How Obama is Already Taking Charge
Obama's immediate challenge is to fill the leadership vacuum created by a lame-duck president with historically-low approval ratings who seems to have lost interest in his job (at this writing, he's out of the country) and who's disappeared from the media, and a Treasury chief who has all but punted on coming up with any workable solution to the crisis. But Obama doesn't become president until 12 noon eastern standard time on January 20 -- and the national economy is imploding right now.
How does Obama manage this feat? Two ways: (1) appointing a highly-capable economic team, and (2) telling the nation what he plans to do starting the afternoon of January 20. Specifically:
(1) The members of Obama's new economic team fit the bill. They're reported (I have no inside knowledge) to include Tim Geithner at Treasury, Peter Orszag at the Office of Management and Budget, Jack Lew and Jason Furman at the National Economic Council, and Austan Goolsbee at the Council of Economic Advisors. All have several things in common. They're relatively young, in their late 30s or 40s, representing a generational change and a fresh start. Despite their youth, they're also experienced; almost all were up-and-comers in the Clinton Treasury, NEC, and OMB.
All are pragmatists. Some media have dubbed them "centrists" or "center-right," but in truth they're remarkably free of ideological preconception. All have well-earned reputations as hard workers, well-versed in the technical details of public and private finance. They are not visible veterans of the old battles over supply-side economics or deficit reduction, nor are they well-known to the public. They are not visionaries but we don't need visionaries when the economic perils are clear and immediate. We need competence. Obama could not appoint a more competent group.
(2) The President-Elect has also signaled the country what he wants to do: enact an "Economic Recovery Plan" that will mean 2.5 million more jobs by January of 2011. In his words (from Saturday's radio address) a plan "big enough to meet the challenges we face ... a two-year, nationwide effort to jumpstart job creation in America and lay the foundation for a strong and growing economy." Again, I have no inside knowledge, but I'd expect it to be about $600 to $700 billion.
Its focus will be on infrastructure of a sort that will not only put people to work but also improve the productivity of the economy. His words: "We’ll put people back to work rebuilding our crumbling roads and bridges, modernizing schools that are failing our children, and building wind farms and solar panels; fuel-efficient cars and the alternative energy technologies that can free us from our dependence on foreign oil and keep our economy competitive in the years ahead."
In short, Obama's job-stimulus plan will be a down-payment on his larger plan to increase the nation's public investment. "These aren’t just steps to pull ourselves out of this immediate crisis," he says, "these are the long-term investments in our economic future that have been ignored for far too long. And they represent an early down payment on the type of reform my Administration will bring to Washington." He could not be more specific, at least while still President-Elect.
At a time when aggregate demand is shriveling because consumers aren't spending and investors have stopped investing, and exports are shrinking, Obama recognizes that government must be the spender of last resort. He will combine old-fashioned Keynesian economics with newly-fashioned public investments to pull the economy out of its slump.
By putting his economic team in place barely three weeks after he was elected, and telling the nation what he plans to do immediately after he takes office, the President-Elect is asserting leadership at a time when the the Bush administration has all but abdicated.
How does Obama manage this feat? Two ways: (1) appointing a highly-capable economic team, and (2) telling the nation what he plans to do starting the afternoon of January 20. Specifically:
(1) The members of Obama's new economic team fit the bill. They're reported (I have no inside knowledge) to include Tim Geithner at Treasury, Peter Orszag at the Office of Management and Budget, Jack Lew and Jason Furman at the National Economic Council, and Austan Goolsbee at the Council of Economic Advisors. All have several things in common. They're relatively young, in their late 30s or 40s, representing a generational change and a fresh start. Despite their youth, they're also experienced; almost all were up-and-comers in the Clinton Treasury, NEC, and OMB.
All are pragmatists. Some media have dubbed them "centrists" or "center-right," but in truth they're remarkably free of ideological preconception. All have well-earned reputations as hard workers, well-versed in the technical details of public and private finance. They are not visible veterans of the old battles over supply-side economics or deficit reduction, nor are they well-known to the public. They are not visionaries but we don't need visionaries when the economic perils are clear and immediate. We need competence. Obama could not appoint a more competent group.
(2) The President-Elect has also signaled the country what he wants to do: enact an "Economic Recovery Plan" that will mean 2.5 million more jobs by January of 2011. In his words (from Saturday's radio address) a plan "big enough to meet the challenges we face ... a two-year, nationwide effort to jumpstart job creation in America and lay the foundation for a strong and growing economy." Again, I have no inside knowledge, but I'd expect it to be about $600 to $700 billion.
Its focus will be on infrastructure of a sort that will not only put people to work but also improve the productivity of the economy. His words: "We’ll put people back to work rebuilding our crumbling roads and bridges, modernizing schools that are failing our children, and building wind farms and solar panels; fuel-efficient cars and the alternative energy technologies that can free us from our dependence on foreign oil and keep our economy competitive in the years ahead."
In short, Obama's job-stimulus plan will be a down-payment on his larger plan to increase the nation's public investment. "These aren’t just steps to pull ourselves out of this immediate crisis," he says, "these are the long-term investments in our economic future that have been ignored for far too long. And they represent an early down payment on the type of reform my Administration will bring to Washington." He could not be more specific, at least while still President-Elect.
At a time when aggregate demand is shriveling because consumers aren't spending and investors have stopped investing, and exports are shrinking, Obama recognizes that government must be the spender of last resort. He will combine old-fashioned Keynesian economics with newly-fashioned public investments to pull the economy out of its slump.
By putting his economic team in place barely three weeks after he was elected, and telling the nation what he plans to do immediately after he takes office, the President-Elect is asserting leadership at a time when the the Bush administration has all but abdicated.
posted by Robert Reich | 1:28 PM
59 Comments:
Any chance they'll open AIG's real books in Luxembourg, Switz. and Bermuda? Or are we only using taxpayers' money? According to Lucy Komisar, they have a rough trillion sneaking around somewhere. Every bit helps.
Dr. Reich:
Why is it so carved in stone that we need to create more jobs to solve the economic crisis? Under the best of times with technical 'full employment' we have around 96% of our workers employed. At his moment in time we have around 93.5% of the workforce employed. While increasing jobs is important humanely and politically , it is not the medication we need to cure the current financial illness. During the 1920's period
leading up to the Great Depression, unemployment was relatively low, yet still the economy collapsed. The primary causes were too little real wage growth for the working class and their reliance on too much debt. Both factors ultimately led to a collapse in consumer demand. And we have a similar situation today. The working 93% of our workforce have not shared in the economic growth of the country and so have relied excessively on increasing debt load to maintain aggregate consumer demand. Restoring a couple of million new jobs and pushing the employment rate up to 94.5% or so will not magically significantly increase the purchasing power of the middle class/working class consumer. In the short term Washington can send checks to everybody a couple of times a year to bolster consumer demand, but that can not go on forever without bankrupting the US altogether. The economic system needs to be restructured along the lines of the mid 1950's and early 1960's, with a significant portion of GDP growth being allocated to the consuming middle class worker. But creating more inappropriately compensated jobs and encouraging more consumer debt beyond the current unsupportable levels will just delay the moment of truth when this house of credit cards comes tumbling down. Like the generals who study how the fight yesterday's battles, too many of those in politics are proposing anew tidied up versions of yesterday's responses to today's challenges.
