The Real Fight Starts After the Stimulus is Enacted
The real stimulus debate hasn't even started yet. Congress will pass President Obama's stimulus package in the next two weeks, more or less as he wants it. The House has already done its part, and the Senate appears likely to follow suit. But when the economy starts to turn up again, perhaps as early as next year, the president will have the real tough decisions to make. He'll have to choose which spending will continue -- or whether any of it will continue at all.
Sixteen years ago, Bill Clinton came to Washington with his own ambitious plans to reverse widening inequality, rebuild the nation's crumbling infrastructure, create an efficient and affordable health-care system and address the growing environmental crisis. But because of raging budget deficits and a towering national debt, he was unable to accomplish most of this. As his secretary of labor, I shared his frustration. Alan Greenspan, then Federal Reserve chairman, and most of Wall Street warned that the nation couldn't afford the risk of runaway inflation. Some aspects of Obama's stimulus package look eerily familiar to me, although the price tag is far higher than Clinton ever dared imagine. Yet today, economic advisers across the political spectrum support Obama's plan. A few weeks ago, Martin Feldstein, Ronald Reagan's chief economist, told Congress that the stimulus should be $800 billion. (Although he apparently has quibbles with exactly how that sum will be spent, he's not taking issue with the total amount.)
The biggest difference between Clinton's original agenda and the public investments Obama is proposing is that Clinton came to office as the U.S. economy was emerging from a recession; Obama is facing the worst downturn since the Great Depression. Even fiscal conservatives concede that when consumers stop buying and businesses stop investing, as they are now, the government must step in as the buyer and lender of last resort.
But the moment the economy appears to be on the mend, conservatives such as Feldstein will want the government to cut spending. In their view, this is the only way to get the economy fully back on track. But others believe that it is precisely the track we were on that got us into this mess in the first place.
Those who support the stimulus as a desperate measure to arrest the downward plunge in the business cycle might be called cyclists. Others, including me, see the stimulus as the first step toward addressing deep structural flaws in the economy. We are the structuralists. These two camps are united behind the current stimulus, but may not be for long. Cyclists blame the current crisis on a speculative bubble that threw the economy's self-regulating mechanisms out of whack. They say that we can avoid future downturns if the Fed pops bubbles earlier by raising interest rates when speculation heats up.
But structuralists see it very differently. The bursting of the housing bubble caused the current crisis, but the underlying problem began much earlier -- in the late 1970s, when median U.S. incomes began to stall. Because wages got hit then by the double-whammy of global competition and new technologies, the typical American family was able to maintain its living standard only if women went into the workforce in larger numbers, and later, only if everyone worked longer hours.
When even these coping mechanisms were exhausted, families went into debt -- a strategy that was viable as long as home values continued to rise. But when the housing bubble burst, families were no longer able to easily refinance and take out home-equity loans. The result: Americans no longer have the money to keep consuming. When you consider that consumers make up 70 percent of the economy, the magnitude of the problem becomes apparent.
What happened to the money? According to researchers Thomas Piketty and Emmanuel Saez, since the late 1970s, a greater and greater share of national income has gone to people at the top of the earnings ladder. As late as 1976, the richest 1 percent of the country took home about 9 percent of the total national income. By 2006, they were pocketing more than 20 percent. But the rich don't spend as much of their income as the middle class and the poor do -- after all, being rich means that you already have most of what you need. That's why the concentration of income at the top can lead to a big shortfall in overall demand and send the economy into a tailspin. (It's not coincidental that 1928 was the last time that the top 1 percent took home more than 20 percent of the nation's income.)
Other structural problems are growing as well. One is climate change and our dependence on oil. Another is the United States' growing reliance on foreign capital, mostly from China, Japan and the Middle East. Neither is sustainable.
Meanwhile, our broken health-care system drains more of our dollars yet delivers less care. When President Clinton tried to tackle health care in 1994, it represented 14 percent of our GDP, and 38 million Americans were uninsured. Now, the nation spends 16 percent of its GDP on health, and about 44 million of us are uninsured. Most cyclists acknowledge these problems, but they tend to think of them as separate from the current crisis -- issues to be tackled after the economy has recovered, and then only to the extent that we can afford to do so.
