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

[FreedomCorpse]

Hale, can we do something about our trade deficit, $600 billion plus leaving the country every year for crappy imports doesn't seem to working very well for our economy. Do you have any case history's of countries that survived long term deficits like this on trade aside from the oil dependence?

[MrBluebird]

Is anyone listening? It is NOT called a tax increase. It is called a tax restoration. It leads, unfortunately for those whose already have several times what they need, to an overall equalization. Life, liberty and the pursuit of happiness is for us all... not just the rich. If everyone pays their share, and this includes the corporate, then there will be plenty to go around. Obama's vision is just that, a vision and a damn good one I think. I have heard enough from those who say we can't. WE CAN!

[almoguy]

I agree MrBluebird.....I believe it is time for some trickle down and if that means restoring taxes on these bastards--so be it.

[TheRealMacDaddy]

None of the current candidates have a "rock solid" solution to the economy.

The worst forecast I think belongs to Sen. McCain...Make permanent the GWB tax cuts and continue the war in Iraq (a MAJOR draw of money) for 100 years.

Second would be Gov. Huckabee...Make the GWB Tax cuts permanent and continue the war in Iraq for at least 8 years.

Next comes Sen. Clinton...She has said she would roll back the Bush tax cuts, withdraw the U.S. from Iraq over a period of time. Probably starting after 4 years so she could continue pandering to the tough on defense crowd.

Then there is Sen. Obama...He says he will rollback the GWB tax cuts and withdraw troops from Iraq within a year.

Now comes the contrast comparison of Sen. Clinton/Obama.

They are basically the exact same when it comes to how they will pay for their programs, reverse tax cuts and end the war. But what they choose to spend that money on is the KEY. Sen. Clinton says she'll spend the funds on HEALTHCARE. Sen. Obama says he'll spend it on JOB CREATION. I don't know about the rest of you but I thinnk jobs will end up putting more money in the coffers than insurance.

This country has lost TOO MANY manufacturing jobs to China in the last 8 years and many to NAFTA countries in the 8 years prior to that. The old mantra was we were a service oriented/i­nformation based economy. Well those Service and Information based jobs ended up in India. So now we are a McDonalds/Corporate Raider based economy. We need to build things. Even if it is as Sen. Obama says we should build roads.

MY vote. Obama and jobs.

Roll Tide...GO Bama

[Overd0g]

Well at least that's good news. At least one monster boondoggle will be headed off at the pass.

[Give Peace A Chance]

Seems like there is always plenty of money for bombs, wars, and subsidies to special interests.

Wink, wink, nudge, nudge... know what I mean!

[WIpatriot]

Always.

[opines]

No candidate or pundit dares to say that we are in the early stages of a crash and that so-called stimulus packages simply throw away funds that would better be spent for Depression type relief programs.

In our desperation to avoid a crash, we are willing to destroy safety nets that would allow us to survive a Depression with our system intact.

In the attempt to bail out the stock market, Wall Street would sacrifice the dollar, fuel inflation and when that fails to halt the plummet, starve social programs for more bailouts.

But, expect no candidate or pundit to counsel that we must accept hard times and use our dwindling dollar resources to establish life lines for Depression survival.

The ineffectiveness of Fed rate cuts, the equivalent of printing paper money, to turn the economy around will be unmistakeable when it is reduced to 1%. We will still be spiralling down, but with a further weakened dollar and out-of-control inflation.

[Rule Of Law]

It's OK opines. Even when 60% of America is out of work and standing in soup lines, guys like Iran will still be saying it's because they're lazy and just don't want to work.

[IsaacKuo]

Ever since 1984, there's been one word to describe a candidate who doesn't purposefully lie about his economic plan: "Loser" (rhymes with Mondale)

When will we outgrow this addiction to fantasy economic promises? I don't know, but I suspect it'll be decades before a candidate has the guts to tell the economic truth. Until then, the only choice we have is between liars who will do something different from their disingenuous promises and morons who will attempt to do what they say.

[browndoe]

Doesn't Obama say "I won't tell you what you want to hear. I'll tell you what you need to know?" I don't hear him talking about the limited resources and serious constraints on the next administration. I always thought this would have to be a caretaker presidency after GW. Someone who won't look to a second term, but just tackle the issues, no, the crises that confront us on so many fronts. I want to hear Obama tell us that resources are tight, problems are large and we should get ready to tighten our belts, sacrifice and demonstrate patience as he tries to find a way to get us on sound footing. There will be pain. But yes, we can. But not without deferred gratification.

[IsaacKuo]

ALL of the politicians claim they're telling you the truth about their economic plans. And post-1984, they're all either lying or morons or not serious contenders anyway.

Voters aren't ready to vote for someone who's telling them the obvious basic economic truth that the money going in must at least vaguely balance with the money going out. Tell the truth? Then you don't get elected.

