By proposing financial reforms that won't curb Wall Street excess, U.S. policymakers have offered an unacceptably weak response to our enormous financial crisis. If voters don't demand that their elected representatives help workers and consumers instead of simply boosting corporate profits, the economic downturn will last for several more years and leave the economy vulnerable to another bank-induced meltdown.
The banks have unbelievable lobbying clout. In an interview with Cenk Uyger of The Young Turks, Heather Booth, executive director of Americans for Financial Reform, describes how one-sided the Wall Street reform fight has been. Despite broad public support for a fundamental financial overhaul, going up against the bank lobby is, as Booth describes, "a David and Goliath fight." It's basically Americans for Financial Reform against every major corporation in the U.S.
Booth notes that the Chamber of Commerce has vowed to spend $100 million on a campaign to defend the "so-called free enterprise system"-you know, the "free market"-in which corporate lobbyists spend millions of dollars to write the rules of the economic game. Just seven financial lobby groups have spent a massive $147 million peddling influence over the past two years.
In fact, as Janine Wedel observes for Salon, the U.S. economic system is starting to look an awful lot like the clannish systems of government that looted Eastern European countries in the early 1990s. Today, the public good takes a backseat to the narrow interests of powerful corporations.
With the Obama administration working with advisers from Citigroup and Goldman Sachs, we're not just watching Wall Street write its own regulations. We're watching the financial sector re-write the official role of the government in the economy. In this new role, the government's top priority is securing profits for corporate America.
"The intertwined coterie of financial and policy deciders in the United States is creating not only the financial architecture of the future, backed by the power and billions of the state, but, more generally, new relationships between the bureaucracy and the market," Wedel writes.
GRITtv's Laura Flanders echoes this theme in an interview with John Perkins, author of Confessions of an Economic Hit Man, and journalist Russ Baker. Lobbyists have so thoroughly hijacked the U.S. economy, Perkins argues, that the nation's government now resembles those of Latin American nations he worked with in the 1980s and 1990s.
"I don't think the U.S. president has much power these days, to be honest with you. . . . It's the big corporate executives who call the shots today, and let's face it, they financed Obama's campaign," Perkins says.
The very efforts the government deployed to save the financial system are being perverted to create another disaster. In a five-part interview with Paul Jay of The Real News, Jane D'Arista, an influential economist and author of The Evolution of U.S. Finance, explains how Wall Street destroyed itself over the past decade. By borrowing massive amounts of money, Wall Street was able to place bigger bets in the capital markets casino, resulting in huge profits when those bets paid off. But when the bets backfired, the losses were just as massive. Companies couldn't pay them off, so the government stepped in to support them.
One of those support mechanisms came from the Federal Reserve, which began making incredibly cheap loans to firms that engaged predominantly in speculative trading. The Fed used to lend exclusively to commercial banks, which used the money to make loans that helped grow the real economy. But now those loans are being used to support risky securities trading, so we're seeing big profits in the financial sector, without much help for workers and consumers. This is a major long-term problem-if the economy can't keep pace with the Wall Street casino, those speculative trades are going to backfire and we'll be right back to the chaos of September 2008, only with an even weaker economy.
All hope is not lost. As Perkins and Baker emphasize in their interview with Flanders, citizens have to demand corporate accountability and a government that actually serves the public good. For much of the past decade in Latin America, governments have been elected that stood up to major corporations and demanded that they stop pillaging their nation's resources at the people's expense.
In addition to demanding much stronger reforms for the financial sector, we have to demand that the government respond seriously to problems facing workers. With the unemployment rate at 10.2% and expected to go still higher, we need jobs. As Steve Benen notes for The Washington Monthly, Obama's economic stimulus package helped stave off total economic devastation. What we need now is another stimulus to get people back to work, not just slow the pace of job losses.
"A bold, ambitious jobs bill can make a huge difference-the stimulus got us out of the ditch, a new effort can get us going in the right direction again," Benen writes.
And the only argument against this plan is that we "can't afford it." That is-the government's fiscal deficit is too high, and we just can't spend money to help people in real economic trouble.
