White House Debates Fight on Economy

Here’s a bit from Binyamin Appelbaum and Helene Cooper in Sunday’s New York Times:

“WASHINGTON — As the economy worsens, President Obama and his senior aides are considering whether to adopt a more combative approach on economic issues, seeking to highlight substantive differences with Republicans in Congress and on the campaign trail rather than continuing to pursue elusive compromises, advisers to the president say.

“Mr. Obama’s senior adviser, David Plouffe, and his chief of staff, William M. Daley, want him to maintain a pragmatic strategy of appealing to independent voters by advocating ideas that can pass Congress, even if they may not have much economic impact. These include free trade agreements and improved patent protections for inventors.

“But others, including Gene Sperling, Mr. Obama’s chief economic adviser, say public anger over the debt ceiling debate has weakened Republicans and created an opening for bigger ideas like tax incentives for businesses that hire more workers, according to Congressional Democrats who share that view. Democrats are also pushing the White House to help homeowners facing foreclosure.

“Even if the ideas cannot pass Congress, they say, the president would gain a campaign issue by pushing for them.”

-I’m with Sperling on this one. Obama has been settling for half a loaf all along, and that’s not getting it done. After the Bush bail-out, Congress had little stomach for stimulus spending to address the Great Recession, and the half-measures that passed served little better than the ‘helicopter theory’ of pump priming would have done.

Economists say this recovery will take years. What are we to do in the meantime? People need work, and there’s work to be done in this country. State and local governments are strapped for cash and have been laying off workers and putting off public works. Consumer demand is off because people are either broke or worried about going broke.

We’ve been hearing the GOP’s answers, and they’re all about comforting the comfortable and afflicting the afflicted. They want to privatize Social Security, Medicare, Medicaid, and even Unemployment Insurance. By way of stimulus they would cut corporate tax rates and capital gains taxes, forego taxation on repatriated corporate profits, and make permanent the lowest tax rates on top earners in fifty years. At the same time, they adamantly oppose any reform of the tax code to close loopholes such as those that benefit Big Oil, Agribusiness, and owners of McMansions and vacation homes. Does anybody really believe this will move corporate America, already sitting on huge cash reserves, to create millions of jobs? It sure didn’t happen when Bush did it. What we would see is record salaries and bonuses for corporate titans, higher dividends, stock buybacks, and a new wave of job-killing mergers and acquisitions.

With progressive tax reform, sustainable energy policy, improved healthcare reform, right-sizing of defense spending, a tax on transactions between financial institutions (a segment of the economy that has doubled in size these last thirty years) and means testing of entitlements, we could afford a new National Recovery Administration to put Americans to work on projects with real pay-back. Energy saving building retrofits, renewable power projects, transit systems, schools, libraries, Wi-Fi networks; all are candidates for investment. Hell, there are millions of Americans that don’t have access to decent supermarkets. The G.I. Bill of 1944 returned between $5 and $10 for every dollar invested. Sensible spending like this could tide us over while the economy recovers from its debt hang-over and put us in position for growth and prosperity down the road.

Now I know that none of this would pass through the present Congress. That’s no reason not to propose it. President Obama should channel “Give ‘em Hell” Harry Truman and not let up until he is re-elected with a super-majority in Congress. Truman berated the “do-nothing Congress” saying “I don’t give them Hell, I just tell the truth about them and they think it’s Hell.”

He could quote Theodore Roosevelt, a great Republican who 100 years before the Crash of 2007 said “It may well be that the determination of the government (in which, gentlemen, it will not waver) to punish certain malefactors of great wealth, has been responsible for something of the trouble; at least to the extent of having caused these men to combine to bring about as much financial stress as possible, in order to discredit the policy of the government and thereby secure a reversal of that policy, so that they may enjoy unmolested the fruits of their own evil-doing. . . . I regard this contest as one to determine who shall rule this free country—the people through their governmental agents, or a few ruthless and domineering men whose wealth makes them peculiarly formidable because they hide behind the breastworks of corporate organization.”