More than 300 economists and policy analysts just released a statement warning Congress and the administration that bold action is needed to put people to work and get the economy going. The statement -- "Don't Kill Jobs and Growth in the Name of Deficit Reduction" -- was released by the Institute for America's Future (which I co-direct) and is available here.
In the partisan election debate, with Tea Partiers ginning up hysteria about incipient socialism and out of control spending, the statement offers a series of common sense propositions.
1. It is time for bold steps to put people to work
We have an economy marked by faltering growth and mass unemployment. 30 million people are looking for full-time work. Poverty is rising. Companies are sitting on cash, unwilling to hire with no customers in sight. Families are still reeling from the loss of trillions in retirement savings and value in their homes. Rising trade deficits sap job growth. There are only four sources of demand in the economy -- consumers, business, exports and government. With the first three nearly comatose, the fourth must act.
2. Grab this moment to rebuild America
Everyone agrees we have a decrepit and aging infrastructure. Collapsing gas mains, leaking sewers, falling bridges, shorted train switches, schools dangerous to the health of the children -- we suffer it all around us. Much was built in the 30s-50s or earlier and has simply worn out. There will never be a better opportunity to rebuild. Construction workers are idled and in need of work. Government can borrow at near record-low interest rates. Anyone with a whit of business sense would see this is an extraordinary opportunity to rebuild America.
3. Premature turn to deficit reduction won't reduce deficits
There is no clearer testament to the divorce of ideology from common sense than the position of House Republican leader John Boehner who calls for cutting $100 billion out of domestic discretionary spending next year -- nearly 15% of the total. This is lunacy. It will increase unemployment and slow growth. That in turn will reduce government revenues and increase costs in unemployment insurance, food stamps and other benefits. Austerity in the midst of a stagnant economy is more likely to increase deficits than to decrease them. Surely we should not forget the lesson of 1937, when Roosevelt -- having reduced the unemployment rate from 25% in 1932 to less than 10% in 1937 -- was persuaded to move towards budget balance. The result caused the economy to contract sharply, sent the unemployment rate soaring and drove us back into a recession solved only by the mobilization for World War II.
4. Building the new economy will help get our nation's books in order
Even in the medium term, once the economy gets going, we should be focused on what is needed to create an economy that works for working people, not on austerity. Consider the end of World War II, when we emerged with a wartime economy and debts of 120% of GDP, or about twice the burden they are now.
Our leaders did not turn to austerity. They saw themselves, inescapably, "present at the creation" of a new economy. They passed the GI Bill and sent a generation to college or advanced training. They subsidized the conversion of defense industries to civilian production. They subsidized housing and built the suburbs. Eisenhower, a Republican president, kept top-end tax rates at 90%, put a lid on the military budget, and built the interstate highway system. The debt kept going up as an absolute number, but the economy grew, the broad middle class was created, and by 1980, the debt was down to 33% of GDP and not a problem.
We face the same choice. We can focus on balancing our accounts, or we can focus on building the new foundation for the economy -- investing in education, 21st century infrastructure, research and development, making the transition to new energy, grabbing a lead role in the new green industrial revolution -- and grow our way out of the hole we are in. One reflects a timid and frightened nation, worried about ordering its books before the takeover. The other a confident nation prepared to renew itself.
5. Don't fix what isn't broken
As the economy recovers and people go back to work, we will have to pay for the investments we make. Some of this should come from warring on waste and new priorities -- like axing subsidies to Big Oil, or cutting a Pentagon that spends as much as the rest of the world on the military. Some, at a time of Gilded Age inequality, should come from progressive tax reforms. Some can come from taxing what we want less of -- like financial speculation, or excessive carbon use.
But it is critical to focus on what is broken and not on what works. We do not have an "entitlements crisis" despite all blather to the contrary. We have a broken health care system. Virtually the entire terrifying long-term debt projections come from soaring health care costs. If we spent what the Europeans spend per capita on health care (with better health care results), we would project surpluses as far as the eye can see right now. Fix health care, and you fix any long-term debt concerns. Fail to fix health care, and you can sack the government, we'll still go bankrupt.
Social Security, on the other hand, isn't broken. It hasn't contributed to the deficits -- in fact it has amassed trillions in surpluses to prepay for the boomers retirement. It contributes a negligible amount to long-term debt. Minor adjustments -- like insuring that those making more than $106,500 a year pay the same rate as those making less -- will solve almost all of long-term projected shortfalls.
