News & Politics

How to Stop the Looming Depression Without Lining Fat-Cat CEOs' Pockets

We are now at a crash site, and our priority should be to save the victims. Here's how we do that.

No one should be shocked to discover that, in his transition to the presidency, the "inexperienced" former senator from Chicago has turned to the last Democratic administration that had experience in Washington. It seems, however, that the Obama team is doing so big time. Looking at lists of early appointees for the transition period and the administration to come, from Rahm Emanuel on down, you might be forgiven for concluding that Hillary had been elected president in 2008. Clintonistas are just piling up in the prospective corridors of power.

You might also be forgiven for concluding that just about no one else in America had ever had any "experience." Late last week, the website Politico.com did some counting and came up with the following: "Thirty-one of the 47 people so far named to transition or staff posts have ties to the Clinton administration, including all but one of the members of his 12-person Transition Advisory Board and both of his White House staff choices." More have been appointed since then, including, as White House Counsel, Gregory Craig, the lawyer who defended Bill Clinton in impeachment hearings. And, of course, everyone in America now knows that Hillary herself is evidently now being considered for a cabinet post.

What do Washington political and policy types do when their party is kicked out of office? If they want to stay in the Big Town, they tend to go to work for lobbyists, consultancy firms, or think tanks. They raise money. They do what's needed and make good livings until the tide turns. Now, that tide is again rushing in -- and the lobbying money is, of course, rushing in with it. As the Washington Post describes it, there is already a "mini-boom" for Democrats along that lobbying alley, K Street.

Here's how Laura Meckler and Jonathan Weisman of the Wall Street Journal described one set of 13 transition-team names released: "The group is filled with second-tier veterans of the Clinton administration and workers in the technology and financial sectors. It includes four former lobbyists, three top campaign fund-raisers and two former employees of troubled mortgage giant Fannie Mae, with some overlap among them. Four people in the group have ties to the consultant McKinsey & Co…" (In 2004, by the way, McKinsey & Co. made $19,500 in executive contributions to President Bush, and $102,000 in soft money contributions to the Republican Party. That will undoubtedly now change.)

Obama himself, for those of you who watched him (and Michelle) on 60 Minutes Sunday, is nothing short of a breath of fresh air -- he actually explains things coherently -- after our last presidential "experience." But let's hope that, as the good times roll (even in bad times) for Democrats, he keeps his equilibrium amid the usual Washington consensual pressures. The President-elect spoke Sunday night of keeping people in their all-too-foreclosable homes. Right now, as far as we know, the best he can imagine is a 90-day foreclosure freeze on "some banks." The plans at the FDIC these days promise to save homeowners by turning 30-year mortgages into 40 years of paying the bank at lower interest rates. Is there no such thing in our world as the economics of kindness (except perhaps for bankers and insurance execs)? What about leaving people in their homes at least until the bad times end? Why is debt forgiveness an option for banks, but not for citizens?

Among all those experienced folks in the new Democratic Washington, will there be anyone who can truly think outside the box in desperate times? Mike Davis, TomDispatch regular and most recently the incandescent author of In Praise of Barbarians: Essays Against Empire, suggests some of the human choices that an Obama administration will face and what might be done about them. -- introduction by TomDispatch editor Tom Engelhardt

Why Obama's Futurama Can Wait

Schools and Hospitals Should Come First in Any Stimulus Package

By Mike Davis

America's "Futurama" is defunct. The famous walk-through diorama of a car-and-suburb world, imagineered by Norman Bel Geddes for General Motors at the 1939 New York World's Fair, has weathered into a dreary emblem of our national backwardness. While GM bleeds to death on a Detroit street corner, the steel-and-concrete Interstate landscape built in the 1950s and 1960s is rapidly decaying into this century's equivalent of Victorian rubble.

As we wait in potholed gridlock for the next highway bridge to collapse, the French, the Japanese, and now the Spanish blissfully speed by us on their sci-fi trains. Within the next year or two, Spain's high-speed rail network will become the world's largest, with plans to cap construction in 2020 at an incredible 6,000 miles of fast track. Meanwhile China has launched its first 200 mile-per-hour prototype, and Saudi Arabia and Argentina are proceeding with the construction of their own state-of-the-art systems. Of the larger rich, industrial countries, only the United States has yet to build a single mile of what constitutes the new global standard of transportation.

From day one, Barack Obama campaigned to redress this infrastructure deficit through an ambitious program of public investment: "For our economy, our safety, and our workers, we have to rebuild America." Originally he proposed to finance this spending by ending the war in Iraq. Although his present commitments to a larger military and an expanded war in Afghanistan seem to foreclose any reconversion of the Pentagon budget, he continues to emphasize the urgency of an Apollo-style program to modernize highways, ports, rail transit, and power grids.

Public works, he also promises, can put the public back to work. His "Economic Rescue Plan for the Middle Class" vows to "create 5 million new, high-wage jobs by investing in the renewable sources of energy that will eliminate the oil we currently import from the Middle East in 10 years, and we'll create 2 million jobs by rebuilding our crumbling roads, schools, and bridges."

Of course, Bill Clinton entered the White House with a similarly ambitious plan to rebuild the derelict national infrastructure, but it was abandoned after Treasury Secretary Robert Rubin convinced the new president that deficit reduction was the true national priority. This time around, a much more powerful and desperate coalition of interests is aligned to support the Keynesian shock-and-awe of major public works.

Rolling Out the Dozers

Since the Paulson bailout plan has become so much expensive spit in the wind, and with bond spreads now premised on the possibility of double-digit unemployment over the next 18 months, massive new federal spending has become a matter of sheer economic survival. As innumerable influentials -- from New York Times columnist David Brooks to House Majority Leader Nancy Pelosi -- have argued, a crash program of infrastructure repair and construction, likely to include some investment in the new power grids required to bring more solar and wind energy online, is the "win-win" approach that will garner the quickest bipartisan support.

