Why We Need Even More Stimulus
The administration's biggest economic mistake so far was to badly underestimate last January how bad the employment situation would become by Fall. As a result, it low-balled the stimulus -- settling for a plan that, while avoiding even worse job losses, didn't go nearly far enough.
Yes, I know. We're already in the gravitational pull of the midterm elections (look at the bizarre attention given to gubernatorial elections in New Jersey and Virginia, and even to a congressional election in the 23rd district of New York, as supposed harbingers of voter behavior a year from now!) so it will be even harder to round up the needed votes from Blue Dog Dems fretting over the deficit. And you can forget the Republicans.
And yes, I know: Only about half the current stimulus has been spent, so it will be awkward to make the case that we need a larger one.
But here's the problem. Everything else on the table -- a new jobs tax credit, more loans to small businesses, more help to troubled homeowners, another extension of unemployment insurance, another round of subsidies to first-time home buyers -- are small potatoes relative to the importance and likely effect of a larger stimulus. Some of these initiatives may do some good, but even combined they'll barely make a dent in the growing numbers of jobless Americans.
Meanwhile, the states are slicing their budgets, laying off workers, and ratcheting up taxes. That's because state tax revenues are falling off a cliff, and almost every state is barred by its constitution from running a deficit. That means the states are actively implementing an anti-stimulus plan.
Let's be clear about this. The national rate of unemployment will almost surely hit 10 percent; we'll know Friday whether it already has. This is more a psychological and political threshold than an economic one (it doesn't include everyone who's too discouraged to look for work, or working part time who'd rather be working full time, or working fewer hours in an ostensible full-time job, or otherwise fully employed but being paid less; the Bureau of Labor Statistics' payroll survey, also due Friday, provides a more accurate picture). But it nonetheless represents a degree of hardship this country hasn't seen in decades.
Public approval of Obama's handling of the economy has slipped to 46 percent in an Oct. 30-Nov. 1 CNN poll, from 59 percent in March. Remember, Obama was elected in part because the public didn't have confidence in McCain's ability to manage the economy. In exit polls last November, almost two-thirds of voters listed the economy as the nation's top issue. If the job numbers don't start moving in the right direction, not only will Obama's poll ratings continue to drop but congressional Dems will all be in trouble.
That should be Obama's selling point to the Blue Dogs. He should tell them the economy needs a bigger stimulus in order to show improved job numbers by the mid-term elections. And he should make sure they understand that they're more politically endangered next November if the the job numbers aren't moving in the right direction by then than if they vote for a larger stimulus now.
Cross-posted from Robert Reich's Blog
Arianna Huffington: Obama One Year Later: The Audacity of Winning vs. The Timidity of Governing
If Obama wants to make sure he doesn't let down the millions who believed he really would change the system, he should read the The Audacity to Win -- and rediscover a whole host of things he knows, but seems to have forgotten.
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Where is the Cabinet? Do we have a Commerce Department? Where are direction, priorities and synergy to restructure and renew our economic platforms and bring some of our economic sectors home? Why aren't we being informed by the Cabinet and Congress of bold, public-private enterprises for domestic energy, conservation, infrastructure, rail projects, and major support for small and mid-size (non-factory) farming? Tens of millions of ordinary Americans know what the underlying problem has been and what has been holding them back. They call it corporatism, which is a nice word for corporate fascism. A private, militant, authoritarian system that in the modern age neuters and devours everything - economy, health, culture, environment, national security, et al. That Obama accepted the United States' (vis-Ã -vis Europe, Canada, and Asia) pathological status quo while resurrecting its unbalanced institutions and unnatural powers - and then rebuild on them with pipsqueak reforms - was a no-brainer for millions of Americans outside media and politics. We held our breath and now we know that this administration is a charmer - all hope and no plan. If the administration had been confrontational and failed, it would have better, perhaps necessary, because it would have, necessarily, identified the problem and allowed the middle class to support revolutionary action to save our nation. Some of our major financiers and industrialists and (their) Republican Party are leveling the United States. Chris Dodd's legislation should prompt Democrats to begin to pose major economic legislation and move around the administration.
The free traders have absolutely broken this country with their chasing the lowest common denominator and letting their own American citizens have no means to support themselves.
Wall street is gloating with corrupt and immoral bonuses while the rest of the country is sliding into desperate times. Communities are devastated, millions of American school children are showing up to school homeless and hungry.
We need WPA now. They instanteously gave Goldman Sachs money to invest but not lend, so you can't tell me they can't react to this economic nightmare for 1 in 6 Americans for WPA PROJECTS called infrastructure that was allowed to disintegrate under Bush. The free market/privatization republicans waited for everything to fall apart, our schools,roads and bridges so they can turn all these over to their privatization buddies. Blackwater and Hallburton sure are doing well in this depression era economy along with Goldman Sachs.