When will the voters be ready to face up to the fact that you can't get something for nothing? I guess it will happen someday, but not this decade.

[Ramus]

Another way to fund the public works projects would be to just cut out the drug war. Legalize all recreational drugs. Tax pot, and medicalize other drugs. We could save billions. Taxpayers could find more money then in reducing the taxes used for prisons by releasing non-violent drug offenders from prisons from taking up space in our prisons. Since the dollar is so low we might begin exporting things again. If we had government-funded healthcare our manufactureres might be able to compete in the international market. Obamas public works ideas are exactly what we need. And no, we should not contract out this work to profit-maiking companies such as Halliburton. These should be government jobs..with health care. Make the international corporations..Exxon for example, pay their fair share of taxes.

[WillBFair]

In 2000, the far left believed Ralph Nader’s rhetoric: that there was no difference between the parties; that he could win the election and govern with less than a fraction of the vote; and that proportional representation would transform American democracy forevermore.
His supporters ignored our pleading, and third grade arithmetic; voted for Nader; and elected Bush.
Now the far left has a new hero with yet more bizarre rhetoric. Among other promises he won’t be able to keep, he tells them that the red States will march arm in arm with us into the misty future; that he will unit the country even while using republican smear tactics and threatening that his supporters may not even vote democratic; that financial interests will roll over and let him remake the campaign system; and that the anti war speech given while representing a very liberal district shows his position better than his many pro war votes.
He is either hopelessly ignorant of American society or openly pandering to the young and inexperienced. It’s working though, because the far left still live in a self righteous dream world. And young people don’t yet know enough about the real world to see through hype even this obvious.

[xenofile]

Yeah, right. Blame us. Those of us who wanted these policies 8 years ago, when they might have been possible. Don't blame the lying, cheating Republicans. Don't blame the K street lobbyists. Don't blame Al Gore for running an abysmal campaign. Don't blame the media for hating Gore and aiding & abetting the Rs. Don't blame the fools who were taken in by Bush.

Just blame the few idealists, honest people who believed in the principle of democracy and thought they were supposed to vote for the candidate who actually represented their point of view.

Go ahead and vote based on a cynical political calculus, and then wonder why corruption is endemic and openly tolerated.

[IsaacKuo]

"Just blame the few idealists, honest people who believed in the principle of democracy and thought they were supposed to vote for the candidate who actually represented their point of view.

Go ahead and vote based on a cynical political calculus, and then wonder why corruption is endemic and openly tolerated."

Whether or not you accept any "blame", the unfortunate fact is that cynical political schemers are USING idealists like you to get their corrupt politicians elected. Why do you think the Republicans donate to Nader's campaigns?

As long as you value your idealism more than gaming the system, the system will be gaming you. You can either try to wield the tools, or you can be a tool.

Nader can sleep at night because he deludes himself into believing that there's no difference between the Democrats and the Republicans. If there's no difference, then there's no harm in helping the Republicans. Well, it's just not true and the disaster of the last seven years should be proof enough. The outcome of the elections DO matter.

[WIpatriot]

You forgot to not blame the 'true conservatives' as they will remind you that they were against (wink, wink) GWB's spending (well, except for the war.)

[FreedomCorpse]

even a moderate republican standing on the 20 yard line looks like someone on the 'far left' when you stand in the end zone deep in fascist territory.

[nippersdad]

WillBFair:

It was not Nader voters who elected George Bush, it was those who call the activist base of the Democratic Party "far left" and the Supreme Court who did so. Now that you are regretting your two votes for George is a bad time to diss them again.

[eclectro]

You can't blame the outcomes on the election on others than those who were directly responsible for the votes. I.e. the candidates themselves. I think that the failure of the democratic party to blatantly ignore conservative leanings of vast swaths of the US and rely on the blue-states to get elected has, and will continue to be folly. And the reason why you're seen rabid support for Obama on the boards. Because those people realize that he, and him alone has the chance to draw voters from *all* segments.
Democrats, cannot, think that even things are going bad for the US will automatically mean that there guy(or gal) will get in the office. Everybody knew Bush was horrible in 2004 - but he still got elected on the conservative vote.
So the message here is Democrats need to either put forth a moderate candidate or continue to get whipped on election day.
Also, if Gore is such a terrific guy, he needs to start taking these things into account and make a *meaningful endorsement*. Democrats need to circle the wagons around the person who can pull this together. And not pull it apart.

[thedave25]

the title is misleading­...shouldn­'t you say "ALL plans are unworkable" since the premise is not about Obama's plan being flawed, but about the fact that the gop has spend all the money?

