infrastructure

Austerity Suicide -- Literally

Dave Johnson — Mon, 10 Sep 2012 12:33:28 -0400

You might be hearing about the "Fiscal Cliff." And you might be hearing about a "Grand Bargain." You certainly have heard about "Simpson Bowles." You will be hearing more and more about these strangely-named things because the usual suspects are cranking up the usual propaganda machine again, getting the usual DC elite ready to play out another of the usual take-from-the-people-to-give-to-the-rich games right after the election. This time it's a push for austerity.

Why Deficits?

I always start any discussion of deficits and debt by reminding people that the country had a big budget surplus before Bush cut taxes for the rich, and doubled the military budget.

Deficit history: Reagan dramatically cut taxes on the wealthy and corporations. He doubled the military budget. Huge deficit resulted and the country began accumulating massive debt. They called it "strategic deficits," a plan to "starve the beast" by bankrupting the country and forcing cuts to government, to the things government does for We, the People, and the ways government protects us from exploitation by the wealthy and powerful.

After 12 years of Reaganomics people were fed up, and elected Clinton. Clinton raised taxes on the rich. Those increases combined with the stock market bubble created a surplus and we were paying off the debt, and then something changed. 'W' Bush again cut taxes for the wealthy and again doubled the military budget and now the deficits are enormous. So here we are.

But fixing what caused the deficits is not on the table. It never is, because that doesn't fit the plan.

Fiscal Cliff

They say the country faces a "Fiscal Cliff" at the end of the year. After the election the Bush tax cuts for the wealthy expire. And – this is a bit complicated – something called “sequestration” also kicks in. This is a series of budget cuts that happen because of the “debt ceiling” deal, when Republicans held the debt ceiling hostage and threatened to put the country into default, demanding that we immediately take trillions out of the economy. The sequestration deal was a compromise that was intended to force the Congress to agree to a bipartisan solution, which failed.

The sequestration includes military cuts, which our billionaire-backed DC elite believe would ruin the economy when combined with expiration of the Bush tax cuts -- because in their minds tax cuts do not cause deficits and unlike other government spending military spending creates jobs. So to avoid the "Fiscal Cliff" after the election Congress is supposed to meet to keep the military budget intact, keep taxes on the rich from rising and cut the things our government does for We, the People.

Why After The Election?

That pesky democracy thing keeps on getting in the way of Wall Street’s plans for our economy. But after the election comes what's called a "lame duck" session of the Congress. The legislators who have been chosen by the people aren't in office yet, the ones who have been defeated are still there and the ones who were re-elected know that anything they do will be long forgotten by the next election. Democracy and the will of the people will not be a factor. Every poll says the public wants immediate action on jobs and no cuts in the things government does for We, the People.

If Obama is re-elected the post-election debate will be between the Obama deficit plan, a "Grand Bargain" based on the "Simpson-Bowles" plan vs the Ryan plan -- the budget the House Republicans passed that privatizes Medicare and reduces spending on most things government does for our people. If Romney is elected all bets are off.

Simpson-Bowles

Simpson-Bowles is a budget plan put together by a Republican Senator and a Director of the Wall Street bank Morgan Stanley. After the President's National Commission on Fiscal Responsibility and Reform ("Deficit Commission") failed to make recommendations, the two came up with a plan that cuts Social Security, cuts a number of other things government does for our people, cuts a bit from military and cuts tax rates on the rich and corporations, calling it "reform." (The plan also eliminates the home mortgage interest deduction, for example.)

Important point: At least Simpson-Bowles is not a "cuts cause growth" plan. It is sold as a deficit plan, even though it cuts taxes at the top and for big corporations. It clearly asks that any cuts not take place until the economy has improved because cuts slow growth.

Grand Bargain

The "Grand Bargain" is the idea that Democrats and Republicans can reach a compromise involving Republicans "allowing" tax "reform" that eliminates some tax deductions like the home mortgage interest deduction and reducing tax rates on the wealthy and corporations, in "exchange" for cuts in things government does for us, including Medicare, Social Security and Medicaid. (These cuts do not eliminate the need, they just shift the cost away from the government onto the larger economy.) (If this sounds like a "bargain" that entirely benefits the wealthy and large corporations, that's just how Washington works these days.) ("Reform" always means cutting out things government does for We, the People and reducing taxes on the wealthy.)

Austerity

Austerity is the word used to describe attempts to lower budget deficits by cutting government spending on the things that government does for its citizens.

The theory is that cutting way back on government will cause the economy to grow because government is "in the way" and helping citizens "takes money out of the economy." Also, when government provides fewer safety-net services unemployed people are forced to take any work they can get, which drives wages down and increases corporate profits. Government cutbacks also mean they can't enforce regulations, which unleashes businesses to pollute, commit fraud, cut safety procedures and other things government polices that restrict corporate profits.

But austerity literally "takes money out of the economy." Public-employee wages and pensions are cut. Government services and safety net programs are cut. Public assets are sold off for immediate cash (reducing the government's income in later years). So the demand side of the economy is reduced as people are not able to spend.

The Results Of Austerity

In practice the theory that removing government makes the economy grow has not worked out. Several European countries have been severely cutting budgets, and the result has been that the economies in the "austerity" countries have suffered. These economies appear to have fallen into a downward cycle where the "reforms" reduce demand, growth stalls, this reduces tax revenue, which means the deficit-cutting is not effective. (And meanwhile the economies are ruined and people are in misery.)

The austerity cycle happening in Europe works something like this:

Bankers demand "austerity" which drives up unemployment, cuts demand and slows economic growth. The reduction in economic growth causes tax revenue to shrink and increases use of whatever "safety net" programs remain, thereby increasing budget shortfalls.

So bankers demand more "austerity" which drives up unemployment, cuts demand and slows economic growth. The reduction in economic growth causes tax revenue to shrink and increases use of whatever "safety net" programs remain, thereby increasing budget shortfalls. .

