Our Demand For Real Investment

Isaiah J. Poole

In a Library of Congress room across the street from the Capitol, about 100 Capitol Hill staffers, activists and experts gathered to build the case for upending the conventional political wisdom that America can’t afford right now to invest in itself and its people. The conference message: To save the economy, we have no choice.

Congressional Progressive Caucus co-chair Rep. Barbara Lee, D-Calif., kicked off the “Real Investment in America” conference with a sweeping statement of what an investment agenda should contain. The federal government, she said, has to “step in and act decisively” to address the needs of everyday Americans. That would mean an economic rescue package that would be at least $200 billion to $300 billion a year over two years. But she also said that the components of the rescue package should contain such elements as a moratorium on home foreclosures and bankruptcies. “That’s what we need to start,” she said.

Aid to states that are facing deficits totaling $48 billion need aid as well in order to ensure that they do not have to cut needed services in order to balance their budgets. Lee called for spending on infrastructure to create jobs, and expanded unemployment compensation while those jobs are being created.

Lee also urged stepped-up efforts to eradicate poverty. She said that she learned during a recent visit to a food bank in her district that the number of people seeking help there had doubled in the past year. She called for reducing the number of people in poverty—now 35 million—in half over the next 10 years. “We have to have a new way to move this country forward in this new environment,” she said.

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“America needs a job,” said Arlene Holt Baker, executive vice president of the AFL-CIO, lining up behind the agenda Lee had laid out. She added that “we must help the automobile manufacturers,” preferably during this week’s lame-duck session of Congress but certainly once President-elect Barack Obama takes office. Plus, “we must give workers back the freedom to improving their lives through organizing and collective bargaining.” Baker promised “an unprecedented mobilization” to bring about “the change this country so desperately needs.”

Eric Lotke, the lead author of the “Real Investment in America” report released at the conference, asked people to look at the magnificence of the Library of Congress building, which was built around 1890. He said the building represents the thinking of leaders who planned for the long term and built lasting public assets. Lotke called for the same kind of long-term planning and willingness to invest in the future. These spending choices yield multiple returns on investment, he pointed out.

Yes, deficits are real, he said, but “we’re fretting about deficits while our infrastructure is crumbling and other countries are racing ahead.” We need to be sensible about ways to pay for the kind of investments we need in infrastructure, and recognize that investments in such items as well-paid teachers are crucial to maintaining the nation’s competitiveness in the 21st century.

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Janet Kavinoky, director of transportation infrastructure at the U.S. Chamber of Commerce, joined Ron Bloom, assistant to the president of the U.S. Steelworkers, in endorsing the need for a strong infrastructure program. Labor and business are on the same page when it comes to the need for an investment commitment, she said, adding, “We’re trying to drive infrastructure to the top of the agenda,” she said.

She did highlight a point of friction between business and some quarters of the progressive movement when she pointed out that much of the infrastructure that needs to be upgraded is privately owned, and that regulatory and financing barriers need to be re-examined. Some not-in-my-back-yard attitudes need to be addressed, she said.

We need to put every funding option on the table, she said, including increasing user fees for transportation. The Chamber of Commerce has in the past supported an increase in the federal gasoline tax, now 18.4 cents per gallon, to ensure there is adequte funding for highways and public transportation.

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Rep. Rosa DeLauro, D-Conn.,offered a proposal for helping to pay for infrastructure projects.

She has introduced legislation (HR 3897) that would create a National Infrastructure Development Corporation that would select projects based on merit and leverage private funding for the projects. The legislation would assure long-term funding for vital projects and would take project selection out of the politicized and discredited earmark process, she said. Her current proposal would capitalize the bank at $10 billion and authorize the Treasury to issue an additional $90 billion in bonds, for a total $100 billion.

This is not new legislation, she said. She first introduced legislation for this corporation in 1994, and at the time it won support from labor and from other infrastructure advocates from both major political parties. But it also had bipartisan opposition, and leaders shelved it to focus on reducing the budget deficit.

DeLauro said that she was at a meeting last night with Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson and concluded that there was no interest from them in moving a second stimulus package forward during the lame-duck session of Congress. She said, as have news reports, that such a stimulus program would be unlikely in this Congress, but would be a top priority in the next one.

