We Need To Be Bold
Digby pointed yesterday to David Broder's none-too-subtle warning that the next President had better not get any funny ideas about investing in the future or giving those among the least of society a hand or anything. Obviously we need to get through the next 22 days and usher in a Democratic President. But this is an absolutely vital discussion that we need to be having right now.
Unsurprisingly, Broder's concern trolling about the economic downturn and the debt reflects mainstream Beltway opinion of the moment. There's a reason why the story about the US debt clock needing extra digits got so much attention. Call it neo-Hooverism, as Matt Yglesias has taken to doing. Throughout the debates serious guardians of the discourse like Jim Lehrer and Tom Brokaw have hounded the candidates about what parts of their agendas they would cut or scale back in the midst of the slowdown. Here's Michael Scherer of TIME following their lead.
Neither candidate has the courage to speak straight with the American people about our nation’s fiscal problems. Asked about the financial crisis, McCain talked about energy independence, hitting the same talking points he used in July. Obama talked about the need to give tax cuts to the middle class, and expand spending programs, a proposal he put forward last year. Both men have proposed policies that will lead to an increase in the deficit, according to independent analysts, even without a dramatic economic downturn, which looks increasingly inevitable. Neither man has shown any clear intention to tell Americans to face head on the hard economic times that await us. This is politics. The candidates are playing it safe, not telling voters anything they don’t want to hear. They choose to demagogue Wall Street instead.
This is precisely the opposite of what needs to be done in a recession. In fact, the crisis facing the states right now is emblematic of this idiotic mindset. When the economy slows, tax revenues decrease. The demand for social services increases. So more is needed while less is earned. This leads to deficits, and because of balanced budget amendments at the state level (thank God we don't have them federally), spending cuts are implemented. This shrinking of state and local spending shrinks the economy. Which prolongs the recession and prolongs the pain. That's what the Beltway chattering class is RECOMMENDING.
The federal budget is not a family budget, as Brian Beutler ably explains.
When times are hard at home, after all, you scrimp and save and avoid exorbitant expenditures. You keep working hard and hold on to the belief that prosperity will return sooner than later. Maybe under different circumstances you take out a loan and start a business and hope it's successful enough to make you rich and famous--but now you have children. You really want them to go to college. And so you can't in good conscience take on the risk.
But countries aren't like households. When times are tough the last thing they need is for their governments to freeze out discretionary spending. And, paradoxically, the Great Men of History who so badly want to be president wouldn't be doing their countrymen any favors by choosing this particular moment to suddenly restrain their vision.
In response to a recession, spending to increase job creation and investment is a completely normal, Keynesian reaction. The idea that the bankers must be bailed out at all costs but that there's no cash for the ordinary stiffs who would benefit from a thorough stimulus package is bunk. It's also dangerous to the health of the economy and our future standard of living.
If you don't start spending at the federal level, more bridges will collapse and more roads will become unpassable. More state unemployment funds will become insolvent. More catastrophic effects of the climate crisis will unfold. More Americans will lack quality access to health care. More Americans will be out of work and lost when they could be put to work for our collective future benefit.
The Beltway attack on the progressive agenda, through the lens of fiscal responsibility, is only the beginning. The Pentagon is going to demand a large payoff at the same time its defenders will call for budget austerity, because as everyone knows military spending is magic spending that doesn't exist in any temporal form.
Pentagon officials have prepared a new estimate for defense spending that is $450 billion more over the next five years than previously announced figures.
The new estimate, which the Pentagon plans to release shortly before President Bush leaves office, would serve as a marker for the new president and is meant to place pressure on him to either drastically increase the size of the defense budget or defend any reluctance to do so, according to several former senior budget officials who are close to the discussions [...]
“This is a political document,” said one former senior budget official, who spoke on the condition of anonymity. “It sets up the new administration immediately to have to make a decision of how to deal with the perception that they are either cutting defense or adding to it.”
If there's one place where budget hawks can go to find wasteful spending and unnecessary expenses, it's the Pentagon. But of course then "the troops" are disrespected by discontinuing weapons systems that the United States hasn't used since the mid-1950s.