So bankers demand more "austerity" ... well you might be starting to get the picture.

Recession Resulting From Austerity

These are the GDP growth rates in European "austerity" countries:

Spain expects -1.7% from 0.4% 2011
Greece -10% to 11%
Portugal -1.2%
Italy -0.7%
Ireland -1.1%
UK -.7%

Chart from Think Progress, CHART: HOW AUSTERITY IS SQUASHING EUROPE’S ECONOMIC GROWTH.

Unemployment Resulting From Austerity

These are the official unemployment rates in European "austerity" countries:

Spain 24.6%
Greece 24.4%
Portugal 15%
Italy 10.7%
Ireland 14.9%
UK 8%

Austerity NOT Lowering Debt

Here is a chart of the debt-to-GDP ration as these countries shrink their GDP - and tax revenue - through austerity (click for larger):

Decline Resulting From Austerity

CNBC: Europe Facing Mental Health "Catastrophe" as Crisis Worsens,

Europe is approaching a crisis as the region’s debt crisis and austerity measures increase the rates of depression, suicide and psychological problems – just as governments cut healthcare spending by up to 50 percent, according to campaigners, policy makers and health organizations.

NY Times: ‘Shocking’ Dip in Britain’s Output Reflects European Stress

Guardian: Portuguese death rate rise linked to pain of austerity programme,

Portugal's health service is being forced into sweeping cuts as last May's EU/IMF bailout terms begin to bite

Catholic Online: European economic crisis takes emotional toll

Suicides Resulting From Austerity

Alternet, April: Crisis to Suicide: How Many Have to Die Before We Kill the False Religion of Austerity?

Telegraph, April: Italian businessman becomes country's 25th 'austerity suicide' of the year

CNN, April: Austerity drives up suicide rate in debt-ridden Greece

Digital Post, July: Austerity takes its toll with suicides increasing in Greece

Tampa Bay Times, August: Suicide rates rise in Europe amid job losses and severe cutbacks

Digital Post, August: Italian dies after setting himself alight in austerity protest

Reuters, August: Study links British recession to 1000 suicides,

A painful economic recession, rising unemployment and biting austerity measures may have already driven more than 1,000 people in Britain to commit suicide, according to a scientific study published on Wednesday.

CNN, September: Death and taxes in Italy

Watch the following news reports if you can stomach it:

What You Can Do

So the experiment in austerity that is playing out in Europe is coming to the US after the election - when democracy can't intervene.

But the way to reduce deficits is to grow the economy. When people have jobs they pay taxes and use fewer social services. Jobs programs that come out of fixing our infrastructure and making us less dependent on oil also make our economy more competitive in the future so they pay for themselves.

Contact your member of Congress and let them know that you do not think this is the time to cut the budget. Let them know that you want to see jobs programs, infrastructure maintenance and improvements, increase the safety net so people are not forced to take any work, cut the age when people can get Medicare and Social Security and increase the benefits so people can retire and open up jobs and renegotiate trade deals that are sucking us dry.

Tell them jobs fix deficits -- you want to grow us out of deficits, not pretend that cuts will work. Cuts make deficits worse.

One Damning Report

Leo Gerard — Tue, 31 Jul 2012 06:43:51 -0400

It’s a damning report because it says America has endangered itself by allowing both its manufacturing sector and its infrastructure – like dams, roads and bridges -- to deteriorate.

The report, Preparing for 21^st Century Risks, issued by the Alliance for American Manufacturing last week, recommends a two-part solution. First is restoring America’s infrastructure lifelines: its electrical grid, its public water and sewer systems, its railroads and dams. And second is doing it with American-manufactured steel and concrete, glass and aluminum – all American components and all American labor.

The result would be a nation more capable of fending off and recovering from natural and man-made disasters. And it would be a nation with a stronger economy based on a solid manufacturing base.

The Preparedness report was written by two security experts. One is Tom Ridge, the former Republican governor of Pennsylvania and first Assistant to the U.S. President for Homeland Security. The other is Robert B. Stephan, a former Assistant Secretary of Homeland Security for Infrastructure Protection.

It discusses the danger of America’s increasing dependence on foreign-made materials and supplies and concludes:

“The American way of life is dependent upon a vibrant economy, the existence of which is based upon a skilled work force, innovation and a world-class critical infrastructure. Much of this critical infrastructure is vulnerable to attack, catastrophic weather events and obsolescence and deterioration. Immediate national security, preparedness and economic needs require an equally strong domestic manufacturing base which, for many reasons, has eroded over the years.”

Risks noted in the report, such as this year’s devastating forest fires and nearly nationwide drought, in addition to the constant threat of terrorism, coincidentally were echoed twice in New York Times stories last week.

The first story described infrastructure problems caused by triple-digit heat, difficulties that are expected to continue with sustained extreme weather. They included excessive temperatures in nuclear plant cooling pools, a train derailed by heat-kinked track and a taxiing jet mired in melted asphalt.

A second Times story revealed a 17-fold increase in cyber-attacks on U.S. infrastructure – including public water systems and cell phone networks -- since 2009. Among the suspects are foreign nations.

The Preparedness report warns of depending on foreign sources for recovery:

“. . .we can no longer rely on global suppliers – many of whom may not have our best interests at heart at a time of crisis. . .or come to our rescue in the midst of an emergency.”

Critical to both psychological and physical recovery, it says:

“is a robust, diverse and resilient domestic manufacturing sector. In fact, there is a direct nexus between a strong domestic manufacturing sector and America’s ability to prevent, mitigate, recover from and rebuild quickly in the wake of catastrophic events.”

Ridge and Stephan devoted a whole section of the Preparedness report to the threats to dams and the nation’s water supply. These are vulnerable to both natural and terrorist-caused disasters. And they’re already in poor shape, receiving a D grade in a review by the American Society of Civil Engineers (ASCE). Dams, the ASCE said, need more than $50 billion in repairs.