Sec. Reich:
You wrote:
"The President-Elect has also signaled the country what he wants to do: enact an "Economic Recovery Plan" that will mean 2.5 million more jobs by January of 2011. I have no inside knowledge, but I'd expect it to be about $600 to $700 billion."
I don't know if you read your comments, but if you do, could you say more about how you arrived at that figure? During the campaign, the proposed National Infrastructure Reinvestment Bank would involve spending of $60 billion over ten years. The Obama campaign predicted that would generate 2 million new jobs. Obviously, the idea now is to generate even more jobs - 2.5 million - in 2 years, so naturally there is some front-loading.
This sounds hopeful. If Obama is the man with a plan let us hope he also delivers pain to the corporados that got us here. BCCI Guy has a good point: AIG needs to come clean along w/the other high-rollers.
Reconciliation is all well and good to establish unity, but if the criminals continue laughing all the way to the bank vault while people are moving into their cars, the fat cats must pay....literally.
The Obama admin may need to spend over $1 Tril, realistically. We need that much stimulus, especially in our crumbling infrastructure.
Obama is right on track: job creation is the primary issue. And government has to be the prime mover of job creation now that private enterprise has failed. The reason they've failed is that they have no commitment to the American worker and so have moved jobs overseas in search of the cheapest labor input to the production process. Their model comprised overseas manufacturing combined with importing back to the American market.
The American market contained the world's largest collection of consumers. And the American consumer was expected to maintain a hefty debt load in order to maintain his/her consumption habits. So Americans were not only positioned to be the world's largest consumer market but the world's largest debt market with investors making out by selling merchandise and buying debt products. Profits were reaped from both. This combined to turn Americans into a nation of overconsuming debtors.
The fly in the ointment was basically that people started walking away from their debt by not paying mortgages. The other fly was that people can not continue to consume without having the income to do so, and people will not have the income to do so without either a good paying job or rising equity in their homes which they can extract in order to consume.
Obama's heart is in the right place, and I'm sure he'll do everything in his power to point the US in the right direction. The question is whether the forces of the status quo will capitulate or whether they will fight back. Even though Bush has lost interst in being President, his administration is doing everything in its power to vitiate environmental laws on his way out the door. It's good that Obama intends to go way beyond token efforts and to fundamentally restructure the American economy and American society. That's exactly the medicine needed. Hopefully, he'll be successful. We'll see.
It is extremely important to put this "job creation" meme in context. Do we need "jobs" or do we need the goods and services people doing the jobs make and perform? If it's the latter, then, fine, "create" the jobs already. But if it's "jobs for jobs sake" somebody's getting their means and ends mixed up.
As silverfox points out, there's plenty of already employed folks whose purchasing power is inadequate. How is creating more jobs going to fix that problem?
The FDR New Deal stimulus public spending programs didn't just happen. They were a reaction to the "threat" of a more radical response to the depression -- the Black-Connery 30-hour bill. Maybe it's time to take another look at the alternative. Below is historian Ben Hunnicutt's account of the interaction between Black-Connery and the New Deal.
"In a letter to Arthur Schlesinger dated April 9, 1958, Leon Keyserling stressed that Roosevelt came to Washington without a "systematic economic program." The "highly experimental, improvised and inconsistent" programs of the first New Deal defy categorization. They were the products of "schools of reformers" that had been promoting diverse programs that Roosevelt, higgledy-piggledy, picked up. According to Keyserling, the PWA, CWA, NIRA, and the rest were not parts of any systematic plan or overall purpose. The only coherence given these events came from outside the administration. It was the "desire to get rid of the Black bill" that prompted the administration to draw up such things as the NRA, "to put in something to satisfy labor." This same point was made by other notables in Roosevelt's administration, among them Raymond Moley.
"Throughout the depression, 30-hour legislation goaded Roosevelt to action. The Black-Connery bill, introduced in each depression Congress until passed in highly modified form as the Fair Labor Standards Act [FLSA] in 1938, with all the work-sharing teeth pulled, continued to function as a sort of reverse polestar, enabling Roosevelt to chart his course by the simple expedient of sailing in the opposite direction. Roosevelt's instinctive reaction against 30 hours matured to positive approaches to industrial stabilization and reemployment. They were built on work creation, not work spreading, founded on industrial growth and increased spending as the wellsprings of progress. In the process, he and his administration discarded the century-old notion that work reduction had the potential for social and individual advancement.
"From the point of view of someone like Representative William Connery, who pushed for 30 hours from 1932 to 1937, the New Deal had a coherence, a reason for happening when and as it did, that was lost on others not so positioned. From Connery's perspective, the New Deal was what it was because of its opposition to 30 hours."
Great post. Forward looking and positive. Thank you.
sandwichman;
If you accept the theory that the current economic slowdown is the result of insufficient consumer demand, believing as I do that this condition arises from lack of wage growth following a failure to share in GDP growth , and a subsequent dependence on ever increasing debt load, than it follows that having Washington create a few million new jobs to replace some of those lost ( due to lack of consumer demand ) will be of little effect. Growing total employment from 93% to 96% will not increase aggregrate consumer demand as it does nothing to increase the purchasing power of the jobs that existed before the creation of the new jobs. The only way to do that , that is, increasing worker wages, is to create a shortage of workers. Washington, or a more effectively operating economy, has to create a surplus of jobs with the understanding that some of those will remain unfilled, and therefore the economy has to compete for the limited pool of workers. Actually, through most of America's history from the 1600's up to the early 1900's there has always been a shortage of labor, which allowed American workers to demand and receive a share of the GDP growth they produced. So, if today we have 10 million unemployed and Washington proposes to create 2-1/2 million replacement jobs, we still have done nothing to increase raw purchasing power for the working consumer. Traditionally major wars, such as WWII, create labor shortages, which probably explains why war has always been so popular throughout human history. I don't propose starting another war, but it might take some sort of national special projects draft of several millions of people to create the required labor shortages needed to drive up wages and therefore aggregrate consumer purchasing power.
I must say, I AM hopeful! Between Obama and Reich, I'm counting the moments to get that SOB outta office at 12 noon on 1/20/09, the 3rd Tuesday of January.
Yes, tt, there is a God.
tt
I'm elclined to agree with silverfox here and say that the Obama plan will not go far enough to make a difference in regards to
our current problem: a lack of consumer demand that is a result of years of stagnant real wage growth.
That is, creating "only" 2.5 million jobs will not create enough
of a sellers market to allow workers to bargain for the higher wages needed to increase business
investmen and thus FUNDIMENTALLY
increase aggrivate demand so we
can turn this thing around.
I'm very disapointed in Mr. Obama.
And I'm also thinking of what James
K. Galbraith said on page 195 of
"The Predator State.":
"You want higher wages? Raise them."
That can be done before March 2009
and I think that it is a much more
P-R-A-C-T-I-C-A-L solution.
And anyone who suggests this now
will be the crazy uncle who lives
in the attic.
That sound you hear? What sound?
Hey, its not like he's throwing the
furniture around again. Just ignore
those noises. Be serious. Act like
a grown-up.
And stop being so intellectually rowty. Get with the program.