It has also been portrayed as the only lifeboat in the water for the ordinary steerage passengers in our sinking economy. The emergent Washington consensus seems to be that those five million green jobs can actually come later (after we save GM's shareholders), but that infrastructure spending -- if resolutely pushed through the lame-duck Congress or adopted in Obama's first 100 days -- can begin to pump money into the crucial construction and manufacturing sectors of the economy before the end of next winter.

Unlike Comrade Bush's "socialist" efforts to save Wall Street, a public-works strategy for national recovery has had broad ideological respectability from the days of Alexander Hamilton and Abraham Lincoln to those of Franklin D. Roosevelt and John F. Kennedy. If Democrats can brag about the proud heritage of the Works Progress Administration and the Public Works Administration from the era of the Great Depression (ah, those magnificent post offices and parkways), there are still a few Republicans who remember the Golden Age of interstate highway construction that commenced in the 1950s with President Dwight D. Eisenhower. Indeed since the national shame of Hurricane Katrina, Americans have become outspokenly nostalgic about competent federal governments and magnificent public achievements.

If one accepts the reasonable principle of supporting the new president whenever he makes policy from the left or addresses basic social needs, shouldn't progressives be cheering the White House as it rolls out the dozers, Cats, and big cranes? Aren't high-speed mass transit and clean energy the kind of noble priorities that best reconcile big-bang stimulus with long-term public value?

The answer is: no, not at this stage of our national emergency. I'm not an infrastructure-crisis denialist, but first things first. We are now at a crash site, and our priority should be to save the victims, not change the tires or repair the fender, much less build a new car. In the triage situation that now confronts the president-elect, keeping local schools and hospitals open should be the first concern, rebuilding bridges and expanding ports would come next, and rescuing bank shareholders at the very end of the line.

Inexorably, the budgets of schools, cities, and states are sinking into insolvency on a scale comparable to the early 1930s. The public-sector fiscal crisis -- a vicious chain reaction of falling property values, incomes, and sales -- has been magnified by the unexpectedly large exposure of local governments and transit agencies to the Wall Street meltdown via complex capital lease-back arrangements. Meanwhile on the demand side, the need for public services explodes as even prudent burghers face foreclosure, not to speak of the loss of pensions and medical coverage. Although the public mega-deficits of California and New York may dominate headlines, the essence of the crisis -- from the suburbs of Anchorage to the neighborhoods of West Philly -- is its potential universality.

Certainly, in such a rich country, wind farms and schools should never become a Sophie's choice, but the criminal negligence of Congress over the past months should alert us to the likelihood that such a choice will be made -- with disastrous results for both human services and economic recovery.

Saving Schools and Hospitals

Congress naturally loves infrastructure because it rewards manufacturers, shippers, and contractors who give large campaign contributions, and because construction sites can be handsomely bill-boarded with the names of proud sponsors. Powerful business lobbies like the National Industrial Transportation League and the Coalition for America's Gateways and Trade Corridors stand ready to grease the wheels of their political allies. In addition, if the past century of congressional pork-barrel methods is any precedent, infrastructural spending typically resists coherent national planning or larger cost-benefit analyses.

Yet saving (and expanding) core public employment is, hands-down, the best Keynesian stimulus around. Federal investment in education and healthcare gets incomparably more bang for the buck, if jobs are the principal criterion, than expenditures on transportation equipment or road repair.

For example, $50 million in federal aid during the Clinton administration allowed Michigan schools to hire nearly 1,300 new teachers. It is also the current operating budget of a Tennessee school district made up of eight elementary schools, three middle schools, and two high schools.

On the other hand, $50 million on the order book of a niche public transit manufacturer generates only 200 jobs (plus, of course, capital costs and profits). Road construction and bridge repair, also very capital intensive, produce about the same modest, direct employment effect.

One of the most likely targets for a Congressional stimulus plan is light-rail construction. Street-car systems are enormously popular with local governments, redevelopment agencies, and middle-class commuters, but generally they operate less efficiently (per dollar per passenger) than bus systems, and at least 40% of the capital investment leaks overseas to German streetcar builders and Korean steel companies.

Personally, I would love to commute via a sleek Euro-style bullet train from my home in San Diego to my job in Riverside, 100 grueling freeway miles away, but I'll take gridlock if the cost of rationing federal expenditure is tolerating the closure of my kids' school or increasing the wait in the local emergency room from two to ten hours.

Obama, unlike his predecessor, has a bold vision, shared with his powerful supporters in high-tech industries, of catching up with the Spanish and Japanese, while redeeming America as the synonym for modernity. Lots of new infrastructure will, however, become so many bridges to nowhere (especially for our children) unless he and Congress first save human-needs budgets and public-sector jobs.

A good start for progressive agitation on Obama's left flank would be to demand that his health-care reform and aid-to-education proposals be brought front and center as preferential vehicles for immediate macro-economic stimulus. Democrats should not forget that the most brilliant and enduring accomplishment of the Kennedy-Johnson era was Head Start, not the Apollo Program.

If, after saving kindergartens and county hospitals, we someday hope to ride the fast train, then we need to rebuild the antiwar movement on broader foundations. The president-elect's original proposal for funding domestic social investment through downsizing the empire offers a brilliant starting point for basing economic growth on an economic bill of rights (as advocated by Franklin Roosevelt in 1944) instead of imperial over-reach and Pharaonic levels of military waste.

Mike Davis is the author of In Praise of Barbarians: Essays Against Empire (Haymarket Books, 2008) and Buda's Wagon: A Brief History of the Car Bomb (Verso, 2007). He is currently working on a book about cities, poverty, and global change.
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