Tuesday, June 07, 2011

Stop Apologizing for the Stimulus

The president needs to make the case for his economic policies, not hide from them.

The White House may hope to dismiss last week's dismal jobs data as a "little bump,"
but the reality is that the state of the economy is dire. President
Obama must acknowledge the economic malaise. Then he can make the
powerful and true case that the policies he has been pursuing are
correct while the Republican alternatives are horrendous canards.

alarming that once again we are letting the Republican candidates'
rhetoric and near-hysterical fear of government spending distort the
national debate and keep us from the more dramatic economic changes we
still need.

The lessons of the Great Recession and the semi-recovery are clear:

  1. Keynes was, and is, right.
    Though much-maligned by Greenspan neo-libertarians, government spending
    in the absence of private sector demand can resuscitate an economy. The
    stimulus bill worked. It saved millions of jobs, generated demand when
    there was none, and kept the economy from near total collapse. The
    unemployment rate kept going up, but it would have been so much worse
    without it. Take a look at the data. There is no doubt that the jobs picture stabilized and then improved after the stimulus kicked in.
  2. Targeted government intervention works. Carefully
    calibrated government intervention in individual sectors can return
    those sectors to solvency and also force needed reform when done
    properly. The auto bailouts are a case study in wise use of capital both
    to overcome a short-term cash flow crisis and to impose necessary
    structural changes. The bank bailout was only a partial success, because
    although the sector was returned to solvency, the needed reforms were
    not imposed. Hence the social gains have been much more limited. But
    both sectors prove that government can play a hugely important and
    positive role as a lender of last resort.
  3. An individual health insurance mandate works.
    Look at the Massachusetts example. The requirement that people pay for
    their coverage when they can do so overcomes an enormous free-rider
    problem, as both Newt Gingrich and Mitt Romney have admitted, and it
    saves the government huge sums of money. The president should offer a
    full-throated defense of the mandate invoking both Romney and Gingrich.
  4. Making the Bush tax cuts permanent has not created jobs.
    The lack of job growth is driven by inadequate demand and excess
    capacity. Marginal tax rates at this point have a minimal impact.
  5. The housing crisis still needs to be addressed head-on.
    Too many homeowners—especially unemployed homeowners—have mortgages
    they can't afford, and this will be a drag on the economy for years to
    come. We know we can't depend on the housing sector to provide
    significant growth during the next few years, but we also must ensure
    that it doesn't drag us down. The failure to require significant
    mortgage reform as part of the bank bailout was an egregious policy
  6. Joblessness—not the deficit—should be our immediate policy concern.
    The debt crisis is real—but in the medium and long term, not the short
    term. The market is still saying to the U.S. government: We want to lend
    to you. While the issue of long-term entitlement costs looms, it will
    not metastasize for a decade or so. The immediate crisis is joblessness
    and the resulting anemic growth rate. If growth remains in the range of
    1.8 percent to 2 percent, we will never generate enough revenue to
    balance our books. If growth accelerates to 4 percent, then deficits
    will organically decline. Priming the pump to increase growth is the
    imperative. Leave the deficit to next year.

All this argues
for a more robust presidential response. He should trumpet the success
of the stimulus, not just the bailout of Chrysler. He should starting
pushing back against the Tea Party's rhetoric.

president should go to bat for Keynes, for Roosevelt, for the policy
tools that have worked. He should again challenge the deregulatory,
Hoover-based-thinking that created the mess we are in. We need a
full-throated defense of the policies of the past several years, not
meekness and apology.

The stimulus worked: The president needs to make the case for his economic policies, not hide from them. - By Eliot Spitzer - Slate Magazine

Wednesday, June 01, 2011

The most important political story?

The most important political story in America
is that its government — distressingly like those under assault in a
dozen nations across the globe — has become almost entirely unresponsive
to the nation’s needs and its citizens’ concerns. It’s become
profoundly corrupt, representing only the needs of the richest of the
rich and the interests of corporate oligarchs, and uncaring about
everyone else. And there’s virtually no check on this accelerating
decline in governmental accountability.

Not a single important problem that really matters to most Americans is
being addressed, let alone responsibly, in Congress or those Biden
meetings. All of the sound and fury in the nation’s capital that pundits
think are “news” is just posturing over things that are not, and never
have been, actual problems, let alone crises. And even for those
contrived issues, the “solutions” being considered are completely at
odds with the wishes of the American people — which is why the
discussions are happening behind closed doors.

... I think we'll move the deck chairs to the port side today.