But structuralists like myself don't believe that the economy can fully recover unless these underlying problems are addressed. Without policies that put the nation on the path to higher median incomes, higher productivity, renewable energy and a more accessible and efficient health-care system, we'll face deeper and more prolonged recessions, followed by ever more anemic upturns. Bill Clinton's inability to do enough about these problems in the 1990s, followed by George W. Bush's negligent disregard of them, allowed them to grow to the point where any major triggering event can cause a vicious downward spiral.
As early as next year, the business cycle may hit bottom and begin climbing. At that point, cyclists and structuralists will want two different things -- and which side the president chooses will be, as Will Marshall of the Progressive Policy Institute puts it, the "central drama" of the Obama administration. The president recently sought to placate the cyclists by promising to focus on controlling the future costs of Social Security and Medicare. Perhaps Obama has in mind a "grand bargain" that would allow him to continue his structural agenda after the business cycle turns upward in return for limiting spending for those two giant entitlement programs.
Let's hope he has something more in mind, something more fundamental: a debate about public investment and sustainable growth. For structuralists, the size of the federal debt itself is irrelevant. Debt has to be considered in proportion to the economy as a whole. According to government projections, the national debt will exceed half the nation's gross domestic product by the end of this year -- not including the stimulus package. That's certainly high, but not close to a record. The debt was far more than 100 percent of GDP at the end of World War II. That mammoth debt, not incidentally, put Americans back to work, financed industrial production, underwrote a new generation of science and technology and created a wave of demand for consumer goods when the war ended. In short, it got the economy on a new and faster track, thereby allowing the United States to pay down the debt and ushering the country into a new era of widely shared prosperity.
Even a high ratio of debt to GDP isn't especially worrisome if much of that debt comes from investments that put the economy on a path toward solid growth. One recent study from Columbia Teachers College, for example, shows that cutting high school dropout rates in half would generate $45 billion in new tax revenues and savings on expenses such as welfare and incarceration.
We cannot assume, however, that gains from these sorts of public investments will grow the economy enough to reduce the relative size of future debt. We must consider the tax code's structure as well. Should marginal taxes be raised on the most affluent? That could help finance what must be done to put the economy on a sustainable growth path.
But I don't think that our new president should wade into this debate right away. He has his hands full. He needs to implement the stimulus package and reverse the downturn. Bill Clinton had to choose sides almost right away -- and had little choice but to cave in to the cyclists and forfeit most of his long-term economic agenda. The severity of the current crisis gives Obama more time.
But he will need to open the larger debate sooner rather than later. This downturn is revealing the U.S. economy's underlying flaws. Once the business cycle turns up, the public and its representatives may be less inclined to tackle the things that truly drag us down. Clinton was, after all, reelected in 1996 on the wave of a cyclical upturn in the economy. But the structural problems that he failed to address -- widening inequality, sagging median incomes, a broken health-care system, crumbling infrastructure and global warming -- are that much larger now, making the current crisis all the worse.
Thank you for the explanation.
February 1, 2009 6:28 PM | Reply | Permalink
That's a pretty long post about our precarious economic situation to not mention the TARP bailout and the systemic corruption that TARP's lack of transparency reveals.
How could you be against defusing bubbles before they get too big? If we weren't living in bubble land the past 15 years, the fundamental problems would have been more apparent to everybody.
Did Clinton pressure Greenspan to defuse the '90's bubble with interest rate hikes, so that the health care and employment issues would be more visible? Of course not.
And how can you not criticize Clinton for NAFTA and the loss of jobs is caused.
You probably think Daschle is a great choice to revolutionize health care.
February 1, 2009 8:01 PM | Reply | Permalink
It seems you pay little attention, my friend. Reich comments about Tarp all the time - read his blog.
And as Sec. of Labor, he was put in the wilderness by Clinton for being to liberal and not accommodating to Greenspan and his ilk.
