Monday, January 11, 2010

New Format, Same Robert



You may have noticed that Robert Reich changed domains for his blog. It’s now at robertreich.org/. I don’t like the new format but I still like what Mr. Reich has to say.

The Bad Job Numbers and the Secret Second Stimulus

”The truth, of course, is that the most important fiscal indicator is the ratio of the debt to the GDP. And the most important issue there is how quickly America can get jobs back and the GDP growing again. More spending in the short term is the only way to accelerate a jobs recovery, and reduce the debt-GDP ratio over the longer term. In other words, more deficit spending is a good thing to do now, a but a bad thing three or four or five years from now when the economy is back to normal. “

Everything I read says that the smart way out of this mess -- probably the only way -- is a targeted stimulus plan. In truth, we only need a second one because the first -- as the economists warned -- was too small. We can call it political reality but I’m thinking it is more political cowardice.

Democrats have been beaten with the “tax and spend” stick for so long that they’re just cowering in the corner. At this moment in time, “tax and spend” is exactly what is called for. The Republicans cut taxes so much that most State budgets were weak before the recession even hit. Now they are desperate to plug the holes in their budgets. Nationally, we are fighting two wars. A tax increase is doable. If it was targeted at the top 1% -- as it should be -- it would probably prove to be popular.

What is needed -- all politics aside -- is jobs. The way to get them is to be politically brave. Create them directly through the government if we must. And from what I can tell, we must. Businesses can’t (and won’t) do it. Robert Reich is probably right (he usually is):

”So expect the Dems to move toward more spending — more unemployment benefits, more cash for clunkers, more help for small businesses, maybe a new jobs tax credit. A larger defense budget will also be part of the stimulus. But don’t expect any of this to be dressed up as a “second stimulus package.” That would give Republicans too much ammunition to attack Dems as big spenders and try to focus the public’s attention on the widening deficit and growing federal debt. “

It’s a shame. But expecting politicians -- as a group -- to be brave is probably unrealistic.

Don Brown
January 11, 2010

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