Obama Takes Charge -- Will He Bail Out America?
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The devil, of course, is in the details, which have not been forthcoming nearly two months before Obama takes office in January. But the broad outlines of the plan he’s likely to put forth can be gleaned from the writings and public statements of his economic advisers, as well as his public statements.
The Center for American Progress (CAP) -- founded by John Podesta, former chief of staff to President Bill Clinton and the head of Obama’s transition team -- called for a major stimulus package in September. In its report, CAP urged lawmakers to think beyond a short-term injection of cash into consumers’ pockets, arguing that the economy needs “more than a quick fix” and the package “should address the short-term crisis in the labor market and the eight years of stagnant incomes and weak job growth.” The centerpiece of CAP’s proposal is “investing in six green infrastructure investment areas” ...
Representative Hilda L. Solis, D-Calif., has proposed a Green Jobs Act that that would rapidly train workers to fill these jobs; the National Renewable Energy Laboratory identified the lack of a skilled workforce as the key nontechnical barrier to the advancement of these industries. Jobs created from this investment would be targeted at the struggling construction and manufacturing sectors.
The think-tank also called for money to fix our creaky, 19th century infrastructure -- roads, bridges, energy grid, etc. -- and for increased spending on hurting citizens with improved food stamps benefits (the Washington Post reported this week that the number of Americans relying on food stamps will soon hit a record 30 million), extending unemployment payments, expanding Medicaid funding to the states and helping struggling families pay their heating bills this winter.
In congressional testimony earlier this month ( PDF), Gene Sperling, former head of Bill Clinton’s National Economic Council and another Obama confidant, argued that “health care initiatives can be a triple-benefit in this context. First, increases in the federal match for Medicaid can be one of the quickest and most effective means to stimulate the economy. Second, an expansion of SCHIP can be a win/win in that it can provide stimulus while moving us forward on the path to universal coverage. Third, an upfront investment in health information technology can also provide stimulus and be a down payment on the goal of reducing long-term health care costs.”
Some progressive analysts have argued that these measures prop up a dinosaur economy, and that we should be undertaking a much more fundamental transformation, especially in terms of our energy needs -- where we live and how we move around and transport goods. Similarly, there’s an argument that pumping billions into an inefficient health care system that delivers the least bang for the buck in the developed world is merely throwing good money after bad. These are important points in the larger picture, and ultimately correct, but they run into a key issue when it comes to stimulating an economy in decline: short- versus long-term thinking.
Conservatives, who have already signaled opposition to a major public-works-type program, have one cogent argument on their side (semi-coherent cries of “socialism!” notwithstanding). Put simply, major projects to retool America’s industrial base and radically transform our energy economy would take a significant amount of time to get off the ground. They require planning, consensus-building among stakeholders, drawn-out legislative debates, environmental-impact studies, public input from local communities, etc. But Medicaid exists already; state and local governments are ready and needy; the infrastructure for distributing food stamps and paying unemployment bennies are in place, and Democrats in Congress have plans for upgrading America’s transportation infrastructure that are essentially ready to go -- they’ve been sitting on the shelf for years, all dressed up but with nowhere to go but to an ignominious death by Bush’s veto pen.