Refurbishing those dams and installing some anti-terrorism measures could provide significant employment, which would improve the American economy. That’s what happened with construction of the Hoover Dam beginning in 1931 during the Great Depression. For five years, the massive project employed thousands of workers desperate for jobs. Their labor has provided drinking and irrigation water and electricity to three states for three quarters of a century.

The Preparedness report notes, however, that because of the decline of American manufacturing, caused in large part by foreign competitors violating international trade regulations, some key components to build and repair dams and water systems are made almost exclusively overseas. The report says:

“Clearly, the extent of these offshore dependencies puts us in a much weakened position regarding overall water sector preparedness . . . In the aftermath of a disaster, we must do everything we can to get these critical systems back on line in safe fashion as quickly as possible. Again, a strong domestic manufacturing capacity comprises an extremely important part of this approach.”

Republicans have stalled infrastructure construction and repair and ignored the nation’s manufacturing decline. Their excuse is the deficit. That’s contrary to the successful actions the nation took during the Great Depression, including construction of the Hoover Dam, which provided jobs and stimulated economic development in Nevada, California and Arizona.

The ASCE recommended in 2009 that the nation invest $2.2 trillion to repair critical infrastructure. Americans want that work, with unemployment stuck at 8.2 percent. And America needs that economic development, with the economy growing at a paltry 1.5 percent in the second quarter.

It’s never been cheaper for America to raise that money. Right now, as Nobel-prize-winning economist Paul Krugman points out, government bonds are paying minus .6 percent, meaning Americans will pay back less in interest and principal, adjusted for inflation, than investors put in.

It’s easy for Congress to show it gives a damn about American security, the American economy and American manufacturing. All it takes is a vote to secure and upgrade a dam. And, you know, the rest of the nation’s infrastructure.

The Latest Lie: "You Didn't Build That"

Dave Johnson — Mon, 16 Jul 2012 10:18:43 -0400

Did President Obama tell business owners they didn't build their businesses. That's what the entire right-wing media machine is saying he said. What did he really say?

Drudge Report headline: "Obama Goes Wild: 'If you've got a business, you didn't build that. Somebody else made that happen'..."

Drudge links to the Washington Times, which writes, "President Barack Obama addressed supporters in Roanoke, Virginia on Friday afternoon and took a shot at the business community. President Obama dismissed any credit business owners give themselves for their success:"

Heritage Foundation: Obama Tells Entrepreneurs "You Didn't Build" Your Business

Heritage writes: "That sound you hear is silence—as millions of small business owners and entrepreneurs were left speechless this weekend from President Obama's latest insult."

And so on across the right-wing media machine. Imagine the talk-radio discussion today!

What Did He Really Say?

President Obama pointed out that businesses did not build the roads and bridges that help them get their products to markets. He said that in the United States we succeed together. Here is the full quote:

There are a lot of wealthy, successful Americans who agree with me -- because they want to give something back. They know they didn’t -- look, if you’ve been successful, you didn’t get there on your own. You didn’t get there on your own. I’m always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something -- there are a whole bunch of hardworking people out there. (Applause.)

If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business -- you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.

The point is, is that when we succeed, we succeed because of our individual initiative, but also because we do things together. There are some things, just like fighting fires, we don’t do on our own. I mean, imagine if everybody had their own fire service. That would be a hard way to organize fighting fires.

This is not "insulting," it is just the way it is. We, the People (government) invested in the internal improvements -- infrastructure -- that enables our businesses to thrive.

Nuts

PS, Heritage then goes seriously off the deep end:

Obama pushed his policy goals of infrastructure (aka stimulus) spending and "government research" as part of a collectivist utopia "doing things together." It's simply stunning that he would tell Americans, "If you've got a business—you didn't build that."

Heritage mocks the idea that We, the People (government) should maintain our country's internal improvements (infrastructure)! Heritage says infrastructure and research and "doing things together" are part of a "collectivist utopia?" We, the People -- democracy -- are "collectivist?" Deep end, people, deep end. Get back in the children's pool.

Transportation & Infrastructure = IMMEDIATE Jobs = Deficit Reduction

Dave Johnson — Mon, 30 Apr 2012 15:22:32 -0400

President Obama spoke today at the AFL-CIO's Building and Construction Trades Department Legislative Conference in Washington, asking Republicans to stop blocking infrastructure and transportation projects. (See transcript here.) These projects would immediately create jobs, which would immediately start reducing the country's deficit -- which is probably why Republicans are blocking them.

There are millions of infrastructure jobs that absolutely need doing. There are millions of people out of work who really, really need jobs. On top of that the cost of financing is the lowest ever. So maintaining and modernizing our infrastructure would immediately put millions of people to work. But wait, there's more! Modernizing our infrastructure would make our economy more efficient and our businesses more competitive, bringing returns for decades. So, of course, with all these points going for it Republicans are blocking it.

The Obstruction

We have been deferring infrastructure maintenance since the Reagan years, but in recent years Republicans have doubled down on blocking public investment, calling it "just more government spending" and even "socialism." And, they complain, construction projects help union members.

So Republicans have blocked bill after bill to repair and modernize the infrastructure, or to maintain and modernize out aging transportation system, build high-speed rail, etc. The President discussed this obstruction in his speech today,

...over the last year, I’ve sent Congress a whole series of jobs bills that would have put your members back to work. But time after time, Republicans have gotten together and said “no.” I sent them a jobs bill that would have put hundreds of thousands of construction workers back to work repairing our roads, bridges, schools and transit systems, along with saving the jobs of cops, teachers, and firefighters, and creating a new tax cut for businesses. They said “no.” Then, I sent them just the part of that bill that would have created those construction jobs. They said “no.” And we’re seeing it again right now. As we speak, House Republicans are refusing to pass a bipartisan bill that could guarantee work for millions of construction workers. Seeing a pattern here? That makes no sense. Congress should do the right thing and pass this bill right away.