Robert Reich is right, the government is the only buyer in town. The bankers aren't lending they're just paying out bonuses for God's executives at Goldman Sachs. And our corporations have moved everything overseas and insourced our jobs. China won't let our companies buy a majority ownership of companies set up in china, but we have allowed the solar Chinese company Suntech to set up in Arizona. Don't we have solar companies in Oregon that are American companies. What's wrong with our solar companies? China has our money thanks to those tax cuts for the rich and fighting two wars.
As Reich himself admits, only about half of the initial stimulus package has been spent, so its obviously months too soon to say what more might be needed in terms of direct stimulus spending, and where it will be most needed. I'd say it's better-than-even money, but far from a sure thing, that a further stimulus may be necessary, but assuming a priori that it will be strikes me as serving only to push the dollar further down, which is good for US exports, but not for US consumers.
High Speed Rail is the answer to our woes. Bonds would be issued, planners would get work, engineers. Eminent Domain would put money in some pockets. Track beds would give aggregate companies business. Steel for new track& of course locomotives and passenger cars (think GM, Chrysler, John Deere etc.) When we rebuild roads bridges & schools the jobs are over at completion & no additional revenue is produced. Rails charge fares & have to have crews, support, etc = JOBS!! Go to cities with good commuter rail & you see alive business districts. Air travel should be luxurious ,fast and expensive it shouldn't be an air bound greyhound. The USA would be turned into one giant linked amusement park which most certainly would be used by foreign tourists & eventually skeptical Americans. Good rail would make limited range electric autos practical. Let the OPEC choke on their oil.Our scrap metal would be more costly for India &China raising their costs of production.Citing Amtrak&subsidies as arguments against HSR can be easily shot down. You can't outsource a railroad!!
posted Nov 09, 2009 at 20:11:29
Great points. Additionally, it's a challenge in design, engineering and advanced large-scale manufacturing techniques that we sorely need right now. Rights-of-way have been mapped and are in place. Much of the outlay occurred a century ago. Why couldn't we lead the world in the development of a new rail transportation system? We already did, once. Half of the rail car manufacturing sites are still up, and need a little dusting off and updating to 21st century code. (Or maybe not ... most were owned by Pullman in Chicago, where code is a relative term).
Thanks MediaRanger...I feel like a voice crying out in the wilderness...Everyone especially the big money types are looking for the "Next Big Thing" ...well...HSR would be it. Unlike the junk bond frenzy, internet and real estate bubbles, HSR would actually > make< something tangible and provide employment yet still allowing the bloodsuckers to make their money. Finally a win-win-win for Wall Street - Manufacturers(in America)--and the working man and woman.
Us talking about this is pointless, I hate to say.
We all know anything that comes down the pike is gonna be watered down, full of tax cuts and will also be a big subsidy for business. Just like every other " jobs" bill. Its too hard for small town "conservatives" to understand that we are a country of big cities. And you'd think with all the Hitler comparisons, they would also remember that huge unemployment in cities was a big factor in his rise to power. clowns.
Sad but true. Their is a very high number of unemployment in their districts too. Add to that, the biggest number of uninsured and states with the least health insurance competition lies in red states and red districts. Go figure.
"Low balling the stimulus" Ahhhh yeah. Translation, Obama caved to the GOP to get three freakin Republican votes.
I want a REALLY BIG stimulus, something that will actually make a difference instead of drip, drip, drip. 1) Hire the chronically unemployed to install Solar Panels on every public school, hospital, government building and post office in the country. Massive government purchases would help bring down the average fixed enough to make solar compete in the private sector too. 2)New Mass transit or upgrades for every major city in the US like the Metro in DC, including hybrid buses(Hello GM!!)
3) Have you seen the list of bridges in need of repair in this country? Target the most chronically in need and repair or fix them once and for all. NO new roads or bridges. 4) A corporate or targeted jobs tax cut ONLY if top mgmt agrees to a pay or compensation freeze pay cut or some such string attached so their is no cheating.(Claiming a credit for people they would have hired anyway or taking the tax cut and paying themselves more bonuses instead of hiring people)
Personal tax cuts will not do any of the above. Repeat TAX CUTS will not build or repair bridges.
Tax cuts will be saved or spent at the mall on stuff made overseas, that's why we are not getting any job bang for our stimulus buck in the first place. Try to understand this Obama administration!!
http://www.youtube.com/watch?v=0SoFwBh9Sqs
http://news.asiaone.com/News/Latest%2BNews/Sports/Story/A1Story20091116-180281.html
http://www.youtube.com/watch?v=31AxHeYEDxc&feature=related
Have a good global stimulus plan which originates in the U. S. Government; can't find support for plans&plan? It's a good global game plan for the economy and jobs.
This sounds good and all but remember it's Obama we are talking about here, if anyone cn fck this up it is him. First he is going to insists on making the republicans a partner in this even though they have no desire to see him suceed. And the result of his insistence on bipartisianship is he will get one republican vote and a watered down plan that puts a hundred people back to work. If I were him I wld come up with the largest package we can, explain to people how this will run up the deficit in the short term but bcz it is creating jobs the deficit will eventually come back down, and then I wld DARE the blue dogs and republicans to vote against creating jobs in this country. But again this is Obambi we are talking about so my guess is unemployment will be around 13% next November and we have a new majority leader in the house.