“We should not think small. We should be bold and ambitious,” she said.

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John Irons, an economist at the Economic Policy Institute, presented arguments he previously made at a House congressional hearing in October. Here he began by debunking some myths. First, he stressed, as did other speakers, that reducing the deficit should not be the priority in a recession; in fact, thge opposite is necessary to stimulate the economy. To those who say tax cuts are needed to boost the economy, Irons pointed out that infrastructure investments are five times as effective as tax cuts in stimulating the economy.

Sherle R. Schwenninger, director of the economic growth program at the New America Foundation, said that “we have to take this 20-30-year experience with pay-go”—the “pay-as-you-go” policy embraced by Democratic leaders in Congress to try to balance increased spending or tax cuts with spending cuts or tax increases elsewhere in the budget—”and consider it a failure.” Congress and the White House needs more flexibility in crafting a response to the economic crisis, he said, notwithstanding the political motivation for pay-go.

Schwenninger also spoke in favor of an infrastructure bank, saying that DeLauro’s proposal is vastly improved from her earlier bills and that “we have turned the corner” in terms of the seriousness with which such a proposal is being taken, he said.

He also said that there should be “Buy America” bonds that people at the top income groups would be required to purchase. These bonds would pay about 4 percent to 5 percent interest. He said this should be compulsory because high-wage earners have not contributed adequately to the public infrastructure in the past.

QUESTIONS FOR GALBRAITH


James Galbraith explains why he thinks the auto industry deserves a federal loan and offers some little-discussed ideas to help ordinary people weather the current financial crisis.

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James K. Galbraith laid out a four-point program for addressing the current economic crisis:

  • A mortgage moratorium, which he said would buy time while a Homeowner Loan Corporation is established to rewrite he millions of unsustainable mortgages that need to be rewritten.
  • Revenue sharing for state and local governments, distributed to states in exchange for a commitment by those states to maintain funding for essential services and to not raise taxes.
  • The creation of a national infrastructure fund to finance investments in critical projects. He added that to address the immediate crisis facing the auto industry, a federal loan is “an act of minimal prudence” to buy time for an orderly restructuring of the industry and ultimate commercial viability.
  • An across-the-board increase in Social Security benefits to protect the senior population, who lost billions in purchasing power as a result of the shrunken value of their stock investments. A $180 billion investment would increase benefits 30 percent.

Galbraith also suggested suspending the payroll tax so that the cost of employment would come down and workers would immediately have more money in their pockets.

The total cost of implementing those policies would cost $900 billion, which would be 6 percent of next year’s gross domestic product. While that sounds large, he pointed out that the percentage is significantly smaller than the expansion program announced by China.

“This is not the time to be nervous about big numbers,” he said.

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Rep. Keith Ellison, D-Minn, brought a somber note to the conference when he held up the photo of the collapsed I-35 bridge in Minneapolis and said that the photo “was worth 13 words, because that is the number of people who died on that bridge. It’s worth 100 words, because that is the number of people who were injured.”

Ellison also has legislation (HR 3401) that would create a national infrastructure bank, as well as a bill (HR 3398) that would create a commission that would ensure that U.S. infrastructure meets current and future demand, facilitates economic growth and is maintained in a manner that ensures public safety.

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Pollster Stan Greenberg reviewed data from his joint post-election poll with the Campaign for America’s Future that help demonstrate the mandate for a bold public investment agenda.

“I believe that people are conscious of this as the beginning a new era, not just as a change from one administration to another,” he said at the beginning of his presentation.

One notable finding with implications for potential public support for an investment agenda: As far as the public is concerned, reducing the deficit is less a priority today than it was in 1992, the beginning of the Clinton administration.

But Greenberg warned that when voters were asked if they were concerned that Obama as president “will raise taxes and increase government spending,” 46 percent said yes. In answer to a similar question about whether Obama would “go too far” on increased spending and taxes, 48 percent said yes.

“The people aren’t going to go for investment unless they get accountable government,” Greenberg said. “If progressives are going to make a case for investment, they’ve also got to make the case that progressives are going to give them a different kind of government.”

Reducing the deficit is a less priority than it was in 1992

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