Washington is waiting for President Obama. Next week, the president has scheduled a big speech to propose new measures to create jobs and get the economy going. Reports are that the administration still has not decided whether to put forth a politically bold plan or propose measures that might pass the Republican Congress.
AFL-CIO President Richard Trumka had it right when he told the president: “Do not look at what is possible — look at what is necessary… If you only propose what you think they’ll [the Republican Congress] accept, they control the agenda.”
Republicans have already made this an easy choice, by denouncing virtually any idea from the president as dead on arrival. Their “jobs plan” involves cutting spending, rolling back financial regulation, repealing health care reform, subsidizing big oil and passing more corporate trade deals. This would cost jobs and make the economy less competitive in the long run. They are either wrong-headed or willing to sustain mass unemployment in order to insure Obama’s defeat. Or both.
So half measures aren’t likely to pass anyway. And worse, they constitute presidential malpractice, using the “bully pulpit” to confuse rather than educate the American people about the straits we are in. Far better simply to tell it like it is.
But progressives shouldn’t be waiting on Obama in any case. It is long past time for Democrats in the Congress to put forth a bold plan to revive America and put people back to work. Let the White House ignore it and Republicans scorn it. Take it to the country. The faltering economy and sustained mass unemployment will make it more and more compelling. Eventually, the president will figure out he needs to run on something. The bold agenda will frame the choice for Americans to decide in the election.
So what would that agenda look like? There is no shortage of good ideas. For a series on big ideas on making America work, go here.. Here is my version.
Get the Challenge Right
The economy is barely growing. Twenty-five million Americans are in need of full time work. One in four teenagers not in college can’t find a job. Wages aren’t keeping up with prices. Our trade deficit is rising, as more and more good jobs get shipped abroad. Nearly one in three homes with a mortgage is underwater, worth less than the mortgage.
Moreover, there is no old, healthy economy to recover to. The old economy didn’t work for most Americans even when it was growing. The cancer was spreading before it metastasized in the financial panic. In the so-called Bush recovery years before the collapse, the few captured all the rewards of growth. Most households lost ground. That economy was built on unsustainable debt. We were hemorrhaging manufacturing jobs and borrowing $2 billion a day from abroad. And we were in complete denial about global warming and the catastrophic climate changes that have already begun. We can’t recover to that old economy – and we wouldn’t want to.
So the task is not simply to give the economy a stimulus, like a dead car battery that just needs a booster cable and a charge to get it going again. We need to rebuild the engine and modernize the wiring, creating a new strategy for America in the global economy even as we put people back to work.
Ironically, no one has made this case better than Barack Obama, most notably in his “Economic Sermon on the Mount” at Georgetown University in April 2009. (Maybe if the president just re-read some of his old speeches…)
Elements of a Real Jobs Agenda
Given that reality, consider the following elements of a new strategy:
• Revive Manufacturing in America
We must end the unsustainable global imbalances that drive us ever further into foreign indebtedness. That would best be done with global cooperation—the surplus nations like China exporting less; the deficit nations like the U.S. making more at home and selling more abroad. But we can gain that cooperation only by setting out an independent course to revive manufacturing in the U.S. and to balance our trade.
This requires a national plan for manufacturing—targeting industries, coordinating research, providing incentives and training, and repealing tax laws that reward companies for shipping jobs abroad. It requires a new trade strategy, insisting that every major nation play by the same set of rules, taking direct action against mercantilist nations like China that protect their markets, rig their currencies and steal our technology. Buy America should be a mandate on all federal, state and local government purchases, consistent with our trade laws.
• Capture a Lead in the Green Industrial Revolution
The priority target should be the green industrial revolution is sweeping a world that has no choice but to address catastrophic climate change. This will change how we live, the appliances we use, the way we travel and fuel our cars, and how we light our homes or power up our computers. China, Germany, Spain and others are rushing to dominate growing markets in solar, wind, fast trains, electric cars and more. This should be the centerpiece of our manufacturing strategy, investing in research and innovation, providing investment incentives, building key infrastructure such as a smart grid. The Apollo Alliance, now merged with the Blue Green Alliance, has a comprehensive energy plan, as well as key initiatives on green manufacturing and transportation, that provides a good roadmap.
• Rebuild America
This is truly a no-brainer. At current interest rates, America is now being paid to borrow money for seven years. That’s right, investors are so spooked they are buying U.S. bonds that pay lower interest than the rate of inflation. For all the ranting of the right, the U.S. now has access to essentially free money.
And we have compelling investments to make that that will have real returns. Our decrepit infrastructure—from roads to bridges to sewer systems to mass transit—is not only taxing our competitiveness; it increasingly endangers lives. Meanwhile, the construction industry is flat on its back. There will never be a better to time to finance rebuilding that will eventually have to be paid for. It will cost more later than now.