The Cost

Our aging infrastructure costs our economy. As things break down it gets harder to get things done. It is harder to start new businesses and our businesses are less competitive in the world. Shipments are delayed, etc.

There are other costs. Cars have to be repaired from driving on our substandard roads, people have to pay higher fuel costs as they try to get where they are going on clogged streets or taking detours around closed bridges, etc. People's time is wasted, which also costs. As we move toward third-world status property values decline, we lose tourism, etc.

From a report on the President's speech in The Hill, (differs from advance transcript.)

"There are bridges between Kentucky and Ohio where some of the key Republican leadership come from, where folks are having to do detours an extra hour and half drive every day on their commute because these bridges don't work," Obama said in a speech to the Building and Construction Trades Department Legislative Conference in Washington. "Time after time, the Republicans have gotten together and they've said no," he said.

The Missed Opportunity

This infrastructure work has to get done at some point, and gets more expensive the longer we put it off. It not only gets more and more expensive to do this work the longer it is put off, but we are falling far behind our economic competitors as we fail to modernize.

But here’s the thing—as a share of the economy, Europe invests more than twice what we do in infrastructure; China about four times as much. Are we going to sit back and let other countries build the newest airports and the fastest railroads and the most modern schools, at a time when we’ve got private construction companies all over the world—or all over the country—and millions of workers who are ready and willing to do that work right here in the United States of America?

Jobs Fix Defitics

Jobs fix deficits. People are paying income taxes instead of collecting unemployment benefits or food stamps, they are spending their paychecks and the stores are paying taxes, etc. So government revenues are up and payouts are down.

This is why the deficit is jobs, but there is a deficit of jobs.

If you want to fix the deficit problem you have get people working again. And since we have to maintain and modernize the aging infrastructure anyway, then let's get people working on ... maintaining and modernizing the aging infrastructure!

Take Back The American Dream Conference

This and other issues will be talked about and worked on at the Take Back The American Dream Conference, June 18-20 in Washington DC.

This is where you need to be to forge the relationships and develop the strategies to change the direction of the country.
At this conference, we'll be tackling some of the most pressing questions we face today:

How do we compel candidates to embrace a jobs agenda big enough to end our economic crisis?
How can we stop unlimited corporate campaign cash from buying this election?
How many progressive champions can we help win in congressional, state and local races?
How will we take back our democracy—to Take Back the American Dream?

Be part of the American Dream movement. Join Campaign for America’s Future, Rebuild the Dream, Progressive Majority and many other groups—and thousands of progressive activists—at the Take Back the American Dream conference.

The Pothole in Our Political Psyche

Sam Pizzigati — Tue, 17 Apr 2012 01:30:59 -0400

Even rich people sooner or later have to drive over bridges. So why aren't the wealthy screaming about America's inadequate — and increasingly unsafe — basic infrastructure?

Investing in infrastructure used to be a political no-brainer. Politicians of nearly every ideological stripe regularly supported government spending on infrastructure staples, everything from school buildings to bridges.

These pols would, to be sure, disagree on emphasis. The more conservative would push for more spending on highways, for instance, the more liberal for investments in mass transit.

But most all elected officials took as a given the necessity of publicly funded infrastructure investment. Businesses simply couldn’t thrive, even conservatives understood, without quality systems in place for transportation, communication, education, and every other basic underpinning of a modern society.

Among the American people this consensus for investing in infrastructure remains as solid as ever. Only 6 percent of Americans, one poll last year found, consider infrastructure “not that important” or “not important at all.”

But support for infrastructure investing among America’s lawmakers has ebbed considerably. One example: Over the past two years, Congress couldn’t even get its act together to pass a basic transportation funding bill.

Overall, U.S. investing in infrastructure has fallen off dramatically from mid-20th century levels. Back in 1968, federal outlays for basic infrastructure amounted to 3.3 percent of the nation’s gross domestic product. This share has sunk by nearly two-thirds. Last year, infrastructure investing made up only 1.3 percent of GDP.

Various national groups have translated the story these percentages tell into dollars and cents. The American Society of Civil Engineers estimates that we would need to spend $2.2 trillion, over five years, to adequately “maintain and upgrade” America’s roads, dams, drinking water, school buildings, and the like.

But lawmakers in Congress are currently cutting, not adding, dollars for infrastructure. The 2013 budget that has passed the House of Representatives slices “transportation infrastructure investment per capita by 28 percent.”

What do stats like these mean for our daily lives? Potholes. Brownouts. Overcrowded buses. Even bridge collapses.

None of this makes any sense. We ought to be witnessing, here in 2012, a historic surge in infrastructure investing. Indeed, contends Economic Policy Institute analyst Ethan Pollack, the stars have all aligned for an infrastructure renaissance.

On the one hand, we have more motive than ever before for making sizable infrastructure investments. After so many years of disinvesting, things are falling apart. Our basic infrastructure systems desperately need repair and replacement.

On the other hand, we have opportunity: The cost of borrowing to fund infrastructure projects, EPI’s Pollack points out, has hit record “low levels.” And the private construction companies that do infrastructure work remain desperate for contracts. They’re asking for less to do infrastructure work.

“In other words,” says Pollack, “we’re getting much more bang for our buck than we usually do.”

And if we spend those bucks on infrastructure, we would also be creating badly needed jobs that could help juice up the economy. Notes Pollack: “This isn’t win-win, this is win-win-win-win.”

Yet our political system seems totally incapable of seizing this “win-win-win-win” moment. What explains this incapacity? Center for American Progress analysts David Madland and Nick Bunker, see inequality as the prime culprit.

The pair have just pulled together all the various studies, from both within and outside the United States, that link levels of infrastructure spending to income and wealth distribution. The evidence from these studies all points the same way. The more wealth concentrates, the more feeble a society’s investing in infrastructure.