But as Christopher Hayes writes for The Nation, the deficit excuse is pretty pathetic. Economic stimulus bolsters economic growth, thus improving tax returns for the government in the future. And any spending on any project can be taken out of the budget from other measures. Hayes notes that our massive military spending is almost never included in discussions about "fiscal responsibility." If we were really worried about how much it would cost to fix the economy, we could stop spending so much money killing people.
"Fiscal conservatism and deficit concern is nearly always code speak in Washington for something else," Hayes writes. "Most often, when someone in Washington says they're concerned about the deficit, what they're really saying is, 'I would like to make sure we have a government that focuses maximally on blowing people up.'"
The government has to start saying 'no' to corporate America. Corporate profits are not the same thing as a strong economy. We need to demand an economic policy that answers to workers, not just bank balance sheets.
This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
On Friday, we learned that the U.S. unemployment rate officially broke 10% for the first time since the early Reagan years. This is about as bad as it gets for a modern, developed economy. No economic force takes a heavier toll on a society than rampant joblessness, and few personal setbacks take a deeper psychological toll than being out of a job for months on end. If Congress and President Obama don't do something to create jobs fast, both are going to pay a hefty political price when next year's mid-term elections roll around.
So how bad is it? In October, the economy shed 190,000 jobs and the unemployment rate jumped from 9.8% to 10.2%. That percentage is the most optimistic reading of the labor market in Friday's report. If you take people who want full-time jobs but are settling for part-time work, then add those who have simply given up on finding a job, the rate is a massive 17.5%.
The problem is not that either Obama or Congress have failed to act on the problem, but rather that they have not done enough. When Congress was moving on Obama's $787 billion economic stimulus package back in February, we were shedding upwards of 700,000 jobs a month. So the stimulus package has worked-it's probably helped keep unemployment from jumping to 12% or 13%. But this is cold comfort to the nation's 15.7 million unemployed, 5.6 million of whom have been out of a job for more than six months.
As Robert Reich notes for Salon, Obama's economic advisers dramatically underestimated how bad things would get when they crafted the stimulus package. As a result, the package was too small and unemployment has remained high. Obama needs to go back to Congress and demand more economic relief funding. Republicans will continue to whine about government spending to excuse their obstructionism, of course, and conservative Democrats will probably start sweating, too-Sen. Ben Nelson (D-NE) helped cut back the original stimulus bill in February to help boost his "centrist" credentials. This of course had nothing to do with economics or policy. Government spending is what saves the economy in a recession. In a downturn as severe as this one, it takes a lot of spending to turn things around.
But as Reich notes, Nelson and his cohorts will have a lot more to worry about in the 2010 elections if the economy doesn't actually improve over the next year. And few economists think it will. The Congressional Budget Office, which is run by a conservative economist named Douglas Elmendorf, projects an average unemployment rate of over 10% in 2010. That's worse than this year. Democrats from swing districts need to support economic relief packages. Continued economic malaise will severely hurt them at the polls.
Congress finally took some action on joblessness on Thursday, voting to extend unemployment benefits for an additional 14 weeks. If we want the economy to recover, we need people to spend money, but if people aren't working, they don't have any money to spend. So the government cuts people checks to help them get by and stimulate a demand for goods and services. Even most conservative economists thinks this is a good idea.
But as Kevin Drum notes for Mother Jones, the soundness of the policy did nothing to prevent Republicans from fighting the effort to extend benefits tooth-and-nail. The bill had to overcome three-that's right, three-filibusters in the Senate from Republicans, who held up the bill for weeks for no apparent reason. In a blog post for The Washington Monthly, Steve Benen explains the economic cost of this obstructionism: In the weeks of delay, 200,000 people looking for work stopped receiving benefits.
But extending unemployment benefits will not solve our economic woes. The total program is just $2.4 billion, a drop in the bucket compared to the trillions of dollars the government put up to salvage Wall Street. $2.4 billion is not enough to reverse the unemployment trend. Cutting the checks certainly helps, but as Matthew Rothschild emphasizes for The Progressive, we need an economic policy that actually puts people back to work. We've known for months that the stimulus was too small and watched the labor market continue to deteriorate. We need more than tweaks at the economic margins, we need a robust job creation plan.