Furthermore, sometime in the next year some wingnut publisher is going to release a book with a title like The FDR Depression, arguing that Roosevelt's policies actually prolonged the agony and deregulation and tax cuts would have been the proper answer to the country's woes.
This is a coordinated attack. And to fight it we're going to have to stake out some pretty solid territory right now in order to get what is desperately needed for the country and its people.
First of all, we have to have a legitimate stimulus package in place, one that's targeted to those steps which would have the best impact on the overall economy. Nancy Pelosi is already talking about something that would provide $150 billion to state and local governments for expanding public works, extending unemployment benefits and food stamps programs. That's not enough, but the targets are pretty solid. Investing in infrastructure provides a tangible benefit for the future while creating jobs now. Funneling money to the states stabilizes their budget and decreases the risk to program cuts. And the biggest "bang for your buck" in economic stimulus comes from spending increases like extending UI and food stamps and aiding state governments, not tax cuts which supposedly will trickle down. The White House thinks the luckie duckies can get their own job and shouldn't be bailed out, and House Republicans want a "stimulus" as long as it does nothing to stimulate the economy:
Rep. Roy Blunt, the Missouri Republican who serves as House minority leader, said he would support a stimulus plan if it did not include massive public works spending and budget bailouts for states that overspent on health care and other social programs.
“A stimulus plan that makes sense is something that I’ll be helpful with,” Blunt said, also on ABC television.
Furthermore, you have to find big solutions that can increase economic output, create jobs that expand the industrial base so we don't keep relying on pushing paper to make a living, and legitimately tackle the global challenges that threaten to overwhelm any short-term band-aids. Fortunately, such a solution already exists.
But in the medium to long term, once the immediate problems in the financial sector have been ironed out, we need a planned transition towards a cleaner future, not a headlong collapse into a new depression. That means – contrary to the suggestion of the "all growth is bad" school – that we need to grow our way out of this economic mess. A return to Keynesianism could be a good thing for the environment, if government-backed spending and investment drives growth in areas where it is desperately needed, especially particularly clean energy. The old days of environment versus jobs are over – we don't need to sacrifice quality of life in order to stimulate the economy.
A green recovery providing millions of jobs and avoiding the catastrophe of unchecked global warming is our only hope of maintaining our sliding global stature. The one saving grace of the past few weeks of debates has been that this question was finally asked in front of a national audience:
Sen. McCain, I want to know, we saw that Congress moved pretty fast in the face of an economic crisis. I want to know what you would do within the first two years to make sure that Congress moves fast as far as environmental issues, like climate change and green jobs?
This must happen quickly and boldly and Senator Obama needs to be pushed. His energy policies are good but insufficient. His renewable targets must be larger - his target of 10% of all electricity from renewables by 2012 has already been exceeded this year. When energy has come up on the campaign trail, Obama foregrounds with talk of "clean coal" and "safe nuclear" power, which is fine for triangulation but terrible for the planet.
Obama's four-part plan today to restore American jobs is solid, and also needs to be bigger. He supports immediate investments in rebuilding America's infrastructure to create a million new jobs, extending UI and suspending taxes on benefits, creating a two-year holiday on penalties for withdrawing from 401(k) and IRA plans, LIHEAP funding supplements, and a 90-day foreclosure moratorium, among other measures. The job creation incentives in here are fine, and relief to those who need help is crucial.
But this is a time to think big. We have to grow our way out of the economic depths. We have to use the money we'll spend wisely enough to create external benefits for the next 50 to 60 years, to wire America like we electrified America in the 1930s, to fix the roads and bridges the way we built them then, to create a new, clean energy grid to replace the old one that served us well. We can not only face the biggest challenges in the world and create a sustainable economy at the same time, but they can complement each other. And we can say "hell no" to those Wise Men of Washington and the conservatives they enable, whose ideas on budgets and fiscal responsibility and supply-side economics have been totally discredited. We need only to have courage in crisis, and a willingness to lead the way.
Who will show it, if not us?