6. Common sense shouldn't be so uncommon
None of this is radical. Even the market fundamentalists at the International Monetary Fund are warning the US against a premature turn to deficit reduction. Any honest investor would agree this is a great opportunity to rebuild America. No one with any familiarity with the federal budget would disagree that it is health care costs that drive long-term deficits and terrifying debt projections.
And America's watchword is optimism, a belief that we can forge our own future. Have we become so timid or confused that we will now lower our sights, concentrate on balancing our books, and forgo making the reforms vital to creating an economy the works? I don't think so. It is a measure of how distorted our political debate has become that common sense is so rare. But what's the alternative? "Hell no, you can't," taunted Republican House Minority Leader John Boehner in the health care debate." Good theater -- but it won't take us where we need to go.
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Richard (RJ) Eskow: Austerity Chic: It's This Year's "Weapons of Mass Destruction"
How the rich have prospered at the expense of the middle class and poor.
http://www.businessinsider.com/15-charts-about-wealth-and-inequality-in-america-2010-4#now-read-16#ixzz0yihZxPsU
No such luck.
So, with these numbers, we're down to only 70% of any spending actually going toward accomplishing whatever the goal is. The rest is a subsidy for the corporation and the owners. Both of whom pay little if any taxes. (Note that these numbers are guesses based on years of experience in the construction industry and assumes some level of honesty on the part of contractors.)
The reason that the CCC and other public works projects were so successful for FDR was that the government hired direct and the money entered the economy at the bottom, in the poorest hands.
The key thing in any successful stimulus is to remember that money flows UP the chain. Every time money is spent, someone takes a percentage for profit. As merchants replace inventory, they create more jobs for manufacturers who in turn take their percentage.
Thus injecting cash at the bottom, where people have to spend to live, is very effective. Injecting money at the top and waiting for it to "trickle down" is just plain stupid.
relected than fixing the econonmy.
or gain the majority then fix anything.....
If the public will not then the government will have to PERIOD.
WHY IS THIS SO DAM_ HARD TO UNDERSTAND !!!
The citizenry must confront, because Congress will not, the disintegration of the global financial system. The dissolution of the United States, via Wall St. machinations, is weeks maybe months away.
Crisis economy formation measures must be implemented now or this great nation is doomed.
More than a year after Congress approved $800 billion in stimulus funds, the Los Angeles city controller has released a 40-page report on how the city spent its share, and the results are not living up to expectations.
"I'm disappointed that we've only created or retained 55 jobs after receiving $111 million," said Wendy Greuel, the city's controller. "With our local unemployment rate over 12 percent we need to do a better job cutting red tape and putting Angelenos back to work."
Articles like these are nothing new. They are great at proposing solutions, but the problem is government. Government won't act because they have monied interests at stake.
The one hope is that they win back the House in November at which time they can draft some legislation to this effect which will get passed with a "Made in GOP" sticker on it. You see, it's not about doing what's right for the country, it's about who gets to take the political credit for doing what's right for the country. I play this game with my 8 year olds all the time. If I tell them to clean their room, I get a defiant "NO" (a.k.a. "FILLIBUSTER"). But if I can manipulate them into thinking it's THEIR idea, they do it gladly and then tell me about it for the rest of the day. I don't care as long as the room gets cleaned.
It's a pity we have to deal with grown congressmen and congresswomen at that level. But if they act like children, I suppose that's the way they should be treated.
As for the tea party, we have more 8 year olds. They seldom think about the ramifications of anything beyond the very immediate. So they'll make ludicrous claims that unemployment can be solved by deporting illegal immigrants. This would make sense to my 8 year olds. But when they reach 12, they'd probably think twice about it. The tea party is still 8. But they're dangerous because they have the vote.
Being progressive means challenging plutocratic oligarchy - not ignoring it. And by 'challenging' I mean doing things - not saying things.
A genius of a man should not be penalized because politicians can't do their job.
And you think we should take his money, money he is donating for good causes now, and invest in bonds? Seems like his plan of using his billions for worthy charities is for the common good. Who are you to tell someone who has made his money the right way, employed people, contributed taxes and to the economy how he should donate his money in his last days.
Absolutely ridiculous.
They live in their own little world and reality is what they fear the most.
Progressives want to manipulate the human condition to fit their screwy agenda.
They are self-appointed elitists trying to usurp Gods place and force the distorted message of social justice on the world.
No, none of this is radical but it appears radical in a political system with a its apparent center of gravity needless way to the right. We need a healthy socialist thought to your left of you and then what you propose will seem less radical. Very few real solutions are possible without a a vibrant socialist thought to the left of milquetoast Liberals. ;-)
You might wanna back that up with some facts...