Yes, silverfox, I agree that there needs to be a shortage of labor to drive wages up. That was the purpose of the shorter work-time strategy originated by Ira Steward in the 1860s and adopted as official policy by the American Federation of Labor in the 1880s (and again in the 1930s). Economists hate this idea like the plague (they call it a 'fallacy') because they would rather think that lower wages are the solution to unemployment. Of course, more liberal economists like Dr. Reich don't agree with the low wage dogma. But they're very timid about speaking out against the prevailing bias of the profession.
It's called the "Lump of Labor fallacy".
Dr. Reich:
How does President Obama plan to finance all of this excessive deficit spending without tanking the bond market? The bond market is currently headed in the wrong direction and flooding the bond market with a tsunami of US Treasuries is going to put it under further stress. What happens if foreign creditors say "No mas" to soaking up additional US debt? What then? President Obama can make statements about not caring about deficits right now, but the President is still subject to financing constraints imposed by the bond market. All of this accumulated deficits and debt over the years/decades is going to present a challenge to the new President's spending ambitions. It won't work in short. In fact, we are likely looking at mandatory cuts in government spending in the coming years. The situation is a lot worse than either you, the current administration, the Obama administration or the MSM is letting on.
Mike Davis, Keynesian Shock and Awe
No one should be shocked to discover that, in his transition to the presidency, the "inexperienced" former senator from Chicago has turned to the last Democratic administration that had experience in Washington. It seems, however, that the Obama team is doing so big time. Looking at lists of early appointees for the transition period and the administration to come, from Rahm Emanuel on down, you might be forgiven for concluding that Hillary had been elected president in 2008. Clintonistas are just piling up in the prospective corridors of power.
You might also be forgiven for concluding that just about no one else in America had ever had any "experience." Late last week, the website Politico.com did some counting and came up with the following: "Thirty-one of the 47 people so far named to transition or staff posts have ties to the Clinton administration, including all but one of the members of his 12-person Transition Advisory Board and both of his White House staff choices." More have been appointed since then, including, as White House Counsel, Gregory Craig, the lawyer who defended Bill Clinton in impeachment hearings. And, of course, everyone in America now knows that Hillary herself is evidently now being considered for a cabinet post.
What do Washington political and policy types do when their party is kicked out of office? If they want to stay in the Big Town, they tend to go to work for lobbyists, consultancy firms, or think tanks. They raise money. They do what's needed and make good livings until the tide turns. Now, that tide is again rushing in -- and the lobbying money is, of course, rushing in with it. As the Washington Post describes it, there is already a "mini-boom" for Democrats along that lobbying alley, K Street.
Here's how Laura Meckler and Jonathan Weisman of the Wall Street Journal described one set of 13 transition-team names released: "The group is filled with second-tier veterans of the Clinton administration and workers in the technology and financial sectors. It includes four former lobbyists, three top campaign fund-raisers and two former employees of troubled mortgage giant Fannie Mae, with some overlap among them. Four people in the group have ties to the consultant McKinsey & Co…" (In 2004, by the way, McKinsey & Co. made $19,500 in executive contributions to President Bush, and $102,000 in soft money contributions to the Republican Party. That will undoubtedly now change.)
Obama himself, for those of you who watched him (and Michelle) on 60 Minutes Sunday, is nothing short of a breath of fresh air -- he actually explains things coherently -- after our last presidential "experience." But let's hope that, as the good times roll (even in bad times) for Democrats, he keeps his equilibrium amid the usual Washington consensual pressures. The President-elect spoke Sunday night of keeping people in their all-too-foreclosable homes. Right now, as far as we know, the best he can imagine is a 90-day foreclosure freeze on "some banks." The plans at the FDIC these days promise to save homeowners by turning 30-year mortgages into 40 years of paying the bank at lower interest rates. Is there no such thing in our world as the economics of kindness (except perhaps for bankers and insurance execs)? What about leaving people in their homes at least until the bad times end? Why is debt forgiveness an option for banks, but not for citizens?
Among all those experienced folks in the new Democratic Washington, will there be anyone who can truly think outside the box in desperate times? Mike Davis, TomDispatch regular and most recently the incandescent author of In Praise of Barbarians: Essays Against Empire, suggests some of the human choices that an Obama administration will face and what might be done about them. Tom
Why Obama's Futurama Can Wait
Schools and Hospitals Should Come First in Any Stimulus Package
By Mike Davis
America's "Futurama" is defunct. The famous walk-through diorama of a car-and-suburb world, imagineered by Norman Bel Geddes for General Motors at the 1939 New York World's Fair, has weathered into a dreary emblem of our national backwardness. While GM bleeds to death on a Detroit street corner, the steel-and-concrete Interstate landscape built in the 1950s and 1960s is rapidly decaying into this century's equivalent of Victorian rubble.
As we wait in potholed gridlock for the next highway bridge to collapse, the French, the Japanese, and now the Spanish blissfully speed by us on their sci-fi trains. Within the next year or two, Spain's high-speed rail network will become the world's largest, with plans to cap construction in 2020 at an incredible 6,000 miles of fast track. Meanwhile China has launched its first 200 mile-per-hour prototype, and Saudi Arabia and Argentina are proceeding with the construction of their own state-of-the-art systems. Of the larger rich, industrial countries, only the United States has yet to build a single mile of what constitutes the new global standard of transportation.
From day one, Barack Obama campaigned to redress this infrastructure deficit through an ambitious program of public investment: "For our economy, our safety, and our workers, we have to rebuild America." Originally he proposed to finance this spending by ending the war in Iraq. Although his present commitments to a larger military and an expanded war in Afghanistan seem to foreclose any reconversion of the Pentagon budget, he continues to emphasize the urgency of an Apollo-style program to modernize highways, ports, rail transit, and power grids.
Public works, he also promises, can put the public back to work. His "Economic Rescue Plan for the Middle Class" vows to "create 5 million new, high-wage jobs by investing in the renewable sources of energy that will eliminate the oil we currently import from the Middle East in 10 years, and we'll create 2 million jobs by rebuilding our crumbling roads, schools, and bridges."
Of course, Bill Clinton entered the White House with a similarly ambitious plan to rebuild the derelict national infrastructure, but it was abandoned after Treasury Secretary Robert Rubin convinced the new president that deficit reduction was the true national priority. This time around, a much more powerful and desperate coalition of interests is aligned to support the Keynesian shock-and-awe of major public works.
Rolling Out the Dozers
Since the Paulson bailout plan has become so much expensive spit in the wind, and with bond spreads now premised on the possibility of double-digit unemployment over the next 18 months, massive new federal spending has become a matter of sheer economic survival. As innumerable influentials -- from New York Times columnist David Brooks to House Majority Leader Nancy Pelosi -- have argued, a crash program of infrastructure repair and construction, likely to include some investment in the new power grids required to bring more solar and wind energy online, is the "win-win" approach that will garner the quickest bipartisan support.
It has also been portrayed as the only lifeboat in the water for the ordinary steerage passengers in our sinking economy. The emergent Washington consensus seems to be that those five million green jobs can actually come later (after we save GM's shareholders), but that infrastructure spending -- if resolutely pushed through the lame-duck Congress or adopted in Obama's first 100 days -- can begin to pump money into the crucial construction and manufacturing sectors of the economy before the end of next winter.