[worldtraveller]

You are correct. Hale is usually much better than this, I will give him that. What needs to be considered is reallocation of spending. The war for one should be a big part of that. By the way does anyone here ever say... hmmm... maybe spend less. Giving one dollar more to government and expecting them to do something good with it is like giving money to a bad, selfish, and not altogether too bright of a child and hoping he doesn't waste it. If I am going to trust anyone out there with even a chance it has to be Obama, I really believe his assesments will be rational. Hillary after her housing plan I can't even look at.

[detriangulation]

Everyone who's taken Eco 101 knows that the Keynesian FDR model calls for increasing the deficit during a recession, either through tax cuts or stimulative spending or both. Stimulative deficit spending is the most direct and effective way to generate economic growth during a recession. The problem is that the Bush Regime forced tax cuts down our throats, including ones for the rich, to squander the surplus during better fiscal and economic times. This was theoretically part of the Repub/Corporate agenda to cripple the Fed Gov and render it impotent, but instead Bush let all spending run out of control, including military expenditures after 9-11.
FDR: "Our [New Deal] policy is succeeding. The figures prove it Secure in the knowledge that steadily decreasing deficits will turn in time into steadily increasing surpluses, and that it is the deficit of today which is making possible the surplus of tomorrow, let us pursue the course we have mapped." And that's exactly what happened. Obama can run the deficit to a gillion dollars for all I care. The jobs it will provide, the boon to the economy, the conversion to green tech and the end to oil dependence (something the free market will not do in time without gov regulation and intervention) are all well worth it and will generate surpluses again in the long run.

[AnotherMcIntosh]

"But the money just ain't there. "

Somebody has the money.

(1) Find out where the money is.
(2) Get it.

[LewisR]

Talk about simplistic. Please let us know when you're ready to join the real world.

[Themo]

Haliburton
Oil companies
Millionaires

[pajewood]

you got it. time to stop subsidizing companies making 40 billion a quarter. the top 1 percent have had it their way for 8 years. it's payback time. not as a source of vengeance but one of fairness. obama proposes increased taxes on corporations who are taking business overseas. this idea coupled with an increase in taxes on the top 1% (actually a repeal or expiration of bush's cuts), savings by ending the iraq war, a decrease in defense spending and an end to pork would pay for his proposals. proposals, which if worked effectively, will give the budget a long term gain with added income tax revenue.

time for a break from the clinton and bush ideas of trickle down economics. obama offers the greatest opportunity for change.

[ErnestineBass]

BINGO!!!

[paixa3]

I am not a professional economist, but I recommend:

Get out of Iraq. Fund ONLY that endeavour as far as Iraq goes.

Cut Federal spending on defense.

Provide an on-going large stimulus for families earning less than 25K.

Reverse the rich folks' tax gift, retroactively.

Set ALL SUBPRIME morgages as fixed mortages and the current PRIME rate. Force the banks to eat the cost and DO NOT ALLOW bankruptcy of these firms.

Peace to you today.

[LewisR]

paixa3, you started off well, but please take a second to imagine a few of the big banks going under: millions of retirement plans become instant dust; everyone's savings accounts dissappear; and no one can pay a bill, so every other company in the US then goes under. Banks don't have money - that's your money, my money, and everyone around you's money. Please, come back to reality.

[nippersdad]

LewisR:

Millions of retirement plans are already dust thanks to the pushing of bad bonds knowingly traded by the bankers you wish to bail out. These bankers made millions off of your retirement dollars, are you suggesting that we let them keep their ill gotten gains, enlarge the deficit by bailing them out and pass the cost off on the taxpayer through higher taxes which will stimulate nothing during an economic downturn?

The FDIC insures bank accounts up to a certain amount, anyone having more in the bank than that should have known better. Banks have not viewed this as your "money and my money" for an awful long time...they have viewed it as their money, and now they expect us to bail them out so that they can preserve their takings.

My suggestion would be an investigation into banking and monoline insurance practices. Then racketeering charges could be brought, which would strip THEM of THEIR savings for once Money which could be used to bail out the FDIC. Wouldn't it be nice to have a government which looks out for the people's interests for once?

[RabidRightRebel]

Nobody expects Obama to balance the budget immediately. However we all want the priorities to change from policies that benefit the super rich to those that favour the average American family. That policy shift combined with competent government would go a long way toward solving most of our domestic problems. The international problems will be much more difficult to resolve but having a President that was on the right side of the issues from day one will be a step in the right direction.

[LeftRight]

So, he just doesn't run on that platform, and then DOES the work anyway! Taxes will have to be raised, especially on the rich, just to recover us to the status that we were at before bushco(tm) took over. Major tax increases will be required if they want to actually DO anything, and I'd be willing to pay, IF they were to actually spend the money on proper things, such as infrastructure rebuilding, single payer health care, REAL education, etc...

[LewisR]

Now there's a prescription for a 4-year presidency.