Does Obama Have What It Takes To Rescue America From The Bush Economic Miracle?

Yesterday and again today, Paul Krugman, warns about the dangers of the Bush Economic Miracle actually turning into a full-fledged Great Depression. He thinks Obama is understating how badly the underpinnings of the economy have deteriorated under the Bush Regime.

The fact is that recent economic numbers have been terrifying, not just in the United States but around the world. Manufacturing, in particular, is plunging everywhere. Banks aren’t lending; businesses and consumers aren’t spending. Let’s not mince words: This looks an awful lot like the beginning of a second Great Depression.

So will we “act swiftly and boldly” enough to stop that from happening? We’ll soon find out.

...[P]olitical posturing has already started, with Republican leaders setting up roadblocks to stimulus legislation while posing as the champions of careful Congressional deliberation-- which is pretty rich considering their party’s behavior over the past eight years.

More broadly, after decades of declaring that government is the problem, not the solution, not to mention reviling both Keynesian economics and the New Deal, most Republicans aren’t going to accept the need for a big-spending, F.D.R.-type solution to the economic crisis.

The biggest problem facing the Obama plan, however, is likely to be the demand of many politicians for proof that the benefits of the proposed public spending justify its costs-- a burden of proof never imposed on proposals for tax cuts.

So far Obama has shown himself to be a wimpy compromiser who is absolutely unwilling to stand his ground on anything. The Republicans and the reactionary Democrats allied with them are certainly planning to take advantage of it-- in the most brazen partisan fashion-- and slow down and shred his plans for an adequate stimulus package. He's offering them a mammoth tax cut program, all $300 billion of which they're reluctantly willing to accept. The ideological mania that dragged the country into the mess we're in says more tax cuts are the key to get us out of that mess. That's wrong-- and Obama should fulfill his promise to act boldly and swiftly to bring real change to America-- not play footsie with American's domestic enemies. Again, Krugman:

Let’s lay out the basics here. Other things equal, public investment is a much better way to provide economic stimulus than tax cuts, for two reasons. First, if the government spends money, that money is spent, helping support demand, whereas tax cuts may be largely saved. So public investment offers more bang for the buck. Second, public investment leaves something of value behind when the stimulus is over.

Today Obama is meeting with congressional leaders, Pelosi and Reid for sure, maybe with the disloyal opposition-- obstructionists all-- as well. He's probably be better off figuring out how to ram through the economic proposals of the Congressional Progressive Caucus, which is thoroughly explained by Katrina Vanden Heuvel in the new Nation. They make it clear that Bush's mess doesn't need tinkering around the edges, it needs a major recovery program, one that will cost at least a trillion dollars "to kick start the economy, invest in sustainable, long term growth and target individuals and communities that are most desperate for resources."

In addition to much needed investments which have already been laid out-- like the extension of unemployment insurance while joblessness soars, increasing food stamps, and assisting cash-strapped states with Medicaid-- the CPC plan goes a step further. It takes a holistic approach to economic recovery and the needs of ordinary Americans by addressing infrastructure, human capital, keeping people in their homes, job creation, fiscal relief for state, local and tribal governments, education and job training and tax relief for lower-income families.

There are smart commitments in the CPC plan that deserve real attention, such as:

• A percentage of the infrastructure work would be performed by veterans, low-income and homeless individuals, out-of-school youth, and others facing multiple barriers to employment.

• Green technologies to weatherize the nation's homes and small businesses.

• Grants to neediest schools for modernization, renovation, energy efficiency, and investing in educational technology.

• Construction of libraries in rural communities in order to expand broadband access

• Capital improvements and short-term operating funds for federally-qualified health centers.

• Boost funding for National Health Service Corps to produce more doctors, dentists and nurses to provide health care in underserved area.

• Expand sustainable food systems at local community level.

• A moratorium on home foreclosures.

• At least $100 billion allocated to "green jobs creation," including at community level and in Indian Country.

• Creation of a new energy block grant to transition to green energy sources

• Re-establish Youth Conservation Corps to eliminate backlog of work projects in national, state, and local parks.

• Federal Arts and Writers Project to create jobs for American artists, writers, editors, researchers, photographers, and others.

• Triple funding for Community Development Block Grant Program

• Make the child tax credit fully refundable, lifting 2.7 million people--including 1.7 million children--above the poverty line.

• Expand the earned income tax credit for families with three or more children.

"The Progressive Caucus is determined to bring justice and prosperity to the American economy, and this proposal does both," CPC Co-Chair, Representative Raul Grijalva of Arizona, said in a released statement.