Unlike Comrade Bush's "socialist" efforts to save Wall Street, a public-works strategy for national recovery has had broad ideological respectability from the days of Alexander Hamilton and Abraham Lincoln to those of Franklin D. Roosevelt and John F. Kennedy. If Democrats can brag about the proud heritage of the Works Progress Administration and the Public Works Administration from the era of the Great Depression (ah, those magnificent post offices and parkways), there are still a few Republicans who remember the Golden Age of interstate highway construction that commenced in the 1950s with President Dwight D. Eisenhower. Indeed since the national shame of Hurricane Katrina, Americans have become outspokenly nostalgic about competent federal governments and magnificent public achievements.
If one accepts the reasonable principle of supporting the new president whenever he makes policy from the left or addresses basic social needs, shouldn't progressives be cheering the White House as it rolls out the dozers, Cats, and big cranes? Aren't high-speed mass transit and clean energy the kind of noble priorities that best reconcile big-bang stimulus with long-term public value?
The answer is: no, not at this stage of our national emergency. I'm not an infrastructure-crisis denialist, but first things first. We are now at a crash site, and our priority should be to save the victims, not change the tires or repair the fender, much less build a new car. In the triage situation that now confronts the president-elect, keeping local schools and hospitals open should be the first concern, rebuilding bridges and expanding ports would come next, and rescuing bank shareholders at the very end of the line.
Inexorably, the budgets of schools, cities, and states are sinking into insolvency on a scale comparable to the early 1930s. The public-sector fiscal crisis -- a vicious chain reaction of falling property values, incomes, and sales -- has been magnified by the unexpectedly large exposure of local governments and transit agencies to the Wall Street meltdown via complex capital lease-back arrangements. Meanwhile on the demand side, the need for public services explodes as even prudent burghers face foreclosure, not to speak of the loss of pensions and medical coverage. Although the public mega-deficits of California and New York may dominate headlines, the essence of the crisis -- from the suburbs of Anchorage to the neighborhoods of West Philly -- is its potential universality.
Certainly, in such a rich country, wind farms and schools should never become a Sophie's choice, but the criminal negligence of Congress over the past months should alert us to the likelihood that such a choice will be made -- with disastrous results for both human services and economic recovery.
Saving Schools and Hospitals
Congress naturally loves infrastructure because it rewards manufacturers, shippers, and contractors who give large campaign contributions, and because construction sites can be handsomely bill-boarded with the names of proud sponsors. Powerful business lobbies like the National Industrial Transportation League and the Coalition for America's Gateways and Trade Corridors stand ready to grease the wheels of their political allies. In addition, if the past century of congressional pork-barrel methods is any precedent, infrastructural spending typically resists coherent national planning or larger cost-benefit analyses.
Yet saving (and expanding) core public employment is, hands-down, the best Keynesian stimulus around. Federal investment in education and healthcare gets incomparably more bang for the buck, if jobs are the principal criterion, than expenditures on transportation equipment or road repair.
For example, $50 million in federal aid during the Clinton administration allowed Michigan schools to hire nearly 1,300 new teachers. It is also the current operating budget of a Tennessee school district made up of eight elementary schools, three middle schools, and two high schools.
On the other hand, $50 million on the order book of a niche public transit manufacturer generates only 200 jobs (plus, of course, capital costs and profits). Road construction and bridge repair, also very capital intensive, produce about the same modest, direct employment effect.
One of the most likely targets for a Congressional stimulus plan is light-rail construction. Street-car systems are enormously popular with local governments, redevelopment agencies, and middle-class commuters, but generally they operate less efficiently (per dollar per passenger) than bus systems, and at least 40% of the capital investment leaks overseas to German streetcar builders and Korean steel companies.
Personally, I would love to commute via a sleek Euro-style bullet train from my home in San Diego to my job in Riverside, 100 grueling freeway miles away, but I'll take gridlock if the cost of rationing federal expenditure is tolerating the closure of my kids' school or increasing the wait in the local emergency room from two to ten hours.
Obama, unlike his predecessor, has a bold vision, shared with his powerful supporters in high-tech industries, of catching up with the Spanish and Japanese, while redeeming America as the synonym for modernity. Lots of new infrastructure will, however, become so many bridges to nowhere (especially for our children) unless he and Congress first save human-needs budgets and public-sector jobs.
A good start for progressive agitation on Obama's left flank would be to demand that his health-care reform and aid-to-education proposals be brought front and center as preferential vehicles for immediate macro-economic stimulus. Democrats should not forget that the most brilliant and enduring accomplishment of the Kennedy-Johnson era was Head Start, not the Apollo Program.
If, after saving kindergartens and county hospitals, we someday hope to ride the fast train, then we need to rebuild the antiwar movement on broader foundations. The president-elect's original proposal for funding domestic social investment through downsizing the empire offers a brilliant starting point for basing economic growth on an economic bill of rights (as advocated by Franklin Roosevelt in 1944) instead of imperial over-reach and Pharaonic levels of military waste.
Mike Davis is the author of In Praise of Barbarians: Essays Against Empire (Haymarket Books, 2008) and Buda's Wagon: A Brief History of the Car Bomb (Verso, 2007). He is currently working on a book about cities, poverty, and global change.
If I could give Obama a standing ovation, I would have done it after watching his Saturday talk. I applaud you for you staunch support, Dr Reich. Although I think standing to applaud you would be overstating the case given the fact you spelled Keynes' name wrong ;-)
Bush is a "Lame Fuc_" he almost destroyed this country.
Now he is coward on the side lines in shame.
Obama is demonstrating the leadership we saw him present during the campaign.
He is putting the petty aside and trying to build America’s confidence and build a coalition bipartisanship. It is so refreshing to hear America being put first above party bickering and posturing.
I feel vulnerable. I feel betrayed. I had shame for America, but I'm finally seeing hope and change.
I am with "poor machinist from Cleveland" on this one....but trying to maintain optimism. I see a real tough row to hoe for the working people in the USA. Depression means wage reduction (which usually is translated to mass layoffs and overwork at lower pay for the remainder). Small business will be hit the hardest while the CEO's have already made their "nut" of 7 generations of secure income for their families. I wish for Obama's success but with Larry Summers still as his lead advisor and Bob Rubin in the wings promoting yet more bailouts for the rich at Wall Street, there will be little left to help the people who will really suffer in the future.
Obama is unfortunately at the stage of Hoover was in the developing economic crisis. The Great Crash only happened at the beginning of Hoover's term and got so much worse during it which unfortunately mimics Obama's tragedy. How ironic that the people most hurt by the coming Depression will be young people and especiall African Americans already suffering high unemployment. I realize I am being a doom-sayer and Hope, beyond long experience, that I am wrong. Maybe Wall Street will bail us out with a big investment into Obama's sort of industries, wind farms, energy conservation, labor intensive firms...but I won't hold my breath. Even the relatively "liberal" Crammer is saying alternative energy and green investments are tanking due to the deflation of oil and gas. (a reasonable conclusion..)
And to not charge the very wealthy with higher taxes for their mishandling of the economy is a losing, deficit hand the Obama's playing.
The poor guy, he isn't having a honeymoon at all is he? I hope he listens to Dr. Reich, Dr. Galbraith, and Dr. Krugman and not just the predominately Clintonite ProWallStreet guys at the top of his economic team. There isn't a Lincoln bedroom to sell this time. Main Street is where the deal will go down. We need more security and hope before we can 'buy'. Jobs are important, nearly everybody I know is afraid that their job will be gone within a year.