February 2, 2009 5:14 PM | Reply | Permalink
Right on, Secretary Reich:
The confrontation you describe between Obama and the Republicans is inevitable, but it will be only the first of many skirmishes.
Economic forces, over time, will FORCE the U.S., as well as the emerging markets, to come to terms with the structural problems in their economies. The U.S. has had a structural budget and current account deficit for years. It is unsustainable.
What Alan Greenspan described as a surplus of savings in the Asian countries was in reality a deficient aggregate demand. China and Japan compensated for that deficiency by basing their economic strategies on exports. Manufacturing in the U.S., on the other hand, has been in decline at least since 1980. The U.S. maintained its life style by financial engineering, by outsourcing its production, and by massive borrowing. That has come to an end.
Now that the U.S. can no longer serve as consumer of last resort, the Emerging markets will have to restructure their economies to be much less dependent on the U.S. consumer. That will take time, but they will do it. The U.S. and the G7 will consume much less of the world's production as economic power and wealth shifts to the developing world.
Asia has to build its domestic economy, and its standard of living; the U.S. has to reduce its consumption and replace it by investment and savings. 70% of our economy is based on consumption, and much of that is imports. We have to consume less and increase our investment in infrastructure, rail transport, public transportation, fewer cars, education, health care, retirement, child care, etc. Everything the Republicans are fighting.
Obama has signaled the death of Reagonomics ("voo doo economics", according to George I) in his statement that a nation cannot prosper when it favors only the prosperous. Obama's election, and this statement, signal an end to "trickle down economics". It will not happen overnight; but there is no going back. It will be a long, long process, but in the end, most domestic economies will look very similar: higher taxes, higher inflation for many years, more investment in education and social services, less military spending.
February 1, 2009 8:22 PM | Reply | Permalink
Please read related article titled "Welcome to the U.S.S.A" posted at http://www.cliffyworld.com
February 1, 2009 8:48 PM | Reply | Permalink
Lyndon H. LaRouche, Jr. recent, extraordinary success of July 25, 2007, in long-range economic forecasting of crucial developments in the world's economic systems, should have become, by now, sufficient, even virtually overwhelming evidence of the need to abandon what had been, heretofore, the leading assumptions respecting economy by governments and others, and to adopt new, more appropriate principles which would be consistent with the validated LaRouche methods of forecasting.That forecast has become a breakthrough, toward a sweeping, fundamental change in the future meaning of the very name of economics, sweeping aside everything which had been considered professional expertise up to the point of that most recent development.
http://www.larouchepac.com/news/2009/02/01/what-nation-nations-dynamical.html
February 1, 2009 9:21 PM | Reply | Permalink
dominickdesid dude, the ONLY thing better than finally reaching your first period, was reaching your second.
February 2, 2009 12:52 AM | Reply | Permalink
Hats off to you, Quinn. I couldn't make it that far.
February 2, 2009 2:39 AM | Reply | Permalink
I stopped at "LaRouche".
February 2, 2009 12:44 PM | Reply | Permalink
This is essentially spam coming from the Larouchie camp. Is this something TPM can put an end to?
February 2, 2009 5:26 PM | Reply | Permalink
Friendly and well-meant question here: how is a structuralist like yourself different from somebody who supports a planned economy, which we know doesn't work only become economies are too complex to be planned? And yes, China's economy is planned and works by GDP measure but it doesn't really work for most people who live there, so... what's the diff between structuralists and planners?
And one observation: this crisis is similar in style to the S&L crisis that Clinton had to deal with the end of. Clinton inherited a crisis that turned into a huge boom. But that boom took awhile to take off. An entire "slacker" subculture developed just to express the anguish of well educated underemployed people. Heck, the militia movement also came to prominence in the face of a perceived lack of opportunity. There was a lot of hopelessness at work even as the economy slowly improved and it wasn't until 1996 or so that new billionaires started to be minted daily and not until 1999 that everyone thought they could get on the train and... they all finally did and... it crashed and took people another 8 years to win back their market gains, which have since been lost.