As Stephen Franklin notes for Working In These Times, we already know that the recession has created a significant jump in the nation's poverty rate. According to official government statistics, the rate climbed from 12.5% to 13.2% in 2008, the largest increase since 1991. But the National Academy of Science thinks the government statistics are misleading, as they account for rising costs associated with medical care, transportation, child care and different regional living standards, as Franklin notes. Taking these factors into account, the National Academy of Sciences calculates the actual poverty rate to be 15.8%. That's an additional 7 million people living in poverty, for a total of over 47 million. That's more than the entire population of the New York, Los Angeles, Chicago, and Philadelphia metropolitan areas combined. What's worse, we don't have poverty statistics for this year, when the most severe economic damage was been dealt.
Workers are facing tough economic prospects around the world. Writing for The Nation, Kristina Rizga details Latvia's economic turmoil. Just like the US, overexcited bankers in Latvia inflated a massive real estate bubble that took down the entire economy when it burst. But with the bubble burst, much of the country is now out of a job and stuck with a mortgage worth far less than what they paid for it. It's almost exactly the same story we've seen at home.
No domestic economic problem is more pressing than our epic levels of unemployment. We need another round of stimulus to get people working again. If not, we'll see the same public unrest here as in Eastern Europe.
This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
After reading Mike's diary, "A Simple Test", I found myself agreeing with the broad thrust of it, that Obama needs to move left-as FDR did, after his initial '100 Days'-guided most simply by the test, "does it benefit poor and middle class people, or does it benefit Goldman and Morgan?". Yet, at the same time, I found myself disagreeing that this simple test is necessarily enough. It's certainly a good starting point, and given that no legislation is ever perfect, and that time and energy spent on one thing is taken away from another, that test may well be enough for most legislation in most circumstances. But we should be clear that ideally more is required, and we should be clear just what that is, so that even when we don't pursue it, we know precisely what it is that we are foregoing. And so I present my three-part test:
(1) Mike's Simple Test:
who does it benefit the most, and who does it benefit first? If the main or biggest beneficiary is the big majority of poor and middle income people, I rate it a success. If the first and biggest beneficiaries are the wealthy and powerful, then I rate it a failure
(2) The Marine Test: Who did it leave behind on the battlefield? Who could have been helped who was not helped? Particularly when more was clearly achievable. If it failed to help a substantial number of poor and middle income people, then it was failure, even if it passed Mike's Simple Test-unless there is a clear and credible plan and a path forward to do more to help those people, and there is the political will to pass legislation that achieves the unmet goal.
(3) The Gramsci Test: Did it help change the direction of basic operating assumptions for future political struggles in a more progressive direction? If so, rate it a success. If it missed a rare opening, created new obstacles, or needlessly reinforced conservative assumptions, it is a failure.
Now, let me emphasize again, I am not suggesting that all three tests should apply to every piece of legislation, just because they could be applied. First of all, as already noted, there are practical trade-offs to be considered. Second, there are significant differences in the opportunities presented at different times. But when we're talking about major pieces of legislation, such as the stimulus, or the health care reform, then it seems entirely proper to employ all three tests. We might, in the end, decide to support legislation that failed one or more of the tests, but at least we would support it having a much more realistic sense of the cost involved.
On the flip, I consider what difference this might make in evaluating the stimulus and health care reform-with particular attention to the former, in light of new statistics out about the state of state finances. By sharpening critical awareness of what happened with the stimulus, perhaps we can do better with health care and global warming.
Two weeks ago, I wrote a diary, "The Recovery Myth", warning about the risks of ignoring longer-term economic prospects for short term upticks. This diary continues that theme (and is fully in tune with Mike's recent diary, "We Need a Jobs Package, Not a Stimulus Package").
A rising tide of voices are warning that optimism over a coming recovery--the promise of "green shoots"--is looking increasingly questionable. Typical of these are Dean Baker's "The Green Shoots Are Dead", hence my diary title. The subhead to his article explains:
The latest jobless figures show America's economy is stuck in the doldrums. The US urgently needs a new stimulus injection
Krugman argues along similar lines in his July 9 column, "The Stimulus Trap"
As soon as the Obama administration-in-waiting announced its stimulus plan - this was before Inauguration Day - some of us worried that the plan would prove inadequate. And we also worried that it might be hard, as a political matter, to come back for another round.
