In the final days of the presidential campaign, President Obama repeatedly assured Americans that it was time to reap a peace dividend as America’s wars wind down. Nation-building here at home should, he insisted, be put on the agenda: “What we can now do is free up some resources, to, for example, put Americans back to work, especially our veterans, rebuilding our roads, our bridges.”
Setting aside just how slipshod or even downright disastrous Washington’s last decade of nation-building projects in Iraq and Afghanistan have been, the president’s proposal to rebuild roads, upgrade bridges, and retrofit the country’s electrical grid sounds eminently sensible. After all, the American Society of Civil Engineers (ASCE) gives America’s infrastructure a grade of “D.” If, in the era of the $800 billion stimulus package, $1 billion at first sounds paltry, ask the mayors of Detroit,Belmar, New Jersey, or even New York City what that money would mean to their municipalities. America may need $2.2 trillion in repairs and maintenance according to ASCE, but $1 billion could radically change the fortunes of many a city.
Instead, that money is flowing into the oil-rich Middle East. Unknown to most Americans, thousands of State Department personnel, military advisors, and hired contractors remain at several large civilian bases in Iraq where nation-building projects are ongoing; hundreds of millions of taxpayer dollars have been flowing into military construction projects in repressive Persian Gulf states like Bahrain and Qatar; and the Pentagon is expanding its construction program in Central Asia. All of this adds up to a multifaceted project that seems at odds with the president’s rhetoric. [must read]
The jobs data released this morning is a clear disappointment: only 120,000 jobs were added, which is less than what analysts predicted and barely enough to keep up with population growth. The unemployment rate went down slightly, to 8.2 percent, but only because the labor force shrank as people stopped looking for work.
In January and February, the economy added 243,000 and 227,000 jobs respectively. A strong recovery would feature something like 250,000 to 300,000 jobs added per month, at least, and it looked as if perhaps we were flirting with that sort of momentum. Apparently not.
One shouldn’t put too much stock in one month’s numbers, but that applies to the recent positive signs too. The bottom line is that the recovery is going forward sluggishly, if at all, and it needs a push. If it wasn’t already clear—and really, it was—the government needs to enact some serious stimulative measures.
[…] When [Christy] Romer showed Summers her $1.7-to-$1.8 trillion [stimulus] figure late the week before the memo was due, he dismissed it as impractical. So Romer spent the next day or two coming up with a reasonable compromise: $1.2 trillion. In a revised document that she sent Summers over the weekend, she included the $1.2 trillion figure, along with two more limited options: about $600 billion and about $850 billion.
At first, Summers gave her every indication that all three figures would appear in the memo he was sending the president-elect. But with less than twenty-four hours before the memo needed to be in Obama’s hands, Summers informed her that he was inclined to strike the $1.2 trillion figure. Though Summers, like Romer, believed more stimulus was almost unambiguously better, he also felt that a $1.2 trillion proposal, to say nothing of $1.8 trillion, would be dead on arrival in Congress. Moreover, since Obama’s political operatives were convinced that any stimulus approaching a trillion dollars was hopeless, Summers worried that urging more than this amount would stamp him and Romer as oblivious in their eyes. “$1.2 trillion is nonplanetary,” he told Romer, invoking a Summers-ism for “ludicrous.” “People will think we don’t get it.”
Romer was uneasy with this. She felt that $1.2 trillion was itself a pragmatic middle ground. [more]
[That] military spending cut? It’s real (for the first time) but it’s about 1% of the Pentagon’s total. Not exactly transformational. The administration thought about eliminating one of our three nuclear weapon delivery systems (bombers, submarines, and land-based missiles); they thought about killing the most expensive weapon system of all time, the F35; they thought about having 10 rather than 11 aircraft carriers (no other country has even one to challenge them). They did none of these things.
And after next year the military budget will, according to plan, go back up. We will spend more in real terms over the next ten years than we spent during the previous ten. This after 13 straight years of increases. This while we spend more than the next 17 countries put together.
The Obama administration did invest about $80 billion in the green economy through the Recovery Act. But that money is mostly gone now. While their budget does make targeted investments—like $310 million for solar and $95 million for wind—overall spending on clean technology in this budget has almost been cut in half. The climate change budget includes, in addition to funding from the Energy Department, EPA money for pollution control, Treasury Department loan guarantees for clean tech investment, GSA purchases of fuel-efficient vehicles, and Housing and Urban Development funds for building weatherization. Those programs totaled $27.6 billion in the 2012 budget. In 2013 their allotment is $15 billion.