Lost interest in his job? Seriously? He is carrying out diplomacy. Didn't the chattering class cluck their tongues when he ran in 2000 because of his lack of international travel? Now, when he leaves the country, he is disinterested. Mr. Reich, you should be above such partisan hackery
John Lawrence said:
And government has to be the prime mover of job creation now that private enterprise has failed. The reason they've failed is that they have no commitment to the American worker and so have moved jobs overseas in search of the cheapest labor input to the production process.
I'm certainly no expert, I'm learning a lot by hanging out here. It seems to me our corporations have stupidly refused to acknowledge that other countries do not have Capitalist economies. Other countries also have nifty little solutions like Nationalized health care for both the working and the retired. Take that expense off the employers and they instantly become more competitive in the global economy. (says the gal who doesn't really know squat about such things)
So if I'm wrong, I'm really, really wrong, but if I'm right, ........how is it that I can see the truth of this and those highly educated hotshots making the megabucks can't?
Why haven't these guys been heavily lobbying for years to get health care off their backs so they can compete on a more equal playing field.
Oh yeah, greed........stupid, short sighted, criminal greed.
Retreads using SOP Democratic stimulus plans that will do little for employment gain but create GDP spikes similiar to the Bush years.
The banking system can no longer generate cheap fast available credit to anyone that can fog a mirror. This will unhinge the demand side employment with massive job losses in finance,marketing,sales, RE and all the various subsets. Women will be particuliarly hit hard in this downturn as many have overextended financially buying property, expensive cars and being a large driver in the designer lifestyle market. No they can't be retrained easily for lower paid jobs or the various pick and shovel construction employment Obama is planning.
I wanted someone fresh for treasury and all we got was a young architect of the plan that can't shoot straight brought into the tent by the ancient Paulson. Pure Wall Street. Rubin acolyte, Rubin of the Clinton Rubin Meltdown we are experiencing as encouraged and multiplied by 12 years of the worst and greediest economic stewardship of the Weepublicans.
My disappointment is great though on most other fronts it does seem that the best prepared man in recent history is abut to get his opportunity to do some good in this second tier nation.
I can't say it enough. Bush and his administrations are THE WORST in American history. Period!!!
Next point.
"We’ll put people back to work rebuilding.."
But which people? This is the problem we face in our "predator" nation. Will construction contracts go to firms who hire illegal workers at slave wages? This has been going on in high gear for the last 25 years.
Will the technology investments go to firms who "outsource" much of the work to overseas firms, or, bring in foreign tech workers at cheapers wages?
Obama should include clear directions and tough penalties for firms who undermine our labor force by mostly employing overseas and illegal immigrant labor.
This is a huge, difficult issue ONLY for those who like slave labor and want to continue the Reagan/Bush policies.
crankyOleBroad:
We live in a machine age that is quickly moving into the robotic stage, botton line manufacturing needs few if any direct labor but the owners of the factories need consumers to buy the huge volume of uniform products the machines produce. There is our crisis, how to fuel consumer consumption? Recently it has been cheap available credit along with a oversized demand size employment force but that has come to a halt as leverage credit creation has finally peaked. The emerging nations were the big hope but high energy cost and a slowdown here in America has ended that pipe dream.
Welcome to our economic nightmare.
Silverfox,
You hit the nail on the head.
Let's focus on plans that allow working Americans to reduce their debt load and save.
The jobs part is essential of course, but not THE only thing that is needed.
And I hope Obama does not back away from changing policies that reward the many corporate terrorists that exist in our country.
The show the heads of the Big 3 put on last week up on Capital Hill boggled the mind.
Unbelievable!
I don't ever want to hear a white person talk about blacks on welfare for the rest of my life.
Yes, Mithras, it is indeed called the lump of labor fallacy. I'm sorry, I was being coy. I wrote the obituary for the fallacy claim. To put it simply, it is alleged that reducing the hours of work cannot improve the employment situation. That allegation is false. The fallacy claim is wrong. Reduction of working time is a viable strategy for reducing unemployment (even Keynes said so). It is not, however, a simple arithmetic process of dividing up and redistributing hours of work. I would describe it more as hygiene -- it keeps labor markets and labor processes healthier (higher wages, better working conditions, healthier, better motivated workers...).
Professor Reich:
Shouldn't we be grateful that the President has finally "lost interest in his job"? Second,you failed to mention Larry Summers. Are you not impressed with Big Lare?
Economy must not be political, there is no conservative or liberal solution to the problem, there is always only one solution, the corect one. The solution is a balance between supply and demand, investments and consuming, tax middle and tax wealthy, inflation and deflation. As the situation change, the reaction to it have to change, you can call it right or left but it must corespond with return to ballance. Facts do not change, only our knowlege of them does change and how fast we realize the real situation. Since Reagan the supply side was rising and it was good while it was restoring the balance, but that balance was reached while Clinton was president and it kept going imballanced untill today. Imballance is so great now, hidden by overborrowing on home equity that it calls for total destruction of the system. The ballance has to be restored arteficially and fast by extreme taxing of investment side and call for a month of production holiday to curb deflation from oversupply. And of course tax cuts to low income earners. Selling treasury bonds for infrastructure can cut down destructive levels of investments that have been wreaking havoc since .com bubble.
I see now that bubble is happening in the food market. Restaurant demand is lagging and familly store demand is growing and prices are rising untill the switch is finished. This bubble will burst also but not untill it hurts many and send them to soup kitchens.
Investments in infrastructure will only help transitional period untill the ballance is reached. Consumers buying power can be increased fast by tax cut to poor but also supported by taxing corporations for high salaries forcing them to look for other ways to raise expenditures. Hopefully they will raise labor costs, if not then incentivie to raise wages.
Obviously those wondering about the need for creating jobs aren't paying their friends' car loans, trying desperately to keep two kids in college since there are no jobs for them, and sitting out the market since there is no job for themselves and their husband is thankfully well employed like I am....
I saw you on CNN today, and I'm hearing lots of suggestions as to how to fix our economy, but I'm still trying to connect the dots here.
You had said that we have to stop the downward slide of median wages in this country.
While I do agree with this premise, how does a stimulus package accomplish that in a meaningful, sustainable way?
At some point, wouldn't we want any job growth to be self-sustaining? At what point, and how, do those government stimulus-based jobs ever become able to wean themselves off of federal dollars? Do they ever become independent, or are they a "permanent" line item in the federal budget from that point forward... or jobs in existence only so long as Congress and the President agree that they "important?"
And what about the costs incurred to finance this stimulus?
Does the adding of debt end up hurting the average American more than it helps?
Moreover, will the jobs created by this package have higher-than-average wages, or will it likely create mostly jobs that are at or below the median?
You also mentioned that the American consumer is essentially, “at the end of their ropes.”
I agree, but doesn’t a fixing of the economy also involve a “deleveraging,” a move back to household fiscal responsibility, which necessitates less borrowing and less spending?
If that is true, does that not mean that there will be significantly more pain ahead for the average American?
And lastly, seeing as how many Americans are beginning to ask themselves exactly how much more CRAP they need to buy, isn't to be expected that the economy is going to shrink?
RR:
I agree wholeheartedly with your comments. Now perhaps, we can abandon the Dow Jones Industrial Index as a barometer of our economic well being.
However, you forgot to mention the old man. He's a pretty cool dude you know....