Unfortunately, those worries have proved justified. The bad employment report for June made it clear that the stimulus was, indeed, too small. But it also damaged the credibility of the administration's economic stewardship. There's now a real risk that President Obama will find himself caught in a political-economic trap.
The so-called "green shoots" of recovery are turning brown in the scorching summer sun. In fact, the whole debate about when and how a recovery will begin is wrongly framed....
In a recession this deep, recovery doesn't depend on investors. It depends on consumers who, after all, are 70 percent of the U.S. economy. And this time consumers got really whacked. Until consumers start spending again, you can forget any recovery....
This economy can't get back on track because the track we were on for years -- featuring flat or declining median wages, mounting consumer debt, and widening insecurity, not to mention increasing carbon in the atmosphere -- simply cannot be sustained.
Meanwhile, Bonddad is on a counter-contrarian kick at DKos, writing "The Economic Free Fall is Over", which I believe is instructively mistaken. It's true in one sense, but it misses the point in a larger one (after all, FDR reversed the downward plunge of the GDP within his first two years, but unemployment remained crushing until WWII came along). More on all of these viewpoints--and more viewpoints as well--on the flip.
This seems like Framing and Political Strategy 101 to me, but since few other people are talking in this way, let me just lay out a basic idea: all this talk about doing a stimulus package versus not doing a stimulus package is fundamentally besides the point. What we need is a comprehensive policy package that is very simply focused on one thing and one thing only: jobs.
I know the policy wonks on Capitol Hill may be confused by that paragraph because, they would say, well, a stimulus program would create jobs. Well, yeah, that is the idea of stimulus. But my point is this: the politics of a second stimulus package are a dead end. The politics of having a debate about a policy package that will create jobs is a helpful thing. Announcing a second stimulus package gets Democrats into a defensive crouch about why the first one failed, and gets us into that same "can we get to 60" dance with Ben Nelson, Arlen Specter, Olympia Snowe, and Susan Collins that caused the first stimulus bill to be pared back and rendered less effective.
Voters don't know what it means to say you are going to stimulate the economy, but they do know what a job is. And right now, what we need is jobs sooner rather than later. My point here is not to just rename the stimulus bill the jobs bill. In fact, there are quite a few things the White House and Congress can do to focus on jobs that don't involve just spending more, although more money will certainly need to be spent. Here is what I would include in a comprehensive package:
Fragmentation of authority, planning and execution have been endemic to urban policy for the better part of four decades. A new report from the Drum Major Institute--"No Economic Recovery Without Cities: The Urgency Of A New Federal Urban Policy"--sounds a clarion call for dramatically turning that around, while also focusing efforts to ensure maximum impact from the existing federal stimulus.
Writing at Huffington Post, report co-author Harry Moroz called for the White House to play "a more active and visible role in cities":
Why not reactivate Obama's grassroots operation so that federal officials and urban stakeholders collaborate in real time and share responsibility for the stimulus? Why not set up stimulus accountability outposts of the White House in cities? Obama came into office with a metro mandate and now is the time to claim it.
All the doubts about the stimulus -- from foes like Senator Coburn and friends like the Conference of Mayors -- will only increase until President Obama empowers his White House Office of Urban Affairs to refocus the American Recovery and Reinvestment Act on bolstering the urban areas that will drive economic recovery.
The report itself presents a more robust argument for pro-active White House involvement. From the executive summary:
The White House Office of Urban Affairs provides President Obama a unique opportunity to articulate a national agenda that recognizes urban areas as integral, indeed indispensable, to national prosperity. The last fifty years of federal urban policymaking have been characterized by two ideologies. The first considers urban decline as both a justification for and a mode of urban policymaking. The second deems federal urban policymaking intrusive and harmful to national economic growth. But research shows that cities and their surrounding metropolitan areas are engines of economic growth. Neither ideology recognizes this and so both fail to tie the fate of cities to the fate of the country at large.
As the Dow Jones Industrial Average inches upward, there will be a strong temptation—especially from financial news outlets—to equate recovery by shareholders with the recovery of economic security in our country. When the Dow returns to, say, 10,000, we're likely to see "Mission Accomplished" signs going up in a number of media and financial quarters. Undoubtedly some in the administration, too, will begin patting themselves on the back.