It's odd. On one hand, I agree that a stimulus focus on jobs is necessary, but I'm inclined to let the slow recovery generate the jobs instead of artificially creating them. If anything, I think the unspent portion of the stimulus (ARRA) should be examined, with an eye to identifying unspent allocation that can be diverted to creating more jobs. I was never that pleased with the mix of expenditures in ARRA to begin with, though.
Let's have the, Can Do, Seabees contract and manage the Rebuilding of America. They are set-up, have the know-how and will hit the ground running. The whole gamut of blue and white collar unemployed can get to work immediately. Each state can make a list of what needs to be done.
As for funding, tell congress, "If you don't want your unemployed constituents to have a job vote no, i f you do vote yes."
Stimulus is not enough. We must stop bleeding of jobs going overseas and then make sure we create real jobs here. We had a fundamentally different economy in the 1930's. It was essentially a sound economy stuck in a low gear. Government sponsored jobs had an aim of jump starting the real economy. We no longer have a real industrial economy. Stimuli will create to few jobs beyond the jobs they create.
That may be true. But consider this: If the government creates sustaining jobs in green technology-- car factories into light rail; wind and solar tech (or whatever--you get the idea) that won't necessarily be true. Maybe we don't need any more WPA buildings or National Parks, but we do need to build new infrastructure-- electric grids, e.g.
And consider what else Reich said-- once people start spending, companies will hire again. It's not only new jobs, but the return of jobs to those laid off. You are certainly right about jobs moving overseas. We must enact laws penalizing those who offshore or move whole industries to low-wage countries.
We need multi-year investments in green technology to create real job.
Must be the giant sucking sound taking our jobs overseas.
I like that !! I agree with Reich !!
FAMILIES NEED TO EAT AND HAVE SHELTER.
WPA now !!
You go!
WPA and CCC! There is so much to rebuild and restore in America. We have not over-consumed. Our streets, waterways, bridges, schools, neighborhoods and other assorted infrastructure are blighted from neglect. America first.
I don't know. There are (were) a lot of people buying a lot of optional items made in Ch1na and sold at W@l-m@rt and other corporate behemouths. I would tend to call that over-consuming.
All of the other things that you mentioned are more important, and have indeed been neglected. Agreed.
Correction.
We need even more stimulus and huge tax breaks to keep jobs here.
WE have to stop outsourcing or we are totally doomed. Bill Clinton's great experiment in society leveling is a total failure. These countries are not raising their work and pay standards to ours, we are lowering ours down to theirs and killing our good jobs in the process.
Yes, NAFTA is a DISASTA !!
But no more tax breaks for any person making less than $100,000 and no business tax break for more than $600,000.
"But no more tax breaks for any person making less than $100,000..."
Less? What?
As usual, Bob Reich has a solid common sense approach to money problems.
Our dear president needs to have him over for a beer and a chat instead of wasting his time with those pointy-headed guys on his economic team. His economic team is the weakest point in his administration. I wish he would just tell them, "Thanks" and move on to a new, more diverse team that isn't composed of the guys who set up the problem.
Agree. Many thanks to Robert Reich for his consistent smart approach.
Well, the White House thinks stimulus means handing the banks and Wall Street more trillions of free money but allowing record foreclosures, bankruptcies, and truly scary unemployment. So I don't want another Obama stimulus since none of it reaches the Americans who truly need it. His trickle down policies via Summers and Geithner are as bad as W's.
If we can admit that Obama is anti American employment and solely supportive of banking and the Street, then we can think things through. To allow unemployment benefits to run out is what a Death Panel would allow. This president it truly setting up for millions of Americans to end up on the street--truly, while bankers and traders vacation in Aruba or Monserrat with their mistresses, laughing at Americans just as Enron traders did. Obama is doing nothing for America. Nothing.
The Enron Traders ended up in the debt derivatives market and that would be funny if it werent true.
The problem is WE made the banks too big to fail. We watched it happen. when you run a 700 +billion dollar trade deficit those dollars have to come back to the domestic economy or the whole house of cards falls apart. Thats the job of wall street. attract investment and sell consumer debt at the highest price possible. Keep consumption going and growing. Those policies are what made the banks 2 big 2 fail. and it didnt just start. its been going on for 30 years. we just simply reached a point where we cant consume any more. Bank balance sheets deteriorated and there arent enough foreign buyers to support domestic consumption.
so we have to give up that model. unfortunately the republicans will make everyone pay for their mistakes by preventing an real reform.
yes, but most people don't want to take responsibility - they were just living their little lives - and this is where the failure of the fourth estate is really pernicious, because it has kept the average person fairly ignorant of what's been going on. European countries have a more informed populace because their press functions so much better. If we could improve the press and accomplish campaign finance reform we could probably fix everything else.
When you say, "we made the banks too big" do you mean Republicans' Deregulation Lord of the Flies style of Gov'mint ??
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