Our long-term decline in federal infrastructure investment — from 3.3 percent of GDP in 1968 to 1.3 percent in 2011 — turns out to mirror almost exactly the long-term shift in income from Americas middle class to America’s rich.

And the U.S. states where the rich have gained the most at the expense of the middle class turn out to be the states that invest the least in infrastructure.

Why should this be the case? Madland and Bunker cite several dynamics at play here in their new Center for American Progress infrastructure paper.

One set of dynamics revolves around the state of a society's middle class. In more equal societies, middle classes will be more robust and politically powerful.

Why does this power matter for infrastructure investing? Middle class people have a vested interest in healthy levels of infrastructure investment. They depend on good roads, schools, and transit.

Wealthy people don’t. If public services frazzle, they can opt out. They can send their kids to private schools. They can commute by helicopter to avoid traffic congestion. And the more inequality in society, the more political leaders will lean their way — and deny public goods and services the funds they need to thrive.

Some wealthy, Madland and Bunker acknowledge, do see the connection between infrastructure and healthy economic development. But increased investment in infrastructure demands higher taxes, and lower tax rates have always been among the “more cherished priorities of the rich.”

“So when push comes to shove,” Madland and Bunker posit, “infrastructure is likely to take a backseat to keeping taxes low.”

A deeper dynamic also seems to be at work. Higher levels of economic inequality, studies show, “can breed a selfish orientation toward public policy.”

By contrast, notes the new Center for American Progress analysis, people in more equal, strong middle-class societies “feel they share a similar fate” and more willingly make investments that may not personally benefit them directly.

A “significant body of evidence,” the analysis concludes, “suggests a strong middle class is important for public investments.” Unequal societies — like the 21st century United States — have weak middle classes.

That leaves Americans with a basic choice. We can press, on every front, for greater equality. Or spend more time looking out for potholes.

Sam Pizzigati, the co-editor of Inequality.Org, also edits Too Much, the online weekly on excess and inequality published by the Washington, D.C.-based Institute for Policy Studies. Read the current issue or sign up here to receive Too Much in your email inbox.

Stop Blocking Infrastructure Jobs!

Dave Johnson — Fri, 06 Apr 2012 05:38:21 -0400

Whatever the March unemployment numbers are today, they are far, far from robust enough to employ everyone who needs work any time soon. (Please, surprise me!)

There is something that can be done to really improve things. This something also gives Republicans a chance to show they aren't just sabotaging the economy to improve their own election prospects. Let's see if they go along.

When the Labor Department releases its jobs report later this morning, it is expected to show a couple hundred thousand new jobs were created. That's good -- and vastly, vastly better than where things were when President Obama took office. But even these job-creation numbers are still far from enough to put all of the people who lost their jobs as a result of the financial-deregulation crash back to work any time soon. To do that, we need to be creating jobs at a rate of close to 400,000 a month for the next 36 months to get the unemployment rate down to 5 percent by then.

Republicans Intentionally Sabotaging The Economy?

Republicans have been blocking efforts to use government to get the economy creating jobs, as well as efforts to assist the unemployed -- itself an economy-boosting, job-creating measure. They have also been forcing large numbers of layoffs of local, state and federal government workers, saying they don't think government creates real jobs. On top of that, they have been blocking new stimulus efforts as wasteful government spending. They have been blocking job-creating high-speed rail projects. Recently they have been trying to block the Export-Import Bank that helps businesses sell products overseas.

They have been blocking everything that might help improve the economy, claiming that only tax cuts for millionaire "job creators" can do the trick (even though that's what 'W' did, with no resulting growth at all.)

Republicans say they are blocking all of these job-creating and economy-improving efforts because they honestly believe that these things shouldn't be the role of government, that government "takes money out of the economy. That's what they say, in spite of all the historical evidence to the contrary. But some people suspect Republicans have been blocking all these efforts for a different reason: because a bad economy might improve their own election prospects, as less-informed people blame "the people in charge" -- Obama and his party -- and the corporate media fails to inform people that "the people in charge" are being obstructed and filibustered.

Opportunity For Republicans To Demonstrate Good Faith

Here is an opportunity for Republicans to demonstrate that they are not just sabotaging the economy in a cynical political manipulation. Republicans can vote to invest in maintaining and modernizing the country's infrastructure.

Everyone agrees, whether they are Republicans or Democrats, that maintaining and modernizing our country's infrastructure is a proper and essential role for government. Everyone agrees, whether they are Republicans or Democrats, that investing in improving the infrastructure helps businesses and the economy.

Infrastructure

Even the most conservative, anti-government Republicans recognize that an economy depends on its infrastructure. They understand that businesses need good roads, airports, a good energy delivery system and other infrastructure components if they are going to thrive and compete in the world's markets.

Currently our infrastructure is in disrepair, following decades of tax-cut-induced neglect. Other countries are investing massively in modern infrastructure. Our country will be trying to compete with those modernized economies, with our outdated electrical grid, rail system, etc.

The American Society of Civil Engineers earlier this month estimated that the nation needs to spend $1.7 trillion over the next nine years just on its surface transportation network alone—almost double what is currently on the books. Being cheap on this front is costing us plenty: $130 billion in 2010, according to the ASCE, "including approximately $97 billion in vehicle operating costs, $32 billion in delays in travel time, $1.2 billion in safety costs, and $590 million in environmental costs."

In addition, investing in infrastructure costs less than the cost of high levels of unemployment: the lower tax revenues, loss of business activity, and all of the forms of government spending resulting from slow growth and increased joblessness.