That would be a mistake. New research from The Opportunity Agenda shows why the Dow—and even average unemployment rates—cannot be the primary measures of our national economic health. The State of Opportunity in America analyzes government data across a range of sectors—from jobs to education to housing to poverty and beyond—to measure our national progress in fulfilling the promise of Opportunity.
Opportunity is the profoundly American idea that everyone deserves a fair chance to achieve his or her full potential, and that affording that fair chance to everyone is key to our common national prosperity. Opportunity is about national conditions, but viewed in the context of national values like equal treatment, economic security and mobility, a voice in decisions that affect us, and a chance to start over after misfortune or missteps.
This year's State of Opportunity report is particularly revealing, because it looks primarily at economic and social conditions from 2006 to 2007—the year before the current economic recession, which economists say began in December 2007. The report makes clear that our national infrastructure of opportunity was fractured and unequal before the current crisis took hold, and that a meaningful national recovery will require attending to structural reforms as well as short-term job creation. Simply restoring the economy to its 2007 conditions will fall far short of the change we need.
The Dow topped 14,000 in 2007. Yet, in 2007, 11% of full-time, year-round workers lived in poverty. Eighteen percent of U.S children (over 13 million kids) shared that condition, despite a still-humming stock market. Almost as many American kids (17%) experienced "food insecurity," meaning that their eating was disrupted because their families could not afford adequate food. Over 45 million Americans—15 out of every 100—lacked health insurance.
Mudflats reports on a public hearing and rally in Anchorage in opposition to Sarah Palin's refusal of federal stimulus funds, and takes note of just how bizarre this turn of events really is:
The fact that Alaskans actually had to go to these lengths to reaffirm their desire for money coming into the state probably came as a bit of a shock to the likes of Congressman Don Young and former Senator Ted Stevens, whose long reigns in the congressional delegation were based largely on their ability to bring home the federal bacon. This whole "we don't need the money" meme is brand new.
Apparently there are Alaskans who are so madly in love with Palin that they don't mind the fact that she as the advocate for the state of Alaska, suddenly feels more of a sense of duty to save the country money than to represent the interests of her constituents.
Particularly weird given her Alaska Independence Party roots. But then, weird is pretty much all they've got going for them, isn't it? A kid with Downs Syndrome and she's cutting off funds for special education.
Mudflats has a collection of quotes from prominent Alaskans in a post that also announces a rally for today at the famous Loussac Library, site of the mammoth anti-Palin "welcome back" rally that overshadowed the official one back in September. But the most damaging of the quotes she has comes from a post by blogger/radio host and former GOP legislator Andrew Halcro, who reports:
This was an email I received this morning from a legislative leader:
Here's the scoop on the Big Stim funding. Until 24 hours before her press conference, the Governor was going to accept most everything, and reject a few items that we all pretty much agreed were not acceptable. Most of the Big Stim money is really pretty benign and does not require unsustainable new permanent programs.
The issue became a big tug of war for control of the Gov between folks in state government and Sara PAC. Sara PAC won, literally hours before the announcement was made. Alaska was sacrificed again to the godless pagan illusions of her national ambitions.
No way the folks at home are going to be happy with this.
In my last diary, "What Does Fiscal Responsibility Look Like?", I tried to provide an example of how one might begin laying out a sane discussion of economic policy. But, of course, in the world we live in today, that sort of thing virtually never happens. So here I want to do a 180, and take a snapshot look at an example of why that's the case, why our economic discourse is so totally crazy.
Going back to my old ways, you know I would say it's an example of hegemony--the existing institutions that shape everyday reality for people also shape the limits of what they can think or see in extraordinary circumstances as well. And so it is that the daily repetition of news sources like CNBC--however ludicrously inaccurate and inept they may be--have an outsized influence, just at the very moment when everything they stand for, every assumption they rely on has been cast in the utmost doubt.
Think of it like high school. The only place where the right answer matters is on the test-if there. In the hallways, the locker room, the football field, the cafeteria, everywhere else, the only answer that matters is what the cool kids say it is. And who's cool? Whoever has the power-one way or another. Being wrong doesn't even begin to register in the equation.