So... the last crisis wasn't as bad as this one. It was 4-6 years after it was over that we realized a boom was starting. It was 8-10 years later that the average investor got involved, even in a small way... I'll end my observation with more questions -- what do we do, Robert? What if it takes more than 5 years to come out of this? How do we keep most people, who have suffered losses, from missing the recovery? If this is worse than the last few times, what are we in store for?
And, finally... are people who believe that all this stimulus will be inflationary and bad for the dollar almost the moment that investors get over using the dollar as a zero-return safe haven right? Because they sound right, even though it's never happened before.
February 1, 2009 9:41 PM | Reply | Permalink
And, finally... are people who believe that all this stimulus will be inflationary and bad for the dollar almost the moment that investors get over using the dollar as a zero-return safe haven right? Because they sound right, even though it's never happened before.
Des someday we may have to worry about hyper inflation and devaluation of the dollar. But now is not the time anymore than 1942 was. We have massive structural problems with the economy, energy and healthcare that must be addressed by government investment for the future. My guess is if we do face problems with hyper inflation/devaluation we either overshot the mark or the stimulus failed.
February 2, 2009 7:12 AM | Reply | Permalink
Good point. In the midst of a deflationary crisis, maybe hyperinflation would be a good problem to have!
February 2, 2009 7:42 AM | Reply | Permalink
The important point that this post has been pointing on, is the issue of middle-man-privatization leaches. This should be called by its name- a de-privatization process is necessary.
The prices for heating, for phones and the municipal payments should be calculated and prohibited of collection above the minimum, differentially (by the income of the household.)
The basic facilities as communication, transportation, education and health- must be accessible to the citizen at minimum cost, when the profits should be aimed of maintaining a good response from these social-infrastructures toward the public, but must not be a profit of singles. The revenues of these systems must be deployed to widen the number of citizens "enjoying" these basics of modern society, and to improve them. Not a penny out. Let all these leaches that bought our social infrastructures on sale- let them get a job!
The above means that a serious process of de-privatization must be initiated. The middle
-profiteers of meddling with the citizen's health and quality of life must cease, as the answerability and enslavement of the government to feed the beast of the lobbies. The direction is right, but these actual changes for a true protection of economical security must be demanded.
An important principal of a healthy economy is an economy that does not build itself on the backs of other people's well being. All "Buisnesses" who are not productive (and art is productive, literature, philosophy and linguistics are productive, to make sure) ...but these that feed on sucking passively out of other people's work must gradually be shut down. A law of fairness in trade, of morality in business is asked for, for business exists to maintain life and not the other way around.
A second issue that is not discussed enough yet is the needed help to all the independents small businesses owners. Now, after the victory, "Joe the plumber" item is forgotten. It is vital that the businesses that are (and will be) struggling, and the new businesses – they should get the lowest interest fees as possible, and the lowest rates of municipal taxes. -Just as the banks gets when they borrow money from the Federal bank. This would be truly spreading the wealth. The burden of tax at such a time, and for as many as 10 years, if not for good, should be strictly differential. (as in Denmark- look up their economic-policy.) the taxes on Big businesses and individuals should be adjusted accordingly.
In the same direction, the people should be encouraged to learn and practice many crafts and skills that are not practiced in the service-givers and conglomerate-depended decade. Work from home, or in fairs, for example, should be encouraged.
The thought of everyone as "employees" is part of the problem. Most people are employees, but a grass-roots change would let people resign to more independent living, and to break off the dependence in high consumption from conglomerates that sells short-lived products, waste, unneeded spending (as buying 15 clothes a year instead of 3-4 clothing-items of good value, for example). This is a policy that can cut the dependence on import to some measure in time.
February 1, 2009 10:28 PM | Reply | Permalink
The fact that Obama has appointed the same people that screwed things up under Clinton (Summers, Geithner, etc.) is not reassuring.
February 1, 2009 10:55 PM | Reply | Permalink
Reich was part of the transition team that chose Geithner, and a labor secretary that thought NAFTA was a great idea. It's good to be an insider...