Create a national infrastructure bank, as the president suggests. But go big. Current plans are too timid to take advantage of our current opportunity. These projects will take time to get moving, but we’d be literally fools to delay a major initiative to rebuild America.
• Save Our Schools
The president has correctly warned against debilitating cuts in our schools. But across the country, we see the carnage at all levels, from pre-K to college: teachers laid off, after school and advanced placement programs closed, music and arts and languages discontinued. Colleges are raising fees and tuitions, cutting grants, and slashing class offerings.
We need to staunch the layoffs of skilled teachers. But we also should be using the current opportunity to invest in creating the finest public education system in the world, from universal preschool, to modernized public schools, to advanced training and affordable college. Expanded federal revenue sharing with the states in exchange for commitments to sustain state and local investment in schools is an essential first step. Again, these investments will generate a strong return in economic performance and can be financed with essentially free money. Why would we allow an essential key to a prosperous society be savaged when it can be revived now with money investors are paying us to hold?
• Save Our Homes
As noted, nearly one in three homes with a mortgage is underwater. Millions have lost their homes already. Millions more are struggling to sustain mortgages even as their jobs are lost, incomes decline, or higher mortgage interest rates kick in. Housing prices will not stabilize until the massive overhang of foreclosed homes is reduced. We need a serious program to restructure this debt.
The New Bottom Line has called on the attorneys general to require, as part settling the mortgage fraud negotiations, that banks write off principal and refinance underwater mortgages at current lower rates. They estimate it would pump about $70 billion a year into the economy and create about 1 million private sector jobs. It would cost the banks about half of what the top six paid out in compensation and bonuses last year. Those already facing foreclosure should have access to bankruptcy proceedings that can restructure their debts and, where appropriate, restructure their mortgages, providing them with a right to rent their own homes at market price.
• Put Veterans and the Young to Work
Veterans are 50 percent more likely to be homeless than other Americans. One in four teenagers is officially unemployed; nearly one in two young African Americans and Latinos is unemployed. We are breaking trust with those who risk their lives for us and abandoning the young at the beginning of their work lives. It is hard to think of anything more corrosive to the future of this nation.
If veterans and young people cannot find employment in the private sector, then government should act as the employer of last resort. Rep. Jan Schakowsky has a sensible bill that would provide 2.2 million jobs, largely through direct employment in the public or non-profit sectors. It creates a new Green and Urban Corps and provides resources to nonprofits to hire the young. Work installs discipline and self-confidence. It provides hope. We should insure that every veteran and every young person has that opportunity.
These elements are only the beginning. We’d be wise to raise the minimum wage, and empower workers to insure a greater sharing of corporate profits and productivity. Greater aid to states and localities now in budget straits would also help limit the drag on the economy.
Straight Talk on Deficits and Debt
As we get the economy moving, we need to be clear about how to put our books in order. The U.S. has a real long-term debt concern—but it is entirely driven by our broken health care system. Comprehensive health care reform is already beginning to create savings, both in Medicare and more broadly. More savings will require taking on the private insurance and drug companies, and the private hospital complexes that make our costs almost twice per capita those of any other industrial nation.
Fixing health care isn’t about “shared sacrifice,” or putting a lid on Medicare and Medicaid. It is about getting costs under control, not shifting them to those least able to pay. Empowering Medicare to negotiate bulk discounts on prescription drugs is a no brainer. Creating a public option to compete with oligopolistic private insurers would help. That every other industrial country has managed this challenge suggests just how lame our privatized system is.
And as the economy recovers and people go back to work, our deficits won’t be much of a problem—other than health care costs. But paying for the new commitments above will require progressive taxes and new priorities, ending the wars abroad, reducing our commitment to policing the world, and cutting the Pentagon budget, even as we maintain the strongest military in the world.
Progressive tax reforms are long overdue. As Warren Buffett wrote, he pays a lower tax rate than anyone in his office, including his secretary. We should tax income from wealth at the same rate as income from work, to curb systematic tax avoidance schemes, crack down on offshore tax havens, and on companies parking profit abroad. And as Buffett argued, millionaires and multimillionaires can easily pay a higher tax rate than that now imposed.
The Choice for Americans
All this sounds outlandish. The Tea Party legislators will go nuts. The corporate lobbies will spend so much in opposition it just might boost the economy.
But Americans aren’t as stupid as Washington thinks. They understand the economy is in trouble. They are looking not for a short-term boost, but for a long-term strategy. They are appalled at Washington’s scorn for their priorities. They want a focus on jobs and reviving America’s economic strength. They are upset about deficits largely because they think they are a measure of an economy that is broken. They want Social Security, Medicare and Medicaid protected. They think the banks should pay to help pay for the mess they have made. They want the rich to pay their fair share, and an end to the money politics where predatory corporate lobbies rig the rules to benefit themselves.
The first step is a clear, bold agenda on jobs and American economic revival. It is time to present this to the American people, to introduce it in Congress, and to fight for it all the way through the 2012 elections.