This is what's been behind the all-out effort to rewrite economic history (so that FDR caused the Great Depression), along with basic empirical facts (such as the fact that poor folks spend everything that comes to them, while rich folks don't, and thus stimulus spending that reaches the poor is far more efficacious than that which reaches the rich). Perhaps these inconvenient facts can't be changed, but they can be clouded, they can be rendered "debatable," simply because people who want to make these facts go away are not about to go away themselves.
It's not so much that they have access. It's more like they are access. This is the larger context behind CNBC and it's merry band of trolls, constantly yelling that the stock market is falling, and it's all Obama's fault! It matters not one whit that the stock market falling is far from the main show. GDP, unemployment, mortgage foreclosure rates, consumer confidence-all these are significantly more important than the Dow Jones Average. But they aren't up there on the ticker, changing moment by moment for all America to see. To watch as if it were an oracle source of omnipotent wisdom.
And, of course, it's not just CNBC. Because the entire media conglomerate-o-sphere is all so tightly wired together. Hence, on Tuesday's Hardball uber-troll Chris Matthews bloviates, counterposing hard facts-folks aren't buying the absurd fiction that Obama's to blame-with hot-headed fantasies....
In addition to his segment on Obama's Vietnam this Friday, Bill Moyers also focused on funding for public education with Vartan Gregorian. The situation with public education is virtually identical with that of public infrastructure-30 years of underfunding and neglect, thanks largely to the movement conservative "tax revolt." In fact, the two are really one and the same, since an educated public is the human infrastructure on which our country is built. And conservatives don't give a damn about any of it.
BILL MOYERS: All across the country it's the same. State governments are staring down the barrel at $300 billion worth of deficits for the next two years. Twenty-six states already have either cut their budgets for higher education, raised tuition fees, or done both. When it comes to college affordability, this report from The National Center for Public Policy and Higher Education gives a failing grade of "F" to 49 of the 50 states. Tuition at public four-year colleges is up an average of more than $6,500, at two-year schools, almost $2,500. Yet even with the increases, THE CHRONICLE OF HIGHER EDUCATION reports that many college buildings are outdated, inefficient, even crumbling. So what's to be done? Some took hope when President Obama spoke up for higher education in his inaugural address.
PRESIDENT BARACK OBAMA: And we will transform our schools and colleges and universities to meet the demands of a new age.
BILL MOYERS: If the colleges and universities do wind up big winners in Washington, no one will be happier than this man, or more responsible. Long a dynamo for the cause of public education, Vartan Gregorian bears testament to the value of a lifetime of learning.... Last October, Gregorian convened a group of educators to urge whoever would become our next president to invest in higher education. Their meeting later resulted in this two-page newspaper ad, an open letter to then President-elect Obama asking that whatever economic stimulus package comes out of Washington, five percent of it - around 40 to 45 billion dollars - go to higher public education.
Considering that the Treasury and the Fed combined have already given trillions to the financial sector, $40-50 billion to higher public education is less than a pittance. It's an insult, really. But it's what they're asking for.
The rejection of bipartisanship by the Republicans should be perceived in terms of their long term strategy. They know that the depression has just begun. The worse is yet to come. How bad will it be? Far worse than anyone so far has imagined, and we've all imagined it as pretty bad. It will exceed our most extreme fantasies. (In fact, my father, who turns 100 next month (!) said this is shaping up as much worse than the thirties; I think he may be right.) The GOP knows that no feasible stimulus plan, no matter how large or well-crafted, can avert catastrophe. They intend to refuse to go along with anything Obama proposes, wait until disaster hits,and then - counting on the country's short memory span as well as the complicity of the media - blame Obama, Democrats, and liberalism for destroying the economy.
Obama also knows that economic disaster cannot be avoided and that it will be far worse than anything anyone alive - other than centenarians like my Dad - has ever seen; that's why his inaugural address was so grim. He also knows that no stimulus plan will work. And he knows he will be blamed for it when the misery adds up. Therefore, he is trying like hell to get the GOP to sign up, at least partially, for his proposal so he can spread the blame, This is after all, a time-honored political tactic, used by Bush, for example, to claim bipartisan authorization for the invasion of Iraq.