Best regards,
Econolicious
There is a simple way to understand our economic problems. Just ask yourself this question, "Would this have happened if we had a communist economy that didn't use money or own property?". We need to realize that for 99 percent of the population, capitalism is a terrible system that perpetuates poverty and misery for millions of people and reduces hundreds of millions to wage slavery. We need an economic revolution! Let's start with an economic bill of rights and obligations. Every person in the US should be entitled to food, shelter, medical care, and education. Every person should be obligated to perform the work necessary to provide the necessities of life to the population. These 2 articles are fundamental, anything else is a side show. None of the requires or involves the use of money. Think of the millions of workers whose jobs consist of shuffling money. They would be freed to perform real, valuable work. Capitalism has alienated people of the idea that useful work is one of lifes greatest pleasures. Capitalism has failed, it's time to replace it with a system that respects labor as the only force that can actually create wealth for everyone.
Sec. Reich said, "...the President-Elect is asserting leadership at a time when the the Bush administration has all but abdicated."
This meme of the Bush mob just "sitting on the sidelines" seems to be universal in these comments, and in the traditional media. What I see is a frenetic and purposeful scorched earth policy that will continue up to noon on January 20th.
Can someone talk me down with a paragraph or two?
Thanks
Robert Reich is the one former Clinton Cabinet member I'd like to see in the new administration. He was a boffo Labor Secretary.
Totally agree with this post. I even think we will see the beginning of a market recovery as a result of Obama's projection of confidence. Will this sustain? Probably not but the president is doing what he can during the transition period to change the mode of investors.
Can you comment on the debate about whether new deal policies actually worked or not?
I see a scorched earth policy, too. When the bad guys are retreating the way they keep the good guys from coming after them is to set everything on fire. The Bushies are doing everything they can to keep people freaked out over the economy so Justice doesn't come knocking.
Obama has a unique opportunity to undo 30 plus years of reactionary/neocon blabber. He should institute the modern-day equivalent of Roosevelt's "Fireside Chats" wherein, every week or two he -- or an appropriate administration spokesman -- would address "what's happening" in language and context that would *clearly* overturn the philosophical/terminological nonsense that Frank Luntz, Grover Norquist, and the morons of the "Agenda for the New American Century" have foisted on the American sheople. It's long overdue that someone patiently identify and explain -- as Jonathan Chait so aptly identified it -- "the big con: crackpot economics and the fleecing of America"!
I would like to work off of what Silverfox asked: "Why is it carved in stone that we need to create more jobs to solve the economic crisis" Having recently read "The Two Income Trap" I am keenly aware that the percentage of adults in the work force has nearly doubled since the 60s. Families went from being one income as the norm, to two income being a practical necessity. Can we get the economy back to a state where one working adult can provide for a family? If technological innovations make everyone more efficient can that efficiency become less working hours, instead of high profits?
Now that the anti-science, superstition-based initiative presidency is coming to an end, we need several public works science Manhattan projects to make us great again and boost us out of this Grotesque Depression. First we must provide free advertising-based wireless internet to everyone. Then we must criscross the land with high speed rail. We must develop microorganisms that may be freely distributed like bread yeast and become commonplace to improve our future. Because bovine flatulence is the major source of greenhouse gases, we must develop microorganisms which can be grow in the home that will provide all of our nutrition. Then we must create microorganisms which turn our sewage and waste into fuel. Since paranoid schizophrenia is the cause of racism, bigotry, homelessness, terrorism, ignorance, exploitation and criminality, we must provide put the appropriate medications, like lithium, in the water supply. We must require dangerous wingnuts who refuse free mental health care to be implanted with drug release devices and microorganisms. Osama bin Laden and Timothy McVeigh were the ultimate superstition based initiatives. We should encourage international organizations to do likewise. In order to fund this we must nationalize the entire financial, electrical and transportation system and abolish the silly feudal notion that each industry should be regulated by its peers. Real estate and insurance, the engines of feudalism, must be brought under the Federal Reserve so we may replace all buildings with hazardous materials to provide public works. Insects, flooding and fire spread asbestos, lead and mold which prematurely disables the disadvantaged. Furthermore, as feudalism is the threat to progress everywhere, we must abolish large land holdings by farmers, foresters or religions and instead make all such large landholding part of the forest service so our trees may diminish greenhouse gases. We must abolish executive pay and make sure all employees in a company are all paid equally. We must abolish this exploitative idea of trade and make every home self sufficient through the microorganisms we invent.
Have you ever heard of the term "hyperinflation"? That is what is going to happen when you keep printing money like it is manna from heaven.
donna said...
Obviously those wondering about the need for creating jobs aren't paying their friends' car loans, trying desperately to keep two kids in college since there are no jobs for them, and sitting out the market since there is no job for themselves and their husband is thankfully well employed like I am....
Women have entered the work force in large numbers during the past 25years largely in finance, advertising, graphic design, marketing, sales and other demand side employment positions with good pay and responsibility. This segment of the work force will take the worst of layoffs and provide the least avenue for new job creation in the coming years.
While women and the youth of America were responsible for electing Obama with such a large majority they will suffer the most in the current downturn. Nothing much Obama can do nor Reich with his retraining mantra to change the tide.
Good luck in the future!
CrankyOleBroad, Sandwichman, Silverfox:
Every society in the world today including our own is a mix of socialism and capitalism. It's just that other societies are doing this mix smarter than the US because we are fixated on the rhetoric of capitalism. Even former communists like Russia and China are combining capitalism with socialism.
When Obama gets done restructuring, we'll have a different mix of socialism and capitalism, one, I hope, that is more salutary than the one we have today which is basically toxic. Government needs to be the helmsman at the rudder of the ship of state. The Bush administration has not been a helmsman. They've abdicated the position of helmsman and so the ship of state has lurched hither and yon with no apparent direction. I think this is an apt description of the bailout attempts. They obviously don't know what they're doing and the ship of state is listing and lurching out of control.
Obama hopefully will provide a sane direction to the ship of state and that includes providing universal health insurance (like every other rational society does), creating good quality jobs that do necessary work (like infrastructure repair and solar and wind energy production), and setting up a tax structure in which the wealthy pay their fair share.
Intelligent direction from the top does not mean that government micromanages every industry. Private enterprise has failed to repair infrastructure. It's a logical function of government. Whether or not people would be civil servants and receive a government paycheck or work for a private corporartion with a government contract, this is the type of decision intelligent people in the Obamma administration should be making.
Hello Dr. Reich:
I saw you on CNN last word today and I decided to send you a copy of the email I sent President Elect Obama & Vice President Elect Joe Biden.
My family and I are very happy about your victory and we wish you and your families only the best.
President Elect Obama & Vice President Elect Joe Biden, I’m concerned about the financial crisis we face in this country and the hardship we the American people are going through. My understanding of this situation is that the Federal Government is in debt to the tune of 10 trillion dollars. Most of our monies are borrowed from China, Japan and the Middle East and this is inappropriate for our great country.
My Suggestion:
1) Establish a 1% medical sales tax on most purchases to fund a newly created Supplemental Medical Investment Fund (SMIF) which can ONLY be used to pay for prescription drugs, Medicare and Medicaid programs and also provides medical coverage for the un-insured.
2) Establish a 1% social security sales tax on most purchases to fund a newly created Supplemental Social Security Investment Fund (SSIF) which can ONLY be used to pay social security benefits for retirees.
