Economy

Cries of 'Build, Baby, Build' Increase as Obama Proposes Massive Public Works Program

With the economy spiraling downwards, Obama crafts new New Deal as conservative dead-enders balk.

The LA Times notes reaction to Obama's Sat. pledge to "create millions of jobs by making the single largest new investment in our national infrastructure since the creation of the federal highway system" under Eisenhower. "Several governors and local officials embraced Obama's initiative, including Schwarzenegger, New York Mayor Michael R. Bloomberg and Gov. Edward G. Rendell (D-Pa.). The three issued a joint statement through their nonprofit, Building America's Future."

WSJ reports the transition team is saving "political capital" for the infrastructure plan and not for releasing another $350B to Bush's Treasury Department: "Barack Obama's transition team is resisting Bush administration overtures to coordinate more on the financial-sector rescue, convinced that neither the lame-duck President George W. Bush nor the president-elect has the clout to win a smooth congressional release of more bailout funds ... [Transition officials] made clear they would [not] lobby for approval of the funds. Their focus is on passing a separate, half-trillion dollar stimulus program that Mr. Obama said Sunday would be the largest infrastructure program since the Eisenhower administration's construction of the interstate highway system."

On NBC's Meet The Press, Obama again put economic recovery ahead of short-term budget balancing: "we've got to provide a blood infusion into the patient right now to make sure that the patient is stabilized And that means that we can't worry short term about the deficit. We've got to make sure that the economic stimulus plan is large enough to get the economy moving."

Salon's Joe Conason stresses the short-term need to combine infrastructure investment with aid to state governments: "For Obama, however, the more immediate consequence of ruinous state budgets would be to frustrate the effects of any new stimulus program. Even if federal spending vastly increases next year, the economic impact will be greatly diminished if states are raising taxes, dumping employees, and curtailing procurement from local businesses."

Former Bush Treasury official Emil Henry, in the W. Post, tells conservatives, "investment in key infrastructure is consistent with Reagan principles ... By investing in the reduction of air, automotive and rail congestion, and by improving the reliability of our power supply, we will increase productivity and foster competitiveness."

While Henry touts public-private partnerships, WSJ's Nicole Gelinas offers caution on giving too much responsibility to private contractors.

HuffPost's Harry Shearer is waiting for Obama to include "work on flood protection and coastal wetlands restoration" for the Gulf Coast.

Conservatives flail to find anti-building attacks

Redstate picks up libertarian economist Tyler Cowen's skepticism on Obama's priorities. Cowen: "upgrading school buildings [is a] total waste and an outright mistake ... isn't human capital the real constraint [to expanding broadband]?

But Sara Robinson at Group News Blog picks up the Institute for America's Future infrastructure report: "The Investment Deficit In America," which finds:

According to a recent report from EDUCAUSE, the United States needs to invest $100 billion over the next four years for a fiber-to-the-home broadband infrastructure that would connect every household and business in the country, which, according to the report, would “provide adequate broadband connectivity for several decades.

...

An investment on rebuilding America’s school can begin with $20 billion for deferred maintenance. The Economic Policy Institute estimates this would generate close to 250,000 skilled maintenance jobs with nearly $6 billion for materials and supplies.

NYT's Bill Kristol (via Tbogg) goes for the false choice: "If you think some government action is inevitable, you might instead point out that the most unambiguous public good is national defense. You might then suggest spending a good chunk of the stimulus on national security — directing dollars to much-needed and underfunded defense procurement rather than to fanciful green technologies, making sure funds are available for the needed expansion of the Army and Marines before rushing to create make-work civilian jobs. Obama wants to spend much of the stimulus on transportation infrastructure and schools. Fine, but lots of schools and airports seem to me to have been refurbished more recently and more generously than military bases I’ve visited."

Newsbusters sticks with delusion,complaining that the media isn't complaing that Obama is "poor-mouthing" the economy.

TownHall's Hugh Hewitt and George Will (on ABC's This Week) try wishful thinking, predicting that public works investment will be stifled by environmental activists.

Auto Rescue Inches Forward

W. Post reports that Congress could vote on a$15B loan to automakers tomorrow, including "a seven-member 'auto board' of Cabinet officials and a chairman to be appointed by President Bush to oversee both the short-term loans and a long-term effort to restore the faltering industry to profitability."

NYT reports: "the form of oversight was still to be negotiated by Congressional Democrats and the White House [but] Whatever oversight entity is created, it would direct the drastic reorganization plans that the auto companies have said they were willing to undertake in exchange for billions of dollars in short-term government loans to keep them in business,"

The Hill says the final outcome is up in the air. Some Senate Republicans, including Sens. George Voinovich (Ohio), Kit Bond (Mo.) and Arlen Specter (Pa.), have made it plain they will vote for the bailout, but it’s unclear whether there will be support to pass the bill."

Separate NYT piece quotes economist Mark Zandi: "There will be tremendous regret if we don’t help them avoid bankruptcy in the next few weeks or month ... If they go into bankruptcy now, they’ll go into liquidation and there will be the loss of hundreds of thousands, if not a million, jobs — on top of the four or five million we’re going to lose. That will add almost a point to unemployment by itself.”

Naked Capitalism writes that even a rescue package won't prevent all job losses. And Bloomberg News concurs.

Paul Krugman says he was misquoted and does not believe the US auto industry is doomed.

Marcy Wheeler points out the media's failing in explaining how geography is influencing Senators.

Raleigh News & Observer reports on how the NYT is stark and disturbing: "possibly most severe [downturn] since the end of World War II ... Americans retrenched even further in November, sending sales at the nation’s retailers tumbling to the weakest level in more than 35 years and leading the Detroit automakers to record their worst sales in a quarter-century. Manufacturers have not seen conditions this bad since 1982. The decline in spending is likely to continue, depriving the economy of its primary growth engine, as layoffs continue to mount. Half a million Americans, from financial analysts to factory workers, were dismissed in November alone. Rarely has a labor downturn affected such a broad swath of income levels. Most frightening of all is that the worst job losses may be yet to come."

The Big Picture says Friday's jobs report is worse than appears. "the broadest measure of unemployment [the U6] jumped to 12.5%. This is the highest reading since the U6 measure was created 1994 ... 637,000 left the labor force last month, typically because they could not find work ... Diffusion indexes ... are the percent of industries with employment increasing; It crashed from 37.8 to 27.6."

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