What Tristero's talking about is the elephant in the room. (And he's not just some wild-eyed nut. A team of economists at The Levy Economics Institute of Bard College has been writing about the dire situation we find ourselves in since 1998. (More about them on the flip.) It's what none of the political elite wants to talk about, and so they have a gentleman's agreement not to talk about it. But the fact remains that all their studied silence will not do one whit to make it go away. Obama himself has thrown out the figure of $1.3 trillion--but that was back before he took the oath of office, and Democrats started seriously shooting themselves in the feet, legs, arms and hands:
[I]t's important to note that every economist, conservative or liberal, at this point agrees that we have to have a substantial recovery plan that helps to jump-start the economy, that short term it's going to be expensive, but it would be much more expensive to see the economy continue in the tailspin that it's been going in. We've seen ranges from [$]800 [billion] to [$]1.3 trillion and our attitude was that given the legislative process, if we start towards the low end of that, we'll see how it develops.
The retreat from reality has been fast and furious ever since.
This is a follow-up to "Dems About To Collapse On Contraceptives In Stimulus Plan???". According to Elana Schor at TPMDC, "Family Planning Aid is Gone For Good From the Stimulus". True or not, we need to fully realize just how bad this is, so we understand the parameters that Obama is operating within. Hopefully they can and will be changed, but we cannot be effective in changing them if we don't understand them--particularly if we will fully mis-understand them. First off, Robert in Monterrey, aka "Eugene" had an excellent recommended diary at DKos yesterday, "This Is Not Acceptable", hitting three main points at the crux of the matter:
Why does this battle matter? First, contraception is economic stimulus. Family planning is necessary for American families of all incomes to enjoy financial stability and the ability to plan expenses. If you have an "oops baby" then your finances may suffer severely and unwantedly.
Second, this is a conservative effort to destroy the Obama Administration in the womb. If Obama caves, as now appears likely, then Republicans will have won a truly major victory. They never had a chance to stop the stimulus, but now they will have shown they can dictate some of its terms. They were active in pushing their bullshit talking points to the media - flawed as they were. If Obama is going to cater to their whims, we know from the Bush era how this story ends - Republicans will make more crazy demands, and Democrats will give in to them.
Third, this is part of the conservative effort to attack not just abortion rights, but contraception and the right to privacy. What they have done, and what Obama is about to enable, is something rather stunning - they have made contraception controversial. Sure, some of us might have felt a bit sheepish the first time we bought condoms or picked up the pill at the pharmacy, but we got over it, because it's not controversial or shameful but normal.
Not to the conservatives. They never wanted to stop at rolling back Roe v. Wade - they want to roll back anything smacking of sexual freedom. Griswold v. Connecticut is their true goal, the 1967 case that outlawed bans on contraception and established the right to privacy. If they are going to have a chance at rolling that back, they have to make contraception controversial. And if we are to stop them, we must not yield an inch to them - we must stand up and say "no, you lost, and we are keeping contraception funding."
Don't look now, but the Democrats are about to do something incredibly stupid, which:
(1) Betrays their base.
(2) Empowers a powerless opposition.
(3) Gives credence to a narrative trope that can be used to bash them repeatedly in the future.
(4) Totally misses the opportunity to start building a new narrative--the sort of thing that's absolutely vitale to long-term political success.
What's this all about? Simple: Caving into GOP pressure to remove contraceptives from the stimulus plan. AP reports:
House Democrats are likely to jettison family planning funds for the low-income from an $825 billion economic stimulus bill, officials said late Monday, following a personal appeal from President Barack Obama at a time the administration is courting Republican critics of the legislation.
Several officials said a final decision was expected on Tuesday, coinciding with Obama's scheduled visit to the Capitol for separate meetings with House and Senate Republicans.
The provision has emerged as a point of contention among Republicans, who criticize it as an example of wasteful spending that would neither create jobs nor otherwise improve the economy.
Under the provision, states no longer would be required to obtain federal permission to offer family planning services - including contraceptives - under Medicaid, the health program for the low-income.
Whatever happened to "states' rights"?
Democrats considered the politically-potent change as congressional budget experts estimated it would take slightly longer for the overall legislation to achieve an impact on the economy than the administration projects.
