11/10/2008 05:12 am ET Updated May 25, 2011

Declaring War on the Meltdown

It's time to declare war on our economic meltdown, and put America back to work.

Back in July, I shared some thoughts in this blog about what an "economy" is, and how the war in Iraq was bleeding dollars from our economy: George Bush has chosen to fight this war as if it has nothing to do with the economy. Back in business school, they taught us that an "economy" was a system in which people decide how to allocate scarce resources to create commodities that people require. A successful economy efficiently takes the resources at its disposal and creates things that people need, and other people want to buy, fostering wealth and an enhanced quality of life for everyone. When the quality of life in an economy improves, more people want to live there, and the value of the land on which that economy sits goes up.

But over the last few years, we haven't allocated our resources to create things that people need. We've taken over a trillion dollars, and have chosen against investing it in the creation of wealth here at home, against investments in roads and bridges, the rebuilding of a great city destroyed, the treatment and cure of disease, food, schools, teachers, police and port security. No, we took that trillion dollars - actually we borrowed that trillion dollars - and have nothing to show for it, save forcing Saddam Hussein into a hole. We've taken 100,000 police officers off American streets, and sent more than 100,000 soldiers to police the streets of Baghdad. What madness.

In July, all this seemed like merely a lost opportunity to improve the shaky health of the sick patient that is our economy. The last few weeks now reveal that the patient is much sicker than we thought, and have made it clear that now is the time to act. It is time to wind down the war in Iraq and declare war on our economic meltdown.

John McCain sees it differently. He believes that if the American government just tightens its belt, everything will be OK. This is more madness. There was a time when physicians thought that the best way to deal with a sick patient was a good bloodletting. John McCain wants to cut government spending at precisely the wrong time; his plan will bleed this economy to death.

Right now, we don't need a bloodletting. We need a transfusion. There are times in a healthier economy when one can argue that the role of government as a builder, a creator, an employer, should be limited. Even in better times, the federal government has recognized its duty to ignite growth by building infrastructure, like Dwight Eisenhower did by creating the interstate highway system. But in rare times like these, times when confidence in the free market ebbs, only governments can step up. And it's time to step up.

The Great Depression ended when the federal government became engaged in two great wars. The first was a war against unemployment. The government stepped up to provide capital to unleash the American workforce to do what our economy needed to do: create things that people needed. Roads, bridges, schools, subways, sanitation systems and courthouses were built or expanded by American workers who would have been otherwise unemployed. Fallow lands were cleared for parks, and communities were spurred to grow around them. Newly employed workers had money in their pockets to invest in their own neighborhoods, and could support local businesses. Technology improved, allowing people to more efficiently travel and communicate.

Today, here in Florida, small businesses, architects, engineers and construction workers hunt for work, now that they have built more houses and condominiums than people can afford or get the credit to buy. At the same time, our roads are overcrowded, our sanitation systems are running at overcapacity. Our streets flash flood when it rains due to inadequate drainage and maintenance. Our schools are crumbling. This deterioration has been going on for years and the quality of life has eroded. We need to build things, for the most part things that only the government can build. At the same time, our local governments are overwhelmed with need, and can't even think about infrastructure. Some are cutting back the size of their police forces, fire departments, and school security personnel just to make ends meet. This is the time for the federal government to step up, to create jobs, and to invest in projects that will create lasting wealth for these and other communities.

The irony, of course, is that our federal government is doing this kind of work right now. Unfortunately, we're doing it in Iraq, and we're paying full freight. We're building a new infrastructure, to replace the one we destroyed with shock and awe in 2003.

A wise Democrat I know argues that a 21st Century WPA-type program is not only good policy; it's also good politics: "Bailing out financial markets is playing defense. I want to play offense. Who will listen? Every town, village and city official in America. Contractors and construction workers and construction professionals who see their work disappearing."

But, of course, there is a concern about the cost of such a program. "Worried about being seen as a big spender?" my friend says, "How can you top $700 million?" In fact, if you create wealth by putting people back to work, it will create wealth in stock markets, pensions and retirement accounts, where trillions have been lost in recent months. Unlike the war in Iraq, this investment would actually pay for itself.