Here are a few infrastructure facts:

The American Society of Civil Engineers has graded our infrastructure ‘D,’ estimating that $2.122 trillion must be spent just to bring it up to “satisfactory” condition. [American Society of Civil Engineers]
More than 25% of bridges in the United States need significant repairs and/or are handling more traffic than they were designed to carry. [Christian Science Monitor and U.S. Department of Transportation]
Nearly a third of all highway fatalities are related to substandard road conditions, obsolete road designs, or roadside hazards. [New America Foundation]
A significant water line bursts every two minutes in the United States. [The New York Times]
One in three schools are in bad enough condition “to interfere with the delivery of instruction.” [U.S. Department of Education]
In 2010, deficiencies in America’s roads, bridges, and transit systems cost American households and businesses more than $129 billion. [ASCE]
By 2020 the nation’s deteriorating surface transportation infrastructure will cost the American economy more than 870,000 jobs and suppress the growth of the country’s Gross Domestic Product by $3.1 trillion.” [ASCE ]
The quality of U.S. infrastructure is falling behind competitors like Brazil, China and India. [Urban Land Institute ]
If infrastructure needs are not addressed, within 10 years U.S. businesses will pay an added $430 billion in transportation costs, household incomes will fall by more than $7,000, and U.S. exports will fall by $28 billion. [ASCE]

At the same time as all of this work needs doing, we have millions of people who need work to do. On top of that government is abke to finance projects at a near-zero rate of interest! Yet efforts to maintain and modernize our infrastructure are blocked, and blocked, and obstructed.

Infrastructure Construction Would Knock 1% Off Unemployment Rate

The President said yesterday that unemployment could be lowered by 3% immediately by restoring state and local government hiring, plus spending on maintaining and modernizing our infrastructure, with each accounting for 1%. Republicans do not agree that we should restore state and local government hiring, but Democrats and Republicans both agree that infrastructure is a proper role of government.

So we could knock 1% off of unemployment right now if Republicans would agree to invest in infrastructure projects, thereby putting millions to work, and making our economy that much more efficient and competitive.

CNN Money reports in "Obama: How we could get to 6% unemployment rate,"

"The construction industry and state and local governments are among the biggest drags on the nation's economic recovery, President Obama said ... If these areas were to have a similar rebound now, each one would take a point off of the nation's 8.3 unemployment rate ... Now is an especially good time to revamp the nation's infrastructure, which would boost job growth, Obama said. Interest rates are historically low, construction workers are dying to get back on the job, and contractors are competing for projects, coming in on time and under budget."

Opportunity For Improvement? Or Agenda To Sabotage?

So three key ingredients for immediate economic improvement are in place:

Work that really, really needs doing.

People that really, really need work.

Financing these projects at best terms in history.

If there ever was a role for government, even in the conservative worldview, it is maintaining and modernizing our country's infrastructure. There has never been a time when people are more available to do the work, and when money is cheaper for financing the work.

There is a formula for economic improvement that even the most conservative Republicans would agree is an opportunity -- unless... unless their real agenda is not to improve the economy, but instead to sabotage the economy.

Improve Or Sabotage Economy? Time To Demonstrate Intent

If Republicans are honestly pursuing a conservative vision when they block government hiring and stimulus and other efforts to revive the economy, they will at least agree that we need to do massive infrastructure maintenance and modernization projects. But if they are just out to sabotage the economy and jobs for the purpose of improving election chances, they won't.

This is the opportunity for the public to find out which it is.

California Taxpayers Financed A New Chinese Competitor!

Dave Johnson — Tue, 03 Apr 2012 07:10:30 -0400

American tax dollars should employ American workers and build American companies. But the Bay Bridge project not only didn't do that, it paid to build up a new Chinese state-owned competitor that will bid against American companies on future projects! Let's not make that mistake again. Jeeze!

Should Be Made In America

Last week I wrote about the Should Be Made In America project. A coalition of American companies and labor organizations has launched this campaign to let taxpayers know when their state sends jobs out of the country. This is an effort to get state governments to buy steel and supplies from American companies when they do infrastructure projects. If they do not, there will be a PR campaign to shame the elected officials and state procurement agencies who made the decision to outsource American jobs with taxpayer dollars.

The New San Francisco Bay Bridge Project

The new San Francisco Bay Bridge is underway. The eastern span of the new bridge is called the self-anchored suspension span (SAS), which will have a single 525-foot-tall tower and uses a single mile-long cable to support the deck, which is two side-by-side steel roadways. The cable is made up of 137 strands of steel which are being pulled across the bridge one-by-one right now. The 1,542 ft span is the largest span of its kind in the world. (Lots of info is available here.)

They Turned Down Federal Dollars So It Could Be Made In China!

The cable and key sections of the tower and deck were outsourced to China. Governor Arnold Schwarzenegger's administration wanted this done in China, saying the low wages and lack of environmental regulations would lower the cost. Federal procurement rules require that taxpayer dollars be spent here, so Schwarzenegger turned down federal funds for the job, in order to be able to outsource the work. Never mind the cost of lost tax revenues, unemployment benefits, food stamps and other "safety net" programs for the lost workers and bankrupted companies that resulted. And never mind the cost to the larger economy and country from the foreclosures, closed businesses, lost jobs, etc. Those larger costs to the larger economy and country were not Schwarzenegger's problem

Built Up A Competitor!

Shanghai Zhenhua Heavy Industries got the job -- even though they had never done a job like this before. Until now the company manufactured cranes and ship loaders. But, thanks to California's tax dollars, they can now. California paid for this Chinese state-owned company to build its capacity to do major infrastructure projects like this one. And they will be bidding against American companies on project in the United States and around the world from now on.

Here is Scott Paul from the Alliance for American Manufacturing, talking about the Should Be Made In America project, on KQED's show Forum. Skip to around 16:00.

"What it has done now unfortunately is established a competitor to these American firms, that has been subsidized by the taxpayers of California, that will compete on future infrastructure projects. And California taxpayers have given this state-owned firm in ~~California~~ China the knowledge and the know-how to do this. And that is not fair to other private-secotr firms in the United states."