Reich, whose duties as labor secretary included stumping for the Clinton administrations NAFTA (North American Free Trade Agreement), said the global economy is a good thing and not to be feared.
"The rising tide will lift us regardless of where the headquarters of the global company is," said Reich. "NAFTA did not result in a gain or loss of jobs—just a new allocation of jobs. What matters is the value that we are able to add to a global supply chain."
February 1, 2009 11:44 PM | Reply | Permalink
billwalker let me ask you, did that "giant sucking sound" come from jobs being shipped to Mexico or did it come from jobs being shipped to China, the country that manipulates it's currency to cannibalize manufacturing jobs? NAFTA hasn't worked out the way many had hoped it, American multinationals hurt Mexican employment more than it hurt us. Their smaller manufacturers and farmers can't compete with American multinationals and factory farms. It's one reason we've seen a tide of immigration. NAFTA isn't a great agreement but I think you're criticizing it for the wrong reasons.
BTW Geithner criticized the Chinese for manipulating it's currency in his confirmation hearings.
February 2, 2009 7:28 AM | Reply | Permalink
You really are Secretary Reich. Son of a gun. I guess the only thing I would ask is an explanation sometime of the effect of the new international corporations and the loss of allegiance to this country, or any other country for that matter.
Otherwise, thank you for being a part of the best web site around!!!!
February 2, 2009 12:03 AM | Reply | Permalink
Robert Reich, I watched the video of you speaking with Rep. Rangel at the House Ways and Means committee, where both of you spoke about the need to craft the stimulus with vague language, so as to provide loopholes, so contractors can discriminate against the very citizens who will be forced to shoulder the burden of paying for it, and hire cheaper foreign labor. Your monied interest friends in the tech, construction and other fields..
As I recall, Rangel stated that poor and struggling citizens will be too busy trying to survive, to be able to feed their kids to pay attention.
You both were wrong, and it stirred up the ire of American citizens, black, brown and white, because they've seen the results of the lousy policies you promoted, bearing bad fruit. Your indifference to the outsourcing and off shoring of our jobs has bled the stability and security from our country and deprived our young people of any chance at a future. Now you want to lie to their faces again, while you're sticking the knife in their backs.
Bill Clinton made a lot of promises, but didn't fulfill any of them. He never tried to rebuild infrastructure, he promoted privatization and deregulation, he pushed through NAFTA and MFN status w/China, claiming that those millions of citizens whose jobs were sent to Mexico would get "new jobs" that they could train for in the "tech industry". You know, the jobs that you, Bill and Hill helped push overseas, while you pocketed hefty payments from your corporate and foreign paymasters.
You refuse to even address the facts, you lie to our faces, pretending that we have worker shortages, when real economists, well respected ones, have proven that we do not have a worker shortage of any kind, and that the policies you have promoted have resulted in the erosion of citizen's wages, and establishing a rationale for wage standards/workplace protections not be enforced by our governments.
You are corrupt and a hypocrite, an embarrassment to the democratic party and the progressive movement.
February 2, 2009 12:52 AM | Reply | Permalink
He probably supports bringing in more illegal aliens to help fill that worker shortage also.
Not all Rhodes Scholars are bad, but the program was set up to train talented graduates for an anti-national sovereignty agenda. Look it up, and look up the founder, Cecil Rhodes.
A healthy and prosperous American democracy doesn't fit into the plans of those who want to consolidate power outside of national governments. And they will always have eager minions spouting deception.
February 2, 2009 1:08 AM | Reply | Permalink
mm232 and markg8 seem to pretty well sum up the analysis here.
For myself, I would like to point out that I get real nervous when the politically entrenched economists start talking about "jobs" in referencing global trade and "free trade."
I'm really not interested in "jobs," you see. My friends and I do not seek "jobs" just to have something to do. And so it is that when you propose that you can replace family supporting employment in the manufacturing sector with other "jobs" in the service sector or other areas that pay little over minimum wage, I'm inclined to say "No, you go ahead and take that job. I'll just take your job instead."
