Even McCain’s Economist Says We Need Big Recovery Package

by Mike Hall, Feb 9, 2009

The economy is rolling faster and faster downhill—more 1.5 million jobs lost in the past three months—and Republican leaders in the Senate and House, along with their wacko radio talkers, are trashing President Obama’s economic recovery program.

But if action isn’t quickly taken, even darker days are ahead. Says Mark Zandi, a former economic adviser to Sen. John McCain:

Without stimulus, unemployment will rise well into the double digits, and the economy will not return to full employment until 2014.

Tomorrow, some 500 members of the community activist group ACORN, along with AFL-CIO Executive Vice President Arlene Holt Baker, will rally at 2:30 p.m. on the West Lawn of the U.S. Capitol to urge Congress to quickly pass the recovery legislation.

The Congressional Budget Office (CBO) says the Senate recovery measure is likely to create between 1.3 million and 3.9 million jobs by the end of 2010, reducing a projected unemployment rate of 8.7 percent by up to 2.1 percentage points. The House passed its version last month, and the Senate’s smaller package is up for a vote this week. Many economists say a bigger recovery package is needed.

The CBO puts transfers to state and local governments for infrastructure spending at the top of its effectiveness list, along with direct federal spending on goods and services. All are far more effective than tax cuts, says the CBO. Ross Eisenbrey, vice president of the Economic Policy Institute (EPI), puts it this way:

This school construction money would be a win-win-win in terms of jobs, education and energy efficiency. By even the most conservative estimates, it would create about 150,000 jobs. Moreover, these jobs will be generated all over the country and will create jobs far beyond construction.

In addition, almost every state faces severe budget shortfalls, and the $25 billion of financial aid that was cut in the Senate version would have helped state maintain vital services such as public safety and health. Eisenbrey says those funds offer

immediate assistance to prevent service cuts and layoffs that would accelerate the vicious circle of job loss, consumer weakness, business cuts and more layoffs.

The Senate is expected to approve the trimmed down “compromise” version by midweek and send it to a House-Senate conference, where the a battle over the Senate cuts will be intense, including nearly $45 billion in aid to states. Some $19.5 billion of that was aimed at infrastructure projects, including shovel-ready school reconstruction and repair projects.

Apparently, a more severe recession is just fine with Republican leaders. Rep. Pete Sessions (R-Texas.), chairman of the National Republican Congressional Committee, says the Republicans’ fight against the bill is part of a disrupt-and-destroy “insurgency” strategy learned from the Taliban. The Capitol Hill newspaper and website Politico reports that Sessions told fellow Republicans they

need to get over the idea that they’re participating in legislation and ought to start thinking of themselves as “an insurgency” instead.

Senate Republican leaders spent the past weekend on talk shows trashing Obama’s recovery plan, even after significant cuts—more than $100 billion in many vital areas that would create or preserve jobs—were made to win the support of a handful of moderate Republicans.

Says Nobel Prize-winning economist Paul Krugman:

The American economy is on the edge of catastrophe, and much of the Republican Party is trying to push it over that edge.

The only alternative most Republican lawmakers seem to be offering is built on the same flawed economic principles that are the underpinnings of the current fiscal crisis.

Larry Summers, chairman of the President’s Council of Economic Advisors, told ABC’s “This Week:”

Those who presided over the last eight years—the eight years that brought us to the point where we inherit trillions of dollars of deficit, an economy that’s collapsing more rapidly than at any time in the last 50 years—don’t seem to me in a strong position to lecture about the lessons of history.

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