(Note, at 16:18 Scott says the Bay Bridge project has "given a state-owned firm in California" the obviously meant to say China.)

So one agency of California "saved money" by outsourcing a project to China. But the state government overall probably lost money when you add in all the costs to other state agencies who lost tax revenue and have to pay out "safety net" expenses. And the national government and larger economy certainly lost out from the lost jobs, closed businesses and loss of steel and manufacturing capacity. American businesses certainly lost out.

At least now as other states look to future infrastructure projects the Should Be Made In America project will be there to remind them of the larger costs that come from "saving money" by sending taxpayer dollars out of the country.

P.S. here is the video from the Should Be Made In America launch event:

Infrastructure And Manufacturing In The President's Budget

Dave Johnson — Mon, 13 Feb 2012 23:51:55 -0500

Saying the country can't "cut our way to growth," the President has some serious infrastructure money in his budget, along with serious help for America's manufacturers. This will create jobs and make our economy more competitive. Republicans are already blasting it as "more government spending."

This budget proposal has significant increases to maintain and modernize the nation's crumbling infrastructure, includeing

$476 billion over six years in a surface transportation reauthorization package, including an immediate investment of $50 billion for roads, rails, and runways.
$47 billion over six years, plus $6 billion in 2012, to fund the development of high-speed rail and other passenger rail programs as part of an integrated national strategy.
Creation of an independent, non-partisan National Infrastructure Bank (NIB) to help fund large-scale ($100 million minimum) transportation, water, and energy infrastructure projects. The NIB would issue loans and loan guarantees to eligible projects. To maximize leverage from Federal investments, the NIB would finance no more than 50 percent of the total costs of any project.
Builds a next-generation, wireless broadband network and establish an interoperable network for public safety.
$30 billion to modernize at least 35,000 schools

The President's budget also offers a number of pro-manufacturing proposals, including:

$2.2 billion for Federal advanced manufacturing R&D, a 19 percent increase over 2012. This includes a doubling of the budget for the National Science Foundation (NSF), the Department of Energy’s (DOE’s) Office of Science, and the National Institute of Standards and Technology (NIST) labs.
Make permanent the R&D tax credit.
$149 million for research at the National Science Foundation (NSF) targeted at developing new manufacturing technologies in partnership with the private sector.
Revisions to the tax system to encourage domestic job creation, including corporate tax reform that will “close loopholes, lower the overall rate, encourage investment here at home, and not add a dime to the deficit.”
$290 million—more than double the amount in 2012 —for the Advanced Manufacturing Office at the DOE Office of Energy Efficiency and Renewable Energy.
$430 million, an increase of $19 million over 2012 levels, for the Export-Import Bank, the U.S. Trade and Development Agency, the Office of the U.S. Trade Representative, the U.S. International Trade Commission, and the Overseas Private Investment Corporation (OPIC).
$517 million for the Department of Commerce’s International Trade Administration (ITA), an increase of $61 million over 2012 levels, to strengthen its efforts to promote exports from small businesses; help enforce domestic and international trade rules; fight to eliminate barriers on sales of U.S. goods and services; and improve the competitiveness of U.S. firms. This includes $26 million for the creation of a new Interagency Trade Enforcement Center (ITEC) intended to challenge unfair practices by America’s trading partners.
$1.1 billion for reauthorization and reform of the Career and Technical Education (CTE) program, currently set to expire in 2013.

Infrastructure!

Dave Johnson — Tue, 01 Nov 2011 12:34:24 -0400

Good Lord, what is the matter with people? There are millions of jobs that need doing, and millions of unemployed. How hard is it to figure out what to do?

Next up before the Senate is an infrastructure bill. It's simple, $60 billion to repair aging infrastructure. This creates hundreds of thousands of jobs while the work is underway, which means people will not be collecting government benefits, will be paying taxes, will be spending which boosts demand, and then when the work is done the economy works better making costs lower and our businesses are more competitive. It's an obvious win-win for everyone.

A win-win for everyone except Republicans who understand that if the economy does better they will have a harder time in the next election.

The Bill

Isaiah Poole, in A $60 Billion Down Payment On The Essentials For Economic Renewal, explains,

This week the Senate will take up another proposal by the Obama administration to create jobs and move the country closer to economic recovery, this one a $60 billion plan for immediate spending on the nation's roads, bridges, public transportation systems and other essentials to a vibrant, efficient economy. Of that, $50 billion is direct spending and $10 billion would take the form of an infrastructure bank that would be used to leverage private investment.

Here is the outline of that bill:

Immediately Invests in Our Roads, Rails and Airports ($50 Billion): The Senate bill provides $50 billion in immediate investments for highways, transit, rail and aviation, helping to modernize an infrastructure that now receives a grade of “D” from the American Society of Civil Engineers and putting hundreds of thousands of construction workers back on the job. This investment will put people to work upgrading 150,000 miles of road, laying/maintaining 4,000 miles of train tracks, restoring 150 miles of runways, and putting in place a next-generation air-traffic control system that will reduce travel time and delays. The plan includes $27 billion to rebuild roads and bridges, $9 billion to repair transit systems, $5 billion for projects selected through a competitive grant program, $4 billion for construction of the high-speed rail network, $2 billion to improve airport facilities and $1 billion for a NextGen air traffic control system. The call for greater infrastructure investment has been joined by leaders from AFL-CIO President Richard Trumka to U.S. Chamber of Commerce President Thomas Donohue.

Establishes a National Infrastructure Bank ($10 Billion): The Senate bill establishes a National Infrastructure Bank capitalized with $10 billion that will leverage private and public capital to help fund a broad range of infrastructure projects. The Bank would be based on the model Senators Kerry and Hutchison have championed, which has been endorsed by the U.S. Chamber of Commerce while building on legislation by Senators Rockefeller and Lautenberg and the work of long-time infrastructure bank champions like Rosa DeLauro and the input of the President’s Jobs Council.

