Does President-elect Obama represent the change we need? His mainstream appointments — largely veterans of the Clinton administration — have sparked a clamor from worried supporters. But in one of the critical challenges facing the country — how to get the country out of what will be the worst downturn since the Great Depression — Obama is calling for dramatic and long overdue change. While President Bush continues to oppose any major plan for Main Street, Obama has been calling for a substantial recovery program, focused on public investments rather than tax cuts.
His chief economic advisor, Clinton’s former Treasury Secretary Larry Summers, suggests a "speedy, substantial and sustained" fiscal stimulus, at levels of $350 billion a year or more. A key question is whether the stimulus will be strategic — investing in areas vital to our future, rather than in simple one-off expenditures for temporary effect.
On this Obama seems clear. The centerpiece of his plan is a down payment towards moving to energy independence and dealing with global warming. He’ll generate green jobs by investing in retrofitting buildings for energy efficiency, in modernizing the electric grid, in pushing renewable energy, mass transit, and retooling the auto industry.
He could also sensibly use the crisis to make college more affordable again. The cost of college has doubled under President Bush. Grant programs haven’t kept pace. States have been limiting their support. Students have had to take on more and more debt to pay the bill.
Now in the crisis, all will get much worse. Tuitions and costs are increasing, as states cut even more costs. Teachers are getting laid off; construction projects stalled; class sizes will increase. As private lenders abandon the student loan area, loans are still available — but the costs and debt burdens are likely to rise.
For this country to prosper as a high wage society in a global economy, we will need greater education for students, particularly in the skill oriented community colleges that are being hit hardest in the downturn. Obama would be wise to raise Pell grants — the grants that go to neediest students back to the level they once were, when the maximum grant covered about 75% of college costs. That would cost $35 billion a year. The money would be spent immediately — and it would keep kids in college and off the unemployment rolls.
Critics argue that the spending program should be temporary — one-time tax rebates, or one-off investments that involve no long term commitments, and can be ended when the economy starts to grow. If we make a downpayment on strategic investments now, they warn, we’ll have to find a way to pay for them when the economy recovers.
Exactly. The fact is that we’ve been starving vital public investments for decades. Just as conservatives pushed for massive tax cuts as a back door way to force cuts in government spending, Obama should be making vital investments as part of the deficit-funded stimulus as a backdoor way to strengthen the argument for paying for these investments in the long run.
A big time recovery plan for Main Street focused on the investments we need is one key element of the change we need. And one that President-elect Obama surely supports.