The Congressional Budget Office said the economy would feel the effects of almost two-thirds of the money over the next year and a half. The administration claims 75 percent of the funding would be absorbed in that period of time, and Obama has pledged that the bill he signs will meet that target and either save or create up to 4 million jobs.
While the debate surrounding the overall impact of the measure pits economists and their statistics against one another, Republicans quickly seized on the family planning money as evidence that the Democrats were advancing an agenda that went beyond the economy.
Yes, how dare the Democrats try to walk and chew gum at the same time! How dare they propose policies that have more than one intended purpose! Remind me again... who won the election?
Robert Reich was the most overtly progressive member of Bill Clinton's cabinet. By all appearances, he's also really smart and really nice. Unfortunately, sometimes the two work against each other. Such was the case on Inauguration day, when his post at TPM, "Obama's First Choice", advanced the argument that, although the stimulus needs to be large (his own view is $900+ billion), the price tag "scares" Republicans and Blue Dogs, and that it " may be the smartest politics and smartest economics" to go for the broadest support, even if the result is "a smaller stimulus package - one that may not be enough to jump-start the economy."
Reich explains:
Why would he ever choose the second strategy? Because his goal is not just to get the biggest stimulus package he can squeeze through Congress. It's to get a Congress that's mostly united behind whatever stimulus package emerges. This would ensure that Republicans and blue-dog Democrats take some ownership of the package, and therefore responsibility for making it work.
If they feel ownership and responsibility, Obama could return to them later if more money is needed, and probably get their backing. Just as important, he starts to build bipartisan support for other things that have to be done in the next few months - keeping the U.S. auto industry afloat, reducing mortgage foreclosures, and devising new regulations of Wall Street. And he lays the foundation for a more united Congress capable of tackling a new health-care system, a new system for reducing carbon emissions, and reform of Social Security and Medicare.
I have just one question: what has Reich been smoking? Republicans and blue-dog Democrats feel "ownership and responsibility"?
Republicans say the $825 billion price tag is too big a burden for a nation crippled by debt and that it doesn't do enough to stimulate the economy by cutting taxes.
"You know, I'm concerned about the size of the package. And I'm concerned about some of the spending that's in there, [about] ... how you can spend hundreds of millions on contraceptives," House GOP Leader John Boehner (R-Ohio) later said.
"How does that stimulate the economy?"
Where to begin? How about 1968? The pill had been around for about a decade then. Plenty of time for politicians to figure that one out, one would think.
$87 billion to states, increasing through the end of FY 2010 the share of Medicaid costs the federal government reimburses states, with additional relief tied to rates of unemployment.
But Boehner, being white male GOP Congressmember doesn't quite get the connection between contraceptives and health care. It's not like we're talking Viagra here. I'm sure he understands how that would stimulate the economy. No?
Bob Herbert is thrilled that we will finally have a president who "gets it" when it comes to job creation:
The idea that the nation had all but stopped investing in its infrastructure, and that officials in Washington have ignored the crucial role of job creation as the cornerstone of a thriving economy is beyond mind-boggling. It's impossible to understand.
Impossible, that is, until you realize that bandits don't waste time repairing a building that they're looting.
This nails it exactly, I think. After all, it wasn't Markos, or Chris, or Matt, or David, or even me who called the Bush Administration budgets "a kind of looting." It was Nobel Prize-winning economist George Akerlof. But, by the same token, getting this basic fact and pledging up front to take significant action on it does not equate to being a progressive. Heck, there was a time when someone might have cited this as evidence of being a proud, far-sighted, but sober-minded American conservative.
More importantly, perhaps, given how confused folks have gotten about labels lately, this pledge is not enough to make sense economically, in terms of basic economic justice. Which is why we need to raise the bar in terms of what we should expect from Obama. Without more details, this could be just be a different--albeit much more responsible--way to make wealthy Americans even wealthier, using taxpayer money. This was explained by economic analyst and historian Michael Hudson explained on Democracy Now! this morning, as part of a powerhouse interview also including Robert Kuttner and Naomi Klein. As Hudson explained, multi-billion dollar infrastructure investments routinely increase nearby property values by considerably more than the cost of such public investments:
