Finance President

Coming Soon: Stimulus Number 2

Developing a broader vision for how to reshape the economy

Last month, I wrote that we’d soon need a second economic stimulus because the first one, at $800 billion, is simply too small to deal with the mounting crisis that’s quickly tearing down the capitalist system. The unemployment rate increased to 8.1% in February, a figure that does not include the millions of Americans who have simply decided to stop looking for work nor the many more who are working part-time even though they’d like – and need – full-time employment. Paul Krugman and and Josh Marshall at TPMDC explore the problem, as does the Washington Post’s front page.

Compounding the situation is that too much of the first stimulus package simply doesn’t contribute to ameliorating the economy’s problems. Almost 3/8 of the bill goes to tax cuts, which might make sense if the economy was working, but when fewer people are paying taxes, and when even those who are paying pay less, the consequence won’t be more consumption: it will simply be a less severe drop in consumption.

The bill’s stated goal is to “create or save” 3.5 million jobs in the next two years, but in the last four months alone, the U.S. has lost 2.6 million jobs. At this rate, we will lose 15.6 million jobs in next two years. We need to do more.

While I was contented by the stimulus bill’s inclusion of funds for infrastructure, especially its strong focus on high-speed rail, I have always been skeptical of the program’s lack of overall vision. Not only do we have no national plan for actually implementing high-speed rail, but even with $8.4 billion appropriated to transit, we’ve yet to solve the huge funding problems of public transportation agencies around the country.picture-14

The administration has made a concerted effort to argue that the majority of the new jobs in the stimulus bill will be created in private industry. Republicans and moderate Democrats are afraid of pushing the U.S. towards the European social democratic state model, and President Obama coddles them by assuring, as he did in his address to Congress last month, that he doesn’t “believe” in “big government.” The fundamental problem, however, is that all we have right now is big government: over the past few months, the private sphere has proven itself quite incapable of sustaining the wealth upon which the western world has come to rely during the past few decades.

What I propose we need is not only a second, probably bigger economic stimulus, but also the creation of a national temporary work program that takes the tens of millions of unemployed Americans and provides them government-paid jobs building the infrastructure projects we need to rebuild our nation. Franklin Roosevelt’s Works Progress Administration, Public Works Administration, and Civilian Conservation Corps, implemented between 1933 and 1943, provided a nation less than half the size of ours more than 8 million jobs. Roosevelt’s programs were temporary: each program was disbanded by the middle of World War II, and the jobs they provided were replaced by employment in the private sphere… once the economy got back up to speed. These programs funded much of the infrastructure upon which we rely today and helped maintain natural resources that remain national treasures. These programs may have been implemented in a different period of our history, but their collective mandate – creating jobs and rebuilding the country – returns today as the national priority.

A second stimulus must push past the opposition of fiscal conservatives, who are intent on pushing the United States towards catastrophe on the back of tax breaks and spending cuts, which are likely only to lead to further fiscal problems in the future. It must also implement a national works program to reconstruct our suffering infrastructure, including the railroads and transit lines that are slowly deteriorating in every city in America.

The collapse of the economy merely confirms that which Mr. Obama expressed so eloquently during the campaign: that we must change if we are to move forward. Either we can accept the continued failures and disastrous social consequences of forty years of neoliberal policy, or we can work towards the creation of a new society. Our nation is sick; we have no choice but to take a leap to cure it.

Image above: Acheivements of the Works Progress Administration, from Wikipedia

3 replies on “Coming Soon: Stimulus Number 2”

It was interesting, this past week, that our capitalist based stock exchange reacted negatively to the Chinese government’s failure that week to announce the anticipated government programs to stimulate the Chinese economy- including lots of HSR that our capitalists on wall street thought would enrich our economy. Clearly, such government programs, especially building HSR, would enhance our economy- through jobs, even if not on Wall St.

Well, political realities being what they are, what would a second stimulus bill look like after it got through the Senate?

I’m not sure one would get past the filibuster.

Most of the modern paved US Routes and thousands of side roads were paved in the 1930’s and 1940’s in Virginia in the new deal public works programs and in fact it looks like that if the public works were not set up in the 1930’s many areas in the US would still have primtive dirt and gravel roads. The CCC played a role in this too.

During the 1930’s the federal goverment new deal helped act as a parter with the Pennsyvinia Railroad to help them build the great catenary wire system from Philli to Harrsionburg.

Also 20 miles of the C&O canal park were restored by the CCC to help pave the way possibly for the return of canal boats in it. In several C&O Canal books they mentioned that CCC restored the canal and stoped work when World War II broke out.

The New Deal attacked the recession at it’s core.

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