10 Absurd Conservative Myths About Obama's Recovery Plan

By Sara Robinson, Campaign for America's Future. Posted January 9, 2009.

Here it is: our moment of economic truth. We're standing at that historic fork in the road where the nation decides, now and for the foreseeable future, whether it's going to hang on to the catastrophic assumptions of the free-market fundamentalists and rely once more on the nostrums that have so far failed to fix the mess, or take a bold step down a new, more progressive path that will finally re-empower the American people to build an economy that works for us all.

As usual, the conservatives have absolutely no conscience about what they did to create this mess. If they did, they'd all be holed up in their gated communities or on their private islands, embarrassed into silence at best and terrified of peasant uprisings at worst. Instead, they're jetting into D.C. en masse in a last-ditch attempt to head the country off -- or at least make sure that any money that does get spent ends up, as it always has, in their pockets.

To that end, the self-serving myths are starting to fly so thick and fast that the staff here at CAF has been working full-time to keep ahead of them. Here's some of what they're flinging in this latest B.S. storm -- and what you need to know to fire back.

1. The proposed recovery package is too big.

False. Most progressive economists agree (and Paul Krugman is downright emphatic) that it's going to take a minimum of a trillion dollars of well-placed investment to pull our economy out of this ditch. This is no time for half-measures, blue-ribbon committees, pilot projects, or trial balloons: this is a life-or-death crisis that requires immediate and massive intervention.

CAF Senior Fellow Bernie Horn puts it this way: "The American economy is huge and it’s at a standstill. It’s like a motionless 100-car freight train -- or one going backwards slowly. A small locomotive simply can’t pull it forward. We need an engine large enough to work, one that can create millions of jobs. If anything, a $775 billion 2-year plan may be too small rather than too big."

Dean Baker of the Economic Policy Institute echoed this same thing on MSNBC's "Countdown" last Tuesday night. It's got to be big. And it's got to be now. Anything too small -- or too late -- and the American economy will be at serious risk of stagnating the same way Japan's did in the 1990s.

2. If we can't afford (insert pet project here), we certainly can't afford this.

Yes, we can. What we really can't afford is a huge recession that undercuts the tax base. That's a vicious cycle that will make it increasingly harder to dig out the longer this goes on. The Congressional Budget Office projects that the current slowdown will cost the federal government $166 billion in lost tax revenues in 2009 -- a number that could easily get even larger in coming years if we fall into a real depression. If we get on that trendline, we could lose a trillion dollars in government revenues by the end of Obama's first term. We need to invest what we have while we still have it if we hope to have a strong economy going forward.

This argument is based on the limited view that wealth is mainly generated by loaning or borrowing at interest -- a common enough assumption among financial people over the past 30 years. A more progressive view is that real wealth is generated by labor, combined with access to resources required for production. Putting people to work creates wealth. So does ensuring that our current failing energy regime is replaced as rapidly as possible with one that's infinitely renewable and that we will finally be in full control of. And so do other kinds of infrastructure investments, which form the footing on which a new round of businesses can rise and thrive.

Businesses have always invested their capital to create more capital. The best parts of Obama's proposal involve getting the government to do the same thing. Conservatives are resisting this because don't believe that there's such a thing as the common wealth -- which is how they've rationalized their plundering of our common assets. We need to make it absolutely clear that we do believe in the common wealth -- and that their assaults on everything that allows America to generate national wealth are going stop, right here and right now.

3. It's more important to balance the budget. Fix that, and the rest will take care of itself.

Read history much? Herbert Hoover is history's poster boy for the idea that balancing the budget during a recession is the best way known to turn it into a full-on depression. And that wasn't a one-off: FDR repeated the lesson in 1937, when he succumbed to the pleas of budget-hawk conservatives and tried to balance the budget -- a move that put the brakes on what had, until then, been a solid recovery.

Looking forward, this year's numbers also show the case clearly. Economists are already estimating that spending by individuals and businesses will be off by $300 to $500 billion in 2009. The upshot of this will be millions of lost jobs, which in turn will mean even lower spending and more job losses next year as the country accelerates toward depression.

The only way to halt this slide is for the government to step in and fill the hole with an additional $300 billion-$500 billion of its own spending -- and to spend that money on investments that will create as many jobs as possible. The longer we wait, the more government spending it will ultimately take to pull us out of this -- and the less able we'll be to muster that much cash.

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Sara Robinson is a twenty-year veteran of Silicon Valley, and is launching a second career as a strategic foresight analyst. When she's not studying change theories and reactionary movements, you can find her singing the alto part over at Orcinus. She lives in Vancouver, BC with her husband and two teenagers.

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