3) Establish a medical lotto with weekly drawings. The maximum payout will be a pre-determined percentage of the total amount of money collected and the balance go to the Supplemental Medical Investment Fund (SMIF). If there are more than one winner then the winnings is shared equally among all winners.
4) Establish social security lotto with weekly drawings. The maximum payout will be a pre-determined percentage of the total amount of money collected and the balance go to the Supplemental Medical Investment Fund (SMIF). If there are more than one winner then the winnings is shared equally among all winners.
5) Depending on how much money is collected it may be a good idea to establish walk-in clinics for basic medical care. These clinics will be a good place for retired doctors, nurses, students and others willing to volunteer their services. To show appreciation to these people, they will get tax breaks and free tuition for their college education.
6) Uptick rule on short selling should not be reversed, Also trading crude oil futures should be regulated to prevent astronomical profits for greedy investors. This only pushes up the price of gas that restricts economic growth and cause financial hardship for most Americans.
The Supplemental Medical Investment Fund (SMIF) and the Supplemental Social Security Investment Fund (SSIF) will be a non-profit fund and will be managed by individuals volunteering their time with impeccable reputation like Colin Powell, Bill & Hillary Clinton, Tom Joyner, Opera Winfrey, Condoleezza Rice, Warren Buffett, Bill Gates, Eric Schmidt, Madeleine Albright, Warren Christopher, Rachel Maddow, Keith Olbermann, Caroline Kennedy to name a few.
Keep insurance companies and greedy people away from these funds to keep the overhead cost down. Pass laws to protect these funds so that the monies cannot be used for anything else beside their intended purposes.
The 2% additional sales tax the American people will be paying will be a tremendous bargain as compared to the benefits and financial security they will receive in return. All Americans who make purchases will be a contributor to these funds which will generate additional funds to pay for healthcare and social security retirement benefits and secure their solvency. Once you have made changes to our existing medical program, these funds will be a supplement to our new medical program. This will stop the worries of not having enough funds to cover medical and retirement cost for the future.
Once this plan is implemented, large corporations will not be burden down with health care benefits they are unable to pay. Instead, they will put their emphasis on making cars and expanding the job market. For example, General Motors pay over 7 billion dollars per year to provide benefits for their employees. The 700 billion dollars bail out money would be better spent to start the funding of the Supplemental Medical Investment Fund. Pass laws immediately so that all Americans can start contributing to this fund. I believe this fund will generate enough money to pay for health care for all Americans.
The name “Supplemental Medical Investment Fund” (SMIF) Invest in America.
The name “USA Medical Lotto” Invest in America.
The name “Supplemental Social Security Investment Fund (SSIF)” Invest in America.
The name “Supplemental Social Security lotto” Invest in America.
Thanks,
David Hall
Hello Dr. Reich:
I saw you on CNN last word today and I decided to send you a copy of the email I sent President Elect Obama & Vice President Elect Joe Biden.
My family and I are very happy about your victory and we wish you and your families only the best.
President Elect Obama & Vice President Elect Joe Biden, I’m concerned about the financial crisis we face in this country and the hardship we the American people are going through. My understanding of this situation is that the Federal Government is in debt to the tune of 10 trillion dollars. Most of our monies are borrowed from China, Japan and the Middle East and this is inappropriate for our great country.
My Suggestion:
1) Establish a 1% medical sales tax on most purchases to fund a newly created Supplemental Medical Investment Fund (SMIF) which can ONLY be used to pay for prescription drugs, Medicare and Medicaid programs and also provides medical coverage for the un-insured.
2) Establish a 1% social security sales tax on most purchases to fund a newly created Supplemental Social Security Investment Fund (SSIF) which can ONLY be used to pay social security benefits for retirees.
3) Establish a medical lotto with weekly drawings. The maximum payout will be a pre-determined percentage of the total amount of money collected and the balance go to the Supplemental Medical Investment Fund (SMIF). If there are more than one winner then the winnings is shared equally among all winners.
4) Establish social security lotto with weekly drawings. The maximum payout will be a pre-determined percentage of the total amount of money collected and the balance go to the Supplemental Medical Investment Fund (SMIF). If there are more than one winner then the winnings is shared equally among all winners.
5) Depending on how much money is collected it may be a good idea to establish walk-in clinics for basic medical care. These clinics will be a good place for retired doctors, nurses, students and others willing to volunteer their services. To show appreciation to these people, they will get tax breaks and free tuition for their college education.
6) Uptick rule on short selling should not be reversed, Also trading crude oil futures should be regulated to prevent astronomical profits for greedy investors. This only pushes up the price of gas that restricts economic growth and cause financial hardship for most Americans.
The Supplemental Medical Investment Fund (SMIF) and the Supplemental Social Security Investment Fund (SSIF) will be a non-profit fund and will be managed by individuals volunteering their time with impeccable reputation like Colin Powell, Bill & Hillary Clinton, Tom Joyner, Opera Winfrey, Condoleezza Rice, Warren Buffett, Bill Gates, Eric Schmidt, Madeleine Albright, Warren Christopher, Rachel Maddow, Keith Olbermann, Caroline Kennedy to name a few.
Keep insurance companies and greedy people away from these funds to keep the overhead cost down. Pass laws to protect these funds so that the monies cannot be used for anything else beside their intended purposes.
The 2% additional sales tax the American people will be paying will be a tremendous bargain as compared to the benefits and financial security they will receive in return. All Americans who make purchases will be a contributor to these funds which will generate additional funds to pay for healthcare and social security retirement benefits and secure their solvency. Once you have made changes to our existing medical program, these funds will be a supplement to our new medical program. This will stop the worries of not having enough funds to cover medical and retirement cost for the future.
Once this plan is implemented, large corporations will not be burden down with health care benefits they are unable to pay. Instead, they will put their emphasis on making cars and expanding the job market. For example, General Motors pay over 7 billion dollars per year to provide benefits for their employees. The 700 billion dollars bail out money would be better spent to start the funding of the Supplemental Medical Investment Fund. Pass laws immediately so that all Americans can start contributing to this fund. I believe this fund will generate enough money to pay for health care for all Americans.
The name “Supplemental Medical Investment Fund” (SMIF) Invest in America.
The name “USA Medical Lotto” Invest in America.
The name “Supplemental Social Security Investment Fund (SSIF)” Invest in America.
The name “Supplemental Social Security lotto” Invest in America.
Thanks,
David Hall
Obama is moving very rapidly, which is precisely what our economy need. I just hope that we develop infrastructure wisely, with no bridges to nowhere and with no roads for the sake of roads.
Better zoning ordinances would do more for easing the traffic than big freeway projects.
IT infrastructure, education support tools (like online libraries) and other similar projects need to be at least as important as fixing our roads.
Not only will these projects do more for the skillset development within our country, but they have the potential of much better pay back.
The trick is to invest creatively, yet still be timely about it. One approach is to appoint dozens of people who we know to be good investors and have them form panels that will review proposals by everyone and invest in any projects that they see fit, provided that there is disclosure of the investments.
We need to try lots of new ideas, many of which are just as likely to come from someone's garage as they are from some big organization.
For me, the shine has worn off the presidential election. I dont see much logic in recycling economic talking heads~new administration, same names, same ideas, etc. I think Mr. Obama is finding out rather quickly that thoughts of 'change' make for good soundbites on the campaign trail. For sure I'd rather see him than McCain or Bush but alas, I don't have much confidence in Mr. Obama at this point. At least I am getting the disappointment overwith before he even starts~so I can keep my expectations low.