Of course, to the extent Republicans are in charge, this will be much worse. They want to increase military spending far beyond what the Obama administration has in mind. And they’re hoping that the trillion-dollar “sequestration” currently planned for 2013 will be allowed to fall on everything but the Pentagon budget.
A reminder about our permanent and uncapped stimulus package:
More than 40 years ago, long before anyone had ever heard of Barack Obama, before the collapse of Bear Stearns, and before contemporary debates about bailouts and debt ceilings, two authors, Paul Baran and Paul Sweezy, considered a tricky problem. In times of downturn, the government must spend to stimulate the economy. Yet getting the political establishment to agree on one particular program of spending seemed nearly impossible.
Baran and Sweezy phrased the conundrum as a question: “On what could the government spend enough to keep the system from sinking into the mire of stagnation?”
After assessing the political realities that steer America’s power elite, they could find only one response. It was not what typically comes to mind when we think of economic stimulus or government-led job creation.
Their answer: “On arms, more arms, and ever more arms.”
The authors did not approve of military spending as a strategy of economic development. But, even at the very outset of the Cold War, they saw the deep hold that it had on decision-makers in Washington, DC.
We can see the continuing hold it has today. This fall, responding to high and persistent unemployment, President Obama called for a federal jobs act. Among its measures, the act proposed investment in schools and infrastructure. Conservative opponents responded with cries of derision. The critics charged that the plan “doubles down on a failed government stimulus strategy.” It means “adding more money to the same broken system” they said. Finally, they insisted, “It comes to a point that you can’t keep borrowing in a futile attempt to stimulate the economy when the increased debt itself is weakening the economy.”
Obama’s proposals were considered political non-starters, certain to be stonewalled by the Republican Congressional majority. But for all the right-wing insistence that government should end stimulus spending, cut federal budgets in order to reduce the deficit, and generally leave the market to its own devices, our country already has a massive spending program, and it enjoys strong bipartisan support. America’s jobs program is its military—and the immense industry that provides the military with services and armaments.
Our country’s existing jobs program goes by many names: The Permanent War Economy, Military Keynesianism, The Iron Triangle, Perpetual War. The real question it raises is not whether the government should spend. It is whether the government has been spending well. [→]
High speed rail provides a sensible and viable solution to our region’s transportation challenges. It is estimated that creating a high speed railway through Virginia will generate as many as 185,500 jobs, as much as $21.2 billion in economic development, and put nearly 6.5 million cars off the road annually.Eric Cantor, in a letter to Ray LaHood pleading for stimulus funds, while publicly claiming to be against the stimulus and that government spending doesn’t create jobs. (via zeitvox)
There are jobs to be had, jobs for the creating, even good ones, if Washington can just pull its head out of… the hole it’s dug for itself. But just as a starting point of reference, for all the GOP denigration of TARP, actions by the Federal Reserve and the Obama stimulus, according to a recent report issued by the non-partisan policy group Demos, “It’s important to remember that we dodged a far more lethal bullet. The Great Recession could have turned into another Great Depression. The fact that it did not is attributable to the federal government’s forceful macroeconomic intervention in late 2008 and early 2009. Economists Alan Blinder and Mark Zandi (one a former Clinton appointee to the Federal Reserve Board of Governors, and the other a former economic advisor to Senator John McCain) have estimated that the nation’s unemployment rate would have reached 16 percent rather than its actual 10.1 percent in the absence of this intervention.”
The report, “Back to Work: A Public Jobs Proposal for Economic Recovery,” written by Rutgers law and economics professor Philip Harvey, recommends an approach that “doesn’t require us to wait for the economy to recover in order to put people back to work. It puts people back to work as a way of nourishing the recovery. It’s a strategy for producing a job-recovery rather than the jobless recovery we have been experiencing so far.
“The recovery strategy… is conceptually simple: Create jobs for the unemployed directly and immediately in public employment programs that produce useful goods and services for the public’s benefit. What this does for the unemployed is obvious. They get decent work while they wait for the recession to run its course… Benefits delivered… trickle up to the private sector, inducing private sector job creation that supplements the immediate employment effect of the job creation program itself.”
