Wednesday, December 24, 2008

Reader's Choice #4: Our Fancy New Depression

Blog reader 'fannyanns' wants me to write about the "economic meltdown... cause what are the long-term consequences? and the like? can Obama turn it around? and is there going to be more stimulus?"

Ohh there will be plenty of stimulus... though not in the mail-everyone-a-check-and-call-it-a-day George W. Bush way. But I'll get to that in a minute.

The long-term consequences, of course, are further economic collapse, more job loss, and the increasingly likelihood of the dreaded "D"-word being thrown around. But that's still a hypothetical. I'm more interested in what is knowable... namely, how did we get here?

I've written quite a few posts in the past few weeks that have touched on how deregulated, anything-goes, top-down Reaganomics nearly killed the thing it was created to worship: capitalism. But it's more than that. The larger problem is so much of what we, as a nation, do now is focused on short-term gains at the expense of long-term protection (that's been true of our foreign policy too... just ask Reagan's allies of convenience, Osama bin Laden and Saddam Hussein). Bush's tax cuts? Like a microwave burrito, it tastes great going in, but leaves a bit of a mess behind. Cheap gas and big cars? Fun for now, but ignores our long-term energy needs. Taking $$$ from the education budget, Social Security pool, etc, helped free up cash for other fun things (like missile shields!), but creates headaches we will complain about in a few years as if we have no idea of their making. And, of course, Bush's "ownership society"-- the domestic center of his 2004 GOP convention reelection speech-- was just another name for the giant Jenga mortage ponzi scheme we've seen come crashing down on everything the past year and change. Etc.

As has been said so many times, we used to be a country that made things, sacrificed, and worked for common goals. Now we settle for canonizing the 'greatest generation' while decrying anyone who seeks to recreate the economic policies of that era a 'socialist'.

So how can Barack Obama fix this mess? Well, if he has secret magic powers, that will help. But I will settle for hoping that he keeps his eye on the long-term, even if at the cost of short-term gratification. John F. Kennedy said of the goals he laid out in his inaugural address, "all this will not be finished in the first 100 days. Nor will it be finished in the first 1000 days, nor in the life of this administration, nor perhaps in our lifetime on this planet. But let us begin." He spoke later that year of making plans to put a man on the moon. And it happened. It took eight years (and Kennedy had been dead for five of those), but it happened. Franklin Roosevelt signed Social Security into law in 1935. The first check wasn't mailed out until 1940. It's about planning for years down the road, not just about the now. This is the kind of leadership we need of Obama.

Here is an early preview of what Obama is thinking in terms of initial stimulus-
President-elect Barack Obama is laying the groundwork for a giant economic stimulus package, possibly $850 billion over two years...

...Obama's plan would feature spending on roads and other infrastructure projects, making government buildings energy-efficient, building and renovating schools and adopting environmentally friendly technologies.

There also would be some form of tax relief, according to the Obama team, which is aware of the political difficulty of pushing such a large package through Congress, even in a time of recession. Any tax cuts would be aimed at middle- and lower-income taxpayers, and aides have said there would be no tax increases for wealthy Americans...

...In addition to spending on roads, bridges and similar construction projects, Obama is expected to seek additional funds for numerous programs that experience increased demand when joblessness rises, one Democratic official said.

Among those programs are food stamps and other nutrition programs, health insurance, unemployment insurance and job training programs.

Now doesn't this sound better than just writing everyone a check, and hoping for the best?

Yes, it will cost money. Lots of it. But a fixed economy will pay back these costs quickly enough, and unlike Bush's free-money giveaways, this is actually going to tangible things. And, yes, these measures alone won't fix all the economic problems. We'll need better leadership at every level-- federal, state, and local governments; business leaders; etc-- and commitment to seeing these things through. But, for now, it seems like a good start.

[Related listening: Will Federal Money Mean Economic Recovery? (KCRW's 'To The Point')]

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