I may not be a Harvard economist, after all, but I do know what it takes to support a family. As an economist, therefore, I would identify such family-supporting jobs as the minimum threshold at which the middle class is accorded their legitimate right to fair participation in this economy. And this empathy and consideration for the middle class workers would make of me a far better economist than those egghead types who view labor as little more than a disposable commodity, and who promise replacement "jobs" to all who would rather keep their gainful employment.
Talk of "Protectionism" undoubtedly makes Wall Street nervous. But the workers on Main Street support the protectionism offered by Fair Trade Rules that promote and preserve their ability to support themselves and their families by working real jobs that provide sustainable employment.
To argue otherwise that we need to lower our expectations so we can be competitive in wages and benefits to the lowest paid prisoners or sweat shop workers on the planet is to invite the suggestion - offered with all due respect - to "Kiss my ass!" Unless labor is treated with respect as a participant in the rewards of this economy instead of a "human resource," there is simply nothing left to discuss.
February 2, 2009 9:55 AM | Reply | Permalink
Obama's economic appointments are horrible, he selected as his treasury secretary, Timothy Geithner, the same
man who helped Bush's treasury secretary, Hank Paulson, engineer the $700 billion dollar rip off of US taxpayers
to go to the same crooked bankers and Wall St types who destroyed American citizen's pensions, jobs and health
care coverage.
Wouldn't a true progressive expose, try and sentence to prison those crooks, not hand them billions of dollars.
You can't hide behind the fact that Obama wasn't the president when this happened, Obama was falling all over
himself to demand that the bailout be pushed through, irregardless of the fact that he KNEW there was no oversight
in the legislation, and that his cronies in congress had no intention of providing oversight. Obama had every
opportunity to get the very best advice, any number of decent, world respected economists were expressing their
very legitimate concern about the proposal, and stating that it was not a good idea.
We know that Obama has ties to those who created and profited from the fraud, we know he took hundreds of millions
of dollars from the crooks, we also know that since his inauguration he has been serving them, not the American
people.
Examine more of Obama's appointees to his administration. He selected one of the chief orchestrators of the rip off to the
highest position in the treasury. Look at Obama's National Economic Council, Larry Summers, Bill Clinton's former treasury secretary,
is at it's head. Recently, Summers stated that he'd had no inkling that a financial crisis was about to occur. Why did Obama select someone for that position who hasn't a clue?
Summer's colleague, Diana Farrell, was appointed as deputy director of the National Economic Council. Farrell is the lead author of a fraudulent study that claimed offshoring/outsourcing of American jobs was a win-win game for Americans. Farrell, like Mr. Reich here, make the same arguments that those who profited from slavery did, and either avoid answering questions or make excuses for their culpability in the nightmares they created.
She is affiliated with McKinsey & Company, a firm that helps US corporations offshore their operations. Ms. Farrell's past claims have been ripped to shreds. Why would Obama appoint someone who is a lobbyist for those who seek to bleed any and all jobs from the US?
How many lobbyists has Barack "no lobbyists in my administration" Obama appointed so far, four, five? I'd say lots more.
Cecilia Munoz has been on the payroll of the US Chamber of Commerce, and Business Roundtable for years. She has taken millions for the organizations she's worked for, and goodness knows how much personally (she hasn't filed any complete financial disclosures)
to fight for the historic enemies of the minimum wage, wage standards, workplace, environmental, food and product safety protections.
Hilda Solis is much the same. Rahm Emmanual is the architect of NAFTA, and refuses to address the wrongs that it has brought about.
He is much more than a cheerleader for destroying worker's rights and protections, it's his meat and drink. He's used a seat in congress as a placeholder for future positions of power, keeping his hand in, so to speak. And while doing so has promoted the interests of every corporate and foreign interest that could funnel money his way.
I could go on, but I don't think it's necessary. Now is the time for those who call themselves progressives to make a decision. Are you truly progressive, or is it merely a cheap label that carries little substance to you?
Obama is looking to push us into a war in Pakistan, possibly Iran if what I'm reading in the foreign press is true.
