don't."
Yes we do! You say $250 Billion over 10 years will break us? Give me a break. And it's not as though Obama proposes to use it on pie-in-the-sky projects. 60% of it will be used to build alternate energy sources. Solar and wind technology is available now. It just takes a decision and implementation by our government to plant solar instrumentation and harvest the sun's energy. Every Californian has seen wind mills in operation and generating energy.
It will take a modest amount of subsidies. The farmers are not averse to "planting" solar panels and I'm sure that old Senator from Massachusetts will ultimately support "planting" wind mills in the waters of old Cape Cod.
The nature of the work requires the installation labor be provided by local people. The USA is a leader in the design and manufacture of the materials. The re- of de- valustion of the dollar is not a factor. Let's call the effort "trickle-up" economics.
It will have a positive effect on our GDP. It will put people to work on positive things. Tax revenues will increase. Healthier air and water quality will result---etc,etc,etc.

[themodernleader]

Bondad. When are you going to explain explicitly and unashamedly that our problems have nothing to do with the operational pure form of glorious "free trade"? When are you going to tell the masochistic "liberals" and conservatives that all the fault resides in a self-indulgent and lazy laboring class that keeps us uncompetitive compared to those hard working millions off-shore?
When are you going to show us graphs and charts of declining productivity and competence and cheaper goods and services that proves beyond any intellectual's criticism that capitalism has proven that efficiency and survival of the fittest are one and the same?
When are you going to show us that the system was fundamentally sound, simply that we were not up to the challenge?

[JinnRikki]

You mean the "lazy laboring class" that got used to 3 squares a day and something other than a tin roof lean-to keeping the rain off (trickle down indeed)? Many things could be said to an ass hole such as yourself but I think, Fuck You and anyone who thinks like you, will suffice.

[research]

How do we make the best weapons systems in the world then?

How are we able to make and sell more weapons then the rest of the world combined?

the Sick robber baron conservative fascist corporatist values and ideology has brought us to this.

The conservatives have always wanted to bankrupt the us, so they can buy it all cheap.

[Skepticat]

How awful - a self indulgent working class that actually expects decent wages and benefits - and a safe workplace as opposed to being disposable humanoids who subsist and die in shanty towns just so that billionaires become richer.
A system that depends on outsourced child labor for survival is NOT fundementally sound.
Please grow a brain!

[Mollye]

themodernleader, you must be a college professor. Only someone sitting high above in an ivory tower would write such an assinine commentary. This country is nothing without it's backbone of your so-called 'laboring class'. They are the most honorable people in this country. They did their part...the fault lies with greedy owners and shareholders who want more, more, more money for someone else's work.
Bring our jobs home and keep them here.

[themodernleader]

The forlorn panaccea is green and renewal energy that may propell the messiah on the white horse into the White House. Not one candidate of the first level breathes a word about our ruinous trade deficits, our disappearing factories, our fast disappearing technology, and now our disappearing support infrastructure jobs, for example, newspaper, weekly periodicals, financial and banking.
The entire system is on the edge of collapse for we are spending as if we have a powerful industrial, technological base that is operated by various skilled jobs that will support a modern family. Those assets and competencies are gone. Our deteriorationg standard of living is is piled upon a mountain of debt and paper money.
Only a hiatus on treasonous trade agreements and other foreign aid arrangements can bring us to revitalize our factory productivity and technological advance.
The next president must pursue a new economic doctrine that provides a way for our people to prevail as commanders of our social and economic destiny rather than endure as servants of strangers.

[castlerider]

Bondad, your analysis is always respected by me and many others, but at least Obama is showing the will to get out there and do something in the direction that proves fiscal responsibility and accountability. He may not be able to spend all he is saying he will, but a step in the right direction does a hell of a lot, as was exemplified when Clinton worked to balance the budget, was not expecting to really be able to do it until well past his term, then ended up with A SURPLUS when his term expired.
So come on, man, don't beat up on the kid too bad. It's not like he's an arrogant jerk that doesn't listen to what anyone tells him, except for the yes men who only say what he WANTS to hear, like we have been subjected with now for 7 years.... Lord, will this ever be over?

[research]

No money? You mean the Newt conservative rethugs have finally accomplished their goal of

"bankrupting the US government till you can drowned it in a bathtub?"

What Bull!

Tax the rich.

[Guitarsandmore]

When Republicans rack up debt it is "genius", "Brilliant", "Reagononmics".

When Democrats rack up debt they are the "tax and spend" Democrats who have lost their way.

When consumers rack up debt they have mismanaged their finances and are now a credit risk.

When Bush talks about curing the economy he wants everyone to go out and use their credit card.

You are the role model for the behavior that disgusts you.

[mcostello]

What might really clear it up for people is this concept:
If you run up a deficit, it helps the economy numbers in the short run. It makes you look good. The only difference between what repubs do and what "liberals" do is that the deficit money goes to the rich (repubs), or poor (dems). The deficit money helps the economic numbers either way. The problem now is that we have run the deficits so high that we can't use deficit spending as a fix anymore. FDR was "brilliant" for pulling us out of the depression with deficit spending.
This time, we will have to use our imaginations, or we will be a country second to india, china and god forbid, france.

[curiousasheck]

Who in the hell is Obamas financial advisor?

We need at least a minimum of $7 trillion to refloat the USS United States.

Damn

[lilli]

I find it it interesting that Obama is now talking about Green collar jobs, it is the first time I have heard him talk of it, Hillary has used that since she came out for president...Hmm, first he starts using her health care plan instead of his own, then he takes her economic plan, now he is adopting her green collar forum. Seems he is good at imitation. What a fraud he is.

[sonofsamstone]

"now he is adopting her green collar forum. "
--------------------------------------
Actually Lilli, that's not entirely true

Obama Called for Green Jobs in Audacity of Hope......Published in 2006.

"What we can do is create renewable, cleaner energy sources for the twenty-first century. Instead of subsidizing the oil industry, we should end every single tax break the industry currently receives and demand that 1 percent of the revenues from oil companies with over $1 billion in quarterly profits go toward financing alternative energy research and the necessary infrastructure. Not only would such a project pay huge economic, foreign policy, and environmental dividends"it could be the vehicle by which we train an entire new generation of American scientists and engineers and a source of new export industries and high-wage jobs...Aggressively investing in alternative fuel sources can also lead to the creation of thousands of new jobs. Ten or twenty years down the road, that old Maytag plant in Galesburg could reopen its doors as a cellulosic ethanol refinery. Down the street, scientists might be busy in a research lab working on a new hydrogen cell. And across the way, a new auto company could be busy churning out hybrid cars. The new jobs created could be filled by American workers trained with new skills and a world-class education, from elementary school to college." [Audacity of Hope, p. 169-170]

[berensma]

I think, also, that Al Gore may have coined it first.