Another economic stimulus package?

My prediction of a Dallas Cowboy collapse against the Atlanta Falcons was flat wrong. I’m happy for that. We saw the most complete game from the Dallas Cowboys in over two years. Who would’ve guessed? As a lifelong Cowboy fan, I wonder what this week will hold.

Yesterday, a New York Times editorial had a lukewarm endorsement for a second stimulus package for our ailing economy. Republicans are already yelling that Obama has created a jobless recovery. Yet they seem to have no understanding of how a recovery works. First, businesses began to make money and stop hemorrhaging money. Then, once there was enough demand for more product, businesses began to higher, again. Unfortunately, when we stand back and look at how our economy has changed over the last 30 years, we must ask ourselves, where are the jobs going to come from? Over the last 30 years, Republicans have stressed that corporations must be leaner and more efficient, which has caused corporations to push jobs overseas. This means that there are fewer jobs here at home. So I fear that as businesses begin to recover, jobs will be created overseas and not here at home.

As Jeff Madrick from Campaign for America’s Future puts it:

In the past 30 years, government, with a few exceptions, did not adequately sustain and nurture society, or help it adapt to change. Government invested less in America, it regulated less, and it led less. It was a lost generation.
The financial crisis occurred because of this widespread disdain for and distrust of government. Under ideological pressure to which both political parties subscribed and under the influence of powerful vested interests, government stepped back and gave financial markets largely free rein. Very risky investments were made with enormous levels of debt; the failure of one firm could take down an entire industry . Common sense was discarded and new, highfalutin theories about the rationality and efficiency of markets dominated thinking at the best universities, the halls of Congress, and the boardroom of the nation’s central bank. Always, the argument was the financial community understood risk better than any government could.

I do not know if we truly need a second stimulus package or not. I do know that America needs help. President Obama and wimpy Democrats on the Hill need to pass legislation which makes it harder for corporations to ship jobs overseas. This legislation must tax raw materials leaving our country to be manufactured overseas and must tax the finished product coming back into the country. This will discourage businesses from shipping jobs overseas and, more importantly, encourage businesses to continue to invest in America. Even if a law like this were passed tomorrow, the effects would not be seen for another several years. But we need to start sometime.

Reform of Wall Street will act as a “mini stimulus” because currently money that would be reinvested into the corporations is now being heaped on executives. Instead of giving upper management millions of dollars in bonuses, that same money can be used to hire more people, upgrade factories and improve productivity. Congress needs to look seriously at reforming this ridiculously dysfunctional practice of heaping large rewards on CEOs.

wind farmPresident Obama has the right plan. Green jobs. We need to invest in clean energy. This is a multibillion dollar industry which will help America on so many levels. This will act as a second stimulus. We need to invest in wind and solar energy and in more efficient power plants. This will cause businesses to begin to hire tens of thousands if not millions of people. Congress needs to act in multiple ways to stimulate this industry. We need tax incentives so that businesses will invest in new plants. (I’m still not sure about nuclear power. When we figure out what to do with the nuclear waste, then I’m all for nuclear power, but right now we don’t have a solution. Digging a big hole and sticking it in the ground somewhere just doesn’t seem viable for the long term.)

True, healthcare reform will also help the economy. We need to curb the growth of this industry. This will allow business to free up moneys which can be reinvested in building new plants and increasing wages.

The New York Times editorial is a little bit off the mark. This should not be surprising to anyone since the Times has been walking around in a cloud of confusion for many many years. I’m not beating up the New York Times. I will leave that to conservatives who never tire at being of the Times. But I think that with a little more thoughtful reflection they could’ve come up with the right formula for long-term success of our economy.

0 Responses

  1. Green industries, expanded access to health care, education, green transportation, improved and maintained infrastructure, sustainable agriculture- all of these make jobs here at home.

  2. There should also be a change in the Free Trade Treaties, which really are a means for multinational corporations to freely do whatever the hell they want to, including freely exploitating the work force and freely polluting the environment. This competitive disadvantage must end!

    Only FAIR Trade Treaties will stop the exodus of U.S. manufacturing jobs. Any imported product should be manufactured under the same OSHA and environmental laws as the U.S.  Plus, all workers should be provided with proper medical care, disability insurance and retirement pensions.

    If foreign producers are unwilling to operate there manufacturing facilities under the same guidelines as U.S. companies so we have an equal playing field, then their products should be banned!

  3. “The financial crisis occurred because of this widespread disdain for and distrust of government. Under ideological pressure to which both political parties subscribed and under the influence of powerful vested interests, government stepped back and gave financial markets largely free rein. Very risky investments were made with enormous levels of debt”

    Actually it wasnt lack of regulation that caused the subprime meltdown last year.