Asks Millionaires to Pay Their Fair Share Without Adding a Dime to the Deficit: In order to create or save hundreds of thousands of construction jobs, the Senate bill imposes a 0.7% surtax on modified adjusted gross income in excess of $1 million for both single filers and married couples filing jointly. The surtax is effective for taxable years beginning after December 31, 2012.

That tax would mean someone reporting $1,000,100 income after all deductions would pay an extra seven cents in taxes.

The Obstruction

Republicans in the Senate will unanimously oppose this bill -- a filibuster.

Republicans have stated that their top objective is to win the next election. Not to create jobs, not to help the economy, not to prevent another financial collapse, not to help prevent foreclosures, not to fight climate change, not to do anything except obstruct everything in order to make things worse, hoping this will turn people against government and democracy.

The Cover

The "mainstream" corporate media does not report this. They do not report that one party is filibustering bills, They do not report that there is obstruction. They instead tell the public that "the Senate" "blocked," "rejected," "failed," or whatever they need to say to describe what happened without letting the public know what happened.

Until the public is informed of what is going on in Washington, the gridlock will continue. An informed public is essential to a functioning democracy. An informed public is able to apply political pressure in the correct places.

Previous posts on infrastructure:

Reagan Revolution Home To Roost: America Is Crumbling

Tax Cuts Leave Nothing Behind -- Infrastructure Investment Leaves Behind Infrastructure

Infrastructure Work Is Needed And People Need The Work

State Of The Union—Infrastructure and Jobs: Two Problems, One Solution

A Simple Plan To Fix The Jobs Emergency -- And The Economy, Too

Infrastructure Jobs, Repeat And Amplify

Transportation Bill Actually Not Boring

Big Ideas To Get America Working: Rebuild Our Infrastructure

Unpaved: Out-Of-Cash America Undoing Its Infrastructure

AFL-CIO Makes $10 Billion Infrastructure Commitment

Where Is The Chamber's Infrastructure Push? and Obama Should Call Chamber’s Infrastructure Bluff

Jobs Speech In A Democracy -- What Do Polls Show The Public Wants?

Dave Johnson — Tue, 06 Sep 2011 14:31:49 -0400

As President Obama prepares to give a major speech on jobs before a joint session of Congress, what does the public think the country should do?

The public wants jobs created to fix our crumbling infrastructure, paid for by tax increases on Wall Street and the super-rich. They do not want cuts in Medicare or Social Security. And business owners want customers, not deregulation or tax cuts.

Public Wants Infrastructure Jobs

There is no way around it: the public overwhelmingly thinks the country should put people to work repairing our infrastructure. Poll after poll shows this. Maybe the idea that there are millions of jobs that need doing while millions are out of work has occurred to people.

Just yesterday, there was one more confirmation of this. Politico reports on a Battleground poll that shows 51 percent support a national program to put Americans to work by building roads, bridges and schools: (Click for the complete PDF of poll results.)

... a majority (51%) supports a large-scale, federally-subsidized construction program to put Americans back to work building roads, bridges, schools, and hospitals, including 40% of voters who support it strongly. Fifty-two percent of independent voters and a majority of blue-collar voters support this proposal. Opposition stands at just 21%, 16% among independents.

Public Doesn't Want Medicare Or Social Security Cuts

Medicare wins 78% to 20%: An August NBC News/Wall Street Journal Survey found that just 20% of Americans support reducing the deficit by cutting spending on Medicare.

Reduce the deficit by reducing spending on Medicare, the federal government health care program for seniors: August 2011
Totally acceptable 5% Mostly acceptable15% Mostly unacceptable 27% Totally unacceptable 51% Not Sure 2%

Social Security wins 62% to 33%: A poll conducted June15-19 by Pew Research asked respindents to choose between these two statements about Social Security: Older people who can afford it need to give up some government benefits to help the country overcome its economic problems, or the government needs to keep its promises to older people by maintaining their benefits, even for those who are well-off :

Give up some benefits 33% Keep its promises 62% Both/Neither/Other (vol.) 2% Unsure/Refused 3%

Business Owners Want Customers

The Washington elite will tell you that businesses want tax cuts, and cuts in regulation. If only we cut taxes on the rich and cut democracy's oversight of business, things will get so much better... Last week McClatchy Newspapers did some actual, honest-to-goodness reporting and went out and asked business owners what they need. The result was this story: "Regulations, taxes aren't killing small business, owners say":

Politicians and business groups often blame excessive regulation and fear of higher taxes for tepid hiring in the economy. However, little evidence of that emerged when McClatchy canvassed a random sample of small business owners across the nation. "Government regulations are not 'choking' our business, the hospitality business," Bernard Wolfson, the president of Hospitality Operations in Miami, told The Miami Herald. "In order to do business in today's environment, government regulations are necessary and we must deal with them. The health and safety of our guests depend on regulations. It is the government regulations that help keep things in order."

So McClatchy went out and actually asked owners of businesses what they thought. That is so not-D.C., to actually ask the people affected. And what did they find?

McClatchy reached out to owners of small businesses, many of them mom-and-pop operations, to find out whether they indeed were being choked by regulation, whether uncertainty over taxes affected their hiring plans and whether the health care overhaul was helping or hurting their business. Their response was surprising. None of the business owners complained about regulation in their particular industries, and most seemed to welcome it. Some pointed to the lack of regulation in mortgage lending as a principal cause of the financial crisis that brought about the Great Recession of 2007-09 and its grim aftermath.

None, as in not any of the business owners complained about regulation, most welcomed it. And what did they hear from business owners about taxes?

"I think the rich have to be taxed, sorry," Douglas said. He added that he isn't facing a sea of new regulations but that he does struggle with an old issue, workers' compensation claims.

Is it really a big surprise that "Businesses Hire When Customers Are Coming In The Door"?

So that's what the public wants the president to talk about. What will he say?