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Leading Economist: Stimulus Package Just the Beginning |
Even as the Senate takes up the $150 billion House-passed economic stimulus bill, a leading economist says much more will be needed to address the fundamental problems of the U.S. economy.
Robert Kuttner, author of Squandering of America, says:
The weak dollar, the risk of rising inflation, the reality of global warming and the need to pull the economy out of the most serious credit crisis since the 1930s will take the kind of activist government not seen in 40 years. To reverse the 30-year trend of increasing inequality and insecurity, and to repair the deep damage to the financial system, Roosevelt-scale remedies and Roosevelt-style ideological clarity will be required: serious public regulation and serious public outlay.
In a recent speech to the Congressional Progressive Caucus and in an article in The American Prospect, Kuttner makes the case that the nation’s economic woes are caused by the rise of “right-wing ideology” and the domination of our politics by a financial elite. Both factors make even more urgent the upcoming presidential elections. Says Kuttner:
I hope that our nominee will have the courage to transform the economy. That is the only way we will reverse the Republican squandering of our economy.
Kuttner argues the economic stimulus package working its way through Congress and the Federal Reserve’s cuts in interest rates are not enough to reform and revive the economy for the long term. One way to do this, he says, is to revamp the housing market, because home ownership is the cornerstone of the nation’s middle class.
Instead of debating the finer points of a “stimulus” package, or the Fed’s next rate cut, Congress and the White House should get together to rescue the housing sector. Home equity represents the greatest part of the net worth of the American middle class.
At present rates of decline in housing values, homeowners will lose more than $2 trillion in home equity this year alone. That loss will deepen the recession, because consumers will spend less money on durable goods, home improvements and other purchases.
Kuttner says the nation needs a 21st century Home Owners Loan Corporation (HOLC), patterned after the New Deal program created when the nation last faced mass mortgage foreclosures. The original HOLC issued tax-exempt bonds and used the proceeds to refinance distressed mortgages at low rates.
The AFL-CIO has proposed several short- and long-term solutions to the nation’s economic problems, with long-term proposals including effective regulation of our housing and financial markets. Other proposals include enacting fiscal and monetary policies to promote full employment, fixing flawed trade policies, investing in high-paying green-technology jobs, fixing our broken labor laws and ensuring affordable health care and retirement security.
Underlying the nation’s long-term economic weakness is wage stagnation, AFL-CIO President John Sweeney said in a letter to House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid:
Wage stagnation, which began in the 1970s, has led to longer working hours, higher consumer debt and increasing reliance on home equities. But today, home values are plummeting, home foreclosures are on the rise and consumer debt is reaching unsustainable levels…
Click here to read more about the AFL-CIO’s stimulus proposals.
Speaking at the AFL-CIO last November, Kuttner said the mortgage crisis is “the poster child of deregulation,” and the 2008 elections are our best opportunity in three decades to regain the political clout to turn around the economy:
Our challenge is to persuade the presidential candidates that economic populism is something they ought to do. It’s politically sound, and it’s the right thing to do. If we don’t show the working people who are being pummeled something more than we did in 2004, then we will lose a winnable campaign. We must offer some way for people to know that the economy will change if they vote for Democrats or social issues will prevail.
That means, he says, that candidates must stand for changes that ensure Wall Street doesn’t dictate the terms of trade deals and freedom of workers to form unions is restored.
It’s also time to end the love affair with deregulation. And we need to restore progressive taxation, Kuttner says, with higher tax rates for those who can afford to pay more and create a viable affordable health care system.
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I find it rather ironic that a president who has touted ‘the economy is fine’ over and over has decided we even need a stimulus package. Someone must have finally gotten through to him. What a shocker! Of course the stimulus package is no more than a bandaid and won’t have any lasting effect. For a lasting economic boost we must first get rid of the home invading illegals who are putting such a huge burden on our public schools and our medical facilities. And who are also responsible for the overall lowering of wages in this country. Then we must have jobs. Good paying jobs. With benefits. Anything short of that just won’t cut it.
Robert Kuttner and other intelligent economists have been telling Bush/Cheney/etc. for a long time what needs to be done, but the Bush/Cheney/etc. egos refused to listen and act. Part of being smart is realizing that no one can know everything about all the facets of the presidency; the smart president admits it and searches for smart people who know what he doesn’t; listens carefully and acts on it. In this case, Bush is downright stupid. Remember his comment that “all Americans have health insurance, all you have to do is go to the emergency room.” He didn’t have a clue that a $50 clinic call is cheaper than a $3,000 emergency room bill later when an untreated minor medical problem gets worse.
Like Nero, Bush fiddled while the economy burned and he still doesn’t get it…The economic problems didn’t happen overnight, there have been warnings for years, but I guess the fiddle music drowned out the voices or his ego just couldn’t comprehend that there could be a problem with his administration.
Does that smirk remind you of Alfred E. Newman, the poster boy for Mad magazine years ago?
One thing I’m going to be sure to do is to explain to my younger family members that they must take care of themselves. The government is not going to do it for you. Don’t depend upon them for anything; not Social Security, health care, nor anything else except depending upon the fact that they WILL take you for every dime they can unless you fight back.
The young ones need to start retirement accounts for themselves right now (definitely not gambling on the stock market), and pay into it with the same tenacity that Uncle Sam removes your money right now. The interest may be low, but it’ll have a better chance of being there than anything you allow the government to take from you. They take enormous, financially devastating amounts out of you, and only give a sorry pittance back, like this so-called “stimulus”. (ROFL) This way, the money won’t disappear down a rabbit hole like the Social Security money has. You have it in your account. Keep it there and away from the predatory government. Make sure it’s in Switzerland while you’re at it.
This “stimulus”? It wouldn’t even cover basic expenses for a month in this household. Of course, unless the Senate comes through for us, only one of us will get any kind of return. The very people who need it the most are those who won’t get a stinkin’ thing! Do I despise this mis-government? Yes! They bleed you and leave you.