    It was overregulation.

    The feds under Bill Clinton pushed quotas on banks to write subprime loans in specified zip codes.

    These subprime products, once sold, were handed off again and again in various packages and configurations until nearly every large financial institution was exposed to them.

    Add in some irresponsibility from Chuck Shumer who caused a run on one of the nations largest banks in summer 08, and the dominoes started falling.

    It was an October surprise (a bit early) from the Democrats, intended to trash the economy and win the election. And it worked.

  4. Joe —

    Again, I appreciate your comments. I also appreciate the passion in which you make your comments.

    I guess the best analogy that I can figure would be if you watch the New York Yankees versus the Philadelphia Phillies last night. The Phillies lost in what was a classic pitching duel. The majority of the people who watch the game probably came away with the thought that the Phillies needed to hit better. A minority of the people probably can way with the thought that Pedro Martinez needed to crank up his game. A few, a very few watch the exact same game and came away with the impression that the Phillies were affected by a fan in the upper deck. Therefore, the solution is that the Phillies should all wear sunglasses and earplugs to block out that fan.

    If Clinton was the problem, how come the Bush administration didn’t fix it? For at least for years, the Bush administration had both houses of Congress and the White House.

    It appears that you’re saying that subprime products were toxic. Why didn’t the Bush administration stepped in and fix this problem before it got out of hand?

    You haven’t mentioned the trillions of dollars that are unregulated in the hedge fund market. You haven’t mentioned how banks and other financial institutions dabbled in derivatives. You haven’t mentioned anything about credit default swaps. You haven’t mentioned how 10 years earlier a large hedge fund went under and it had NOTHING to do with home loans, mortgages or even mortgage derivatives. The reason that they went under was because of deregulation. 

    So, your theory, is that the Democrats intentionally trashed the economy to win the election. Really? Where is your evidence? So, Bill Clinton and of course you forgot Jimmy Carter, planned on trashing the economy by trying to get banks to loan to low-income families. Clinton figured that Al Gore would lose the election and that George Bush and his financial team were too stupid to be able to see the problem. Bill Clinton and the rest of the Democrats then needed someone to tip the scales. Chuck Schumer. He was the one. He was the powerful Senator that could stand up and tip the scales so subtly that almost nobody would notice. The only catch, but I can see, is how the Democrats convince Paulson to watch as Bear Stearns went under? Oh, by the way, how did the Democrats convince him, Paulson, to make the same mistake again with Lehman Brothers? Because of Paulson would’ve interfered and would’ve injected cash into Bear Stearns and Lehman Brothers wouldn’t most of the financial collapse been avoided?

    I know that there’s a tendency to try to blame Republicans or Democrats for something. This is because one side is obviously good and the other side is obviously bad. Unfortunately, it didn’t work out that way. Both Republicans and Democrats bought into deregulation. Republicans and Democrats enjoy the good times under President Clinton. They both resisted regulation after Enron’s failure. As a matter of fact, they both argued for more deregulation.

  5. Absolutely the Bush administration bears responsibility for not undoing what Clinton had done.

    You can make the argument that they were politically timid and unwilling to end a program popular in the inner cities.

    You can make the argument that they were distracted by the need to defend the country after being attacked on 9/11.

    But the fact is that they didnt undo it and they should have yes I agree.

    That still means that the subprime mess was a result of overregulation, put in place by the Clintons and unrepealed by Bush.

    It was not deregulation.

    And yes <a href=http://latimesblogs.latimes.com/laland/2008/07/feds-cite-schum.html>Shumer bears responsibility for causing a run on one of the nations largest banks</a>

    It is also undeniable that the other dominoes started falling shortly thereafter.

    Did Republicans including Paulson make all the right moves in response to the crisis? No

    But it is arguable whether the IndyMac failure and the resulting aftermath could’ve been reasonably foreseen and prevented by Paulson, and I think the answer is mostly No. Paulson could not have foreseen the tremendously irresponsible behavior of the Democratic member of the Senate Finance Committee.

  6. That package should focus on public works, especially on expanding public transportation.  It would create jobs in the short and long terms while reducing trade imballances that helped cause the credit crisis.

  7. Most of the money from the first ‘stimulus package’ is unspent.

    Why?

    Obama is holding it for next year, to release it during the election cycle and buy votes.

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Errington C. Thompson, MD

Dr. Thompson is a surgeon, scholar, full-time sports fan and part-time political activist. He is active in a number of community projects and initiatives. Through medicine, he strives to improve the physical health of all he treats.

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