A million temporary jobs in a federally administered, direct jobs creation program — jobs in childcare, eldercare, education, public health and housing, construction and maintenance, recreation and the arts. And as many as 414,000 jobs created outside the program. Annual cost in program spending: $46.4 billion. Actual net cost, taking into account revenues and savings: only $28.6 billion. How? For a fuller explanation, you can read the complete Demos report at: http://www.demos.org/pubs/BackToWork.pdf.
Gov. Jerry Brown said this afternoon that California’s embattled high-speed rail project should move forward, despite growing criticism about the project’s management and cost.
While the nation is in a “period of massive retrenchment,” Brown told The Fresno Bee’s editorial board, “I would like to be part of the group that gets America to think big again.”
The Democratic governor has said little publicly about the project since it came under fire this year in Sacramento, with cost estimates rising and lawmakers questioning its oversight. The project, to connect San Francisco and Los Angeles, was once expected to cost about $43 billion, a figure the California High-Speed Rail Authority is expected to update this fall.
Brown said he is “really getting into” the project and that “we’re working directly with the authority to get their act together.”
He said he will appoint a commissioner to fill a vacant seat on the agency’s governing board this week, though he declined to say who.
“I’m doing the best I can to keep this train running,” Brown said.
The rail project is one of two major infrastructure projects on Brown’s agenda. He said today that he will have a plan for the other project - a peripheral canal or other way to move water through or around the Delta - within a year.
There is a broad consensus in Congress regarding the preference for “private sector” (as opposed to publically funded) solutions to pressing social problems. As we saw in the health care “debate”, this a priori assumption effectively foreclosed serious consideration of the single payer method, the only approach that could reasonably have been expected defuse the health care cost bomb.
There is a broad consensus in Congress regarding the fact that our relationship with Israel is beneficial to the US. This despite the fact that our blank-check support for Israel’s six-decade campaign of expropriation and abuse of the Palestinians is a major cause (the only people that question this are Israel’s many apologists in the US media) of Arab distrust and hostility toward the US. As long as this consensus,—which slavishly embraces Israel’s bully first, talk later approach on its relations with its neighbors and its own second-class Arab citizens—has the unconditional backing of Congress, we will be totally “gridlocked” on the matter of seeking, never mind finding, creative and peaceful solutions to foreign policy issues in the Middle East.
There is a broad consensus in Congress regarding the essential validity of the “War on Terror”, a concept that holds that, “whether we like it or not”, the US is obliged to view most of the world (outside of Great Britain and Israel) as potential adversaries. Implied is the belief we must never, ever “let our guard down” (aka “stop spending obscene quantities of money on armaments) vis-à-vis all those people “intent on doing us harm”. Needless to say, repeatedly telling the many nations of the world, people that might actually like you if you were to modify your behavior toward them, that we (the US and they) of us are condemned to live in a state of distrust, if not open conflict, tends to foreclose many fruitful possibilities. And needless to say, funding this paranoia with heaping expenditures cancels out the possibility that we might actually begin taking care of all the desperate and needy people here at home.
There is a broad consensus in Congress about people in the Executive Branch of government not being subject to the laws of the land. People who broke laws regarding torture, surveillance on American citizens and the need to have congressional approval of military action (to name just a few of the many examples I could adduce), not only walk around free, but openly crow on talk shows and in interviews about how they’d “do it again” if presented with the same set of conditions. This consensually-embraced disdain for the very laws our congressional representatives are elected to uphold and enforce breeds deep cynicism and anger among the general population, and especially among those millions of Americans who, as Barbara Erenreich points out, are increasingly being prosecuted for the “crime” of being poor.
There is a broad consensus in Congress that the rich need not contribute in any inordinate way to solving the problems they had an inordinate role in fomenting. Rather, it is generally agreed in the House and the Senate that they should be able keep almost all of the inordinate wealth they obtained in the last three decades, even if this means letting the millions of less fortunate among us sink into inordinate levels of misery.
And finally, there is a broad consensus in Congress (despite the crocodile tears that some Dems are now sporting before the cameras) regarding to the need to give priority to deficit reduction (favored by the banks and big industry) over a robust stimulus policy designed to give hope and jobs to ordinary Americans.