Medicare Stronger. Automakers Profitable. Government Action Works.

Bill Scher

Today, the President visited his third American auto plants in recent weeks, highlighting the fact that all three major American automakers are now profitable after government intervention and restructuring of the industry.

Also today, the Medicare trustees reported that the new health care reform law has strengthened the Medicare trust fund, extending its solvency for 12 years.

Active government works.

After decades of anti-government conservatism dominating Washington, the last 18 months have been an initial test of how well reality-based active government can work.

The Recovery Act is the most prominent test case, but it’s a muddled example. The size of the stimulus needed to be hemmed in below what most economists called for, otherwise right-leaning Democrats and “moderate” Republicans would have likely filibustered it. Plus, a sizeable portion of the Recovery Act was composed of tax cuts, which are not as stimulative as infrastructure investment or support for anti-poverty programs.

So the Recovery Act is widely seen — at least by economists — as successful in averting an economic depression, but not enough to produce a robust recovery. The fact that the $787 billion stimulus effort was better than doing nothing, but not enough to alleviate all economic suffering, is a difficult point to make.

The mixed results have given conservatives a opening to ignore the facts, and trash the the entire idea of government stimulus. And that has made it more difficult for Congress to build on the Recovery Act and provide extra help. Today’s Senate passage of a deficit-neutral state aid package, observed the Washington Post, “probably marks the end for spending bills aimed at boosting economic activity.”

But now we have a two clear examples of government action providing direct benefits. The auto industry intervention, derided as a “bailout” by conservatives who believed the industry should just collapse, has created jobs in the industry. And it also saved the entire American auto parts industry that’s dependent on GM, Chrysler and Ford. The Wall Street Journal reported this week: “…the U.S.-based automotive suppliers are not only doing better, but they are profitable, their stocks are surging, they are hiring and they’re putting the finishing touches on restructurings.”

And the health care reform law, designed to both expand coverage and save money, is already putting Medicare on firmer footing.

Americans are now sizing up how well active government works, after it’s been kept in cold storage so for long. But we can’t size it up unless we call attention to what’s been done.

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