From where I sit, we are in the process of nationalizing the banking system and the wall street debt. There's little money left for infrastructure when our money goes toward taxes to offset corporate greed.
True enough there is a leadership vacuum in this country. Why else would Wall Street spike when anyone looks like they can do anything? In another time and place Mr. Paulson would be hung out to dry. Instead, we get the same team that has sat the same table and watched our economy tank.
I'll need to be convinced of the next administration's ability.
I want the middle class, uneducated, uncritical, non-thoughtful, and easily led by the nose, to have the full 8 years of George W. Bush.
Reich is right, infrastructure investment is the best economic stimulus. America has grown accustomed to instant gratification in our indulgences due to our wealth.
Stimulus #1: Give us money so we can buy more foreign made products and once again consumer spending will save the economy? Wrong.
Stimulus #2: Bail out the banks, the fat cats, the lazy inefficient manufacturers, and buy toxic assets in order to avoid depression era mistakes and to get the instant gratification of saving jobs and investments? Wrong.
Stimulus #3: Bail out the instant gratification of those who bought homes they could not afford? Wrong.
We must focus back on our founding principles and make sound investments in our children's future. These investments take time to reap rewards but are much more satisfying in the long run that our desire instant gratification for economic success.
The current Congress should start confirmation proceedings immediately, so Obama's team is ready to start on January 20. There is no time for hearings after that.
Jobs: A Practical Path to Overfull Employment
The U.S. experienced full employment during World War II: The jobless rate was a mere 2%. Early in 1977, the late Robert Edmonds an economist, L.V. Watkins, Jr. an attorney experienced in economic development and I, prepared the second of two reports for the Economic Development Administration that described a Human Investment Tax Credit program. We suggested a group of employment tax credits and provided research to support turning them into law. The 1977 job tax credit program, which reflected a few of the recommended incentives, generated 900,000 private-sector jobs, fully 20 percent of all new jobs created that year. To that moment (and perhaps since) it resulted in more jobs in less time than any single piece of legislation in our history. A Census Bureau survey showed that only 34 percent of all businesses were aware of the little-publicized program. Only a third of the eligible businesses utilized the credits. The White House opposed the job tax credit, and it was little advertised.
If promoted effectively, with all of the suggested incentives, it might have met the original goal of generating three million to six million new jobs and encouraging one million to four million people to become self-employed. Since Congress created the program over Administration opposition, the following year the program was gutted and became the targeted jobs-tax credit, with only a small fraction of its previous effectiveness. Unemployment is once again a most urgent problem. The tax incentives in the Human Investment Tax Credit program can readily be updated and voted into law. That should be the first order of business for the new Administration and Congress. What follows has been adapted from the Abstract that introduced the second report.
Curing unemployment without creating new inflationary pressures is clearly possible if we view the economy from new perspectives and adopt appropriate tools and policies. The primary addition in the second report was a unique analysis of causes of unemployment that suggests that overfull rather than merely full employment may prove possible. This analysis split employers into three categories: large corporations, medium corporations and government, and small business. The only category having the potential to absorb large numbers of new employees appears to be the small employer. It is worth repeating that a package of carefully crafted carrots could readily create 3 to 6 million additional jobs in the small business sector with another 1 to 4 million becoming self-employed. A small business employment reservoir, rather than government as an employer of last resort, appears to be available.
Employment tax credits can be used as a more effective alternative to another general tax cut. This is a rifle shot approach, instead of a shotgun, aimed specifically at lessening unemployment as rapidly as possible without contributing new inflationary pressures. A concept of the "employer force" was advanced. This seeks to supplement the existing studies of the labor force by examining the impediments to additional employment from the other side of the coin. Long term policy would aim at the underlying structural corrections necessary for the economic roller-coaster to move toward equilibrium. Were these new directions adequately explored, new management tools can become available. These could include, for example, an incentivized Income Maintenance Savings Program.
A coordinated alternative economic analysis is suggested as an immediate priority that could yield large dividends. If the Human Investment Tax Credit program is rapidly updated and implemented, a comprehensive attack on the root causes of both unemployment and inflation can both stimulate the economy and provide millions of citizens with hope for an accelerated economic recovery.
Mark Goldes is Chairman of Magnetic Power Inc., Sebastopol, California. L.V. Watkins, Jr., seeks funds to update the Human Investment Tax Credit program.
Expenditures of $700 Billion have already been approved for Wall Street and much of that money has been given to high paid CEOs with no strings or performance requirements attached. While I am disappointed with the implementation of the “Bailout” so far I am not surprised given the program is being run by President Bush.
I am encouraged when I hear that President-Elect Obama wants to re-build our infrastructure and create a new sustainable economy.
To accomplish this goal will require massive expenditures. I would like to suggest a method to partially pay for the infrastructure improvements while at the same time work to decrease our dependence on imported oil.
I am proposing that there be a new tax on gasoline. The time is ripe for this with gas prices having dropped over 50% in the past few months. The tax would start at 1₵ per gallon and be increased by 1₵ each month for the next 50 months. This will generate $7 Billion the first year and will grow to generate $50 Billion a year by 2013.
With this income we need to start spending $25 Billion a year to repair of existing bridges and roads, $10 Billion a year on repair and expanding the electrical grid to allow distribution of the power, generated by new wind farms, that will be needed to service electric vehicles and at least $10 Billion in a “Manhattan Project” program to develop better batteries for electric vehicles.
I can only hope that within the group of advisors that Obama has someone will present this plan and push for its implementation.
In 1994, the alternative was more jobs and greater inequality, or fewer jobs and a thicker social welfare system. Are we still asking that question 15 years later? Or did the inequality option taken in the latter Clinton years and through the Bush years, make this a moot point?
Invfrastructure yes and first. Even Bill Clinton wanted to do that, but in the face of Weepublican opposition he folded quickly and then set about helping to free the financial sector with Rubin & co. to wreak havoc. As we can see, they suceeded grandly.
On gasoline, tax $1 per gallon with a total tax credit for anyone with less than a $50,000 annual gross and a full refund for those not subject to tax. Put the $ into infrastructure and alternative energy, 50/50.
Hike the tax immediately on the top 1% of earners. Obama owes us this one. Otherwise I join the thousands of others who gave the personal limit or what they could for a refund.
So Obama is taking charge already.I am
getting all tingly inside my body.
Isn't is premature to think Obama will provide miracles for our government and or economy ?
He has already hired a number of Clinton flunkies and lobbyists.Not to mention Barney Frank and Nancy Pelosi being top policy makers.
You want to talk about our lame duck president. I want to talk about who was responsible for the collapse of Freddie and Fannie.
Why hasn't the Senate Finance Committee brought those responsible for this mess to task.
I guess Barney Frank can't put himself on the stand or any of his cronies who were instrumental in creating this financial mortgage mess.
As far as a leadership vacuum we will see if the Dems can turn this around.If he doesn't in four years you can sing Bye Bye Barack.
Having the Dems in charge of the House, Senate and the White House could spell disaster.
Let's not forget those great Jimmy Carter years. I know I never will.
Wish he would look at howmany people been waiting on social security and see how much they have put into the system and not getting anything oput. If one not physically able to work then they should get theur compasations,
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