He is tied to the same types Dick Cheney is, and it seems for the same reason. He's pushing for a horribly crafted stimulus bill, that will only stimulate the looting of the US. Imposing an unbearable burden upon the working poor and middle classes, so his corporate buddies will be set to ride out the total destruction of our economy.
Are you truly progressive, or are you Obamacons, with your heads in the sand, every bit as much as Bush's neocons?
If you care, you have to pick up your phones tomorrow, first call the white house (202-456-1414) and express your displeasure with the bad appointments that have been made and state
your lack of trust in what is being proposed. That you expect Obama to honor his promises, including the one about denying lobbyists a place in his administration, and to put the plight of American citizen workers at the top of his list of priorities, as he promised to do.
That he can not strip out Buy American out of the stimulus. You expect him to take a stand and call out the real protectionists, China, France, Germany, Canada and Mexico. That their attacks against a stimulus plan intended to help America's poor and unemployed is not only the height of arrogance, but a protectionist stance.
Secondly, call and demand that your elected members of congress (switchboard 202-224-3121) not pass the stimulus until there are hearings (they can do this relatively quickly, they don't have to drag it out) and that tax incentives
for real job creation be added (like the 3 thousand per new job that Pelosi and Reid stripped out), and that we need a real public
works program that uses a larger share to create more jobs, and not so much profits for contractors. Buy American has to be part
of any stimulus and no, it's not in violation of our trade agreements, nor is it protectionist.
Tell them that any bank, investment company, insurance or what have you company that has received bailout funds already can not get any tax rebates under the bill. Foreign interests and corporations can not receive tax breaks or rebates. The money being
spent will not stimulate our economy if it's funneled overseas, instead of being spent in local communities, to spur the creation
of new jobs/preserve current ones. We are facing life or death, we need to
save our country.
February 2, 2009 1:10 AM | Reply | Permalink
According to government projections, the national debt will exceed half the nation's gross domestic product by the end of this year -- not including the stimulus package. That's certainly high, but not close to a record. The debt was far more than 100 percent of GDP at the end of World War II. That mammoth debt, not incidentally, put Americans back to work, financed industrial production, underwrote a new generation of science and technology and created a wave of demand for consumer goods when the war ended. In short, it got the economy on a new and faster track, thereby allowing the United States to pay down the debt and ushering the country into a new era of widely shared prosperity.
I think you have to take this in historical context. In 1946 there was pent up demand for housing, cars almost all kinds of consumer goods, etc. in the US from 12 years of depression deferred consumption (1929-1941) and 3 years of wartime deferred consumer goods manufacturing (1942-1945).
GIs coming home and wartime double shift workers were ready and willing to buy cars, homes, durable and non durable goods of all kinds with money they didn't have in 1941 and couldn't spend during the war years.
On top of that much of the world's industrial capacity had been bombed into rubble. US exports soared.
We were in a economic catbird seat we're not in right now and most likely will never see again. It's better not to gloss over these factors. I believe Obama's challenges in the face worldwide of recession/depression, the global warming crisis, dwindling energy resources, healthcare and debt are a much harder hill to climb than we faced in the post war period.
February 2, 2009 7:06 AM | Reply | Permalink
I really get the feeling he's not even trying. I think the permanent campaign will make it look like he tried though.
It will be all trimming around the edges, if that when it comes to the colossal defense budget. And how much are overpriced drugs costing the government?
February 3, 2009 12:18 AM | Reply | Permalink
He's been in office for less than two weeks Bill. You might try a little patience. I know it's hard to keep an open mind after 8 years of Bush where assuming the worst became a cynical yet handy shortcut to seeing the both forest and trees but Obama isn't Bush. Keep that in mind.
February 3, 2009 9:48 AM | Reply | Permalink
I sure hope you're right Mark. I think you'd agree we're running out of options, and as Bush himself said, "this sucker could go down."
And the new era of change and service begins with the appointment of two major tax cheats...
February 3, 2009 12:20 PM | Reply | Permalink