Why Obama’s Economic Plan Will Not Work—And a Better Plan

[IndianaGreen]

Published on Sunday, January 17, 2010 by CommonDreams.org

Why Obama’s Economic Plan Will Not Work—And a Better Plan

by Robert Freeman

Obama's economic recovery plan will not work. It does not begin to address the profound structural problems that hobble the U.S. economy and that amount to a slow-motion death sentence for the American middle class. His policies are the equivalent of trying to re-float a sunken boat, nothing more. Once the government buoys are removed, the boat will promptly sink again, with the American people trapped inside.

<snip>

Seven million high-paying manufacturing jobs have been shipped overseas in the past decade, one third of all those in the entire economy. Twenty per cent of the nation's labor force - thirty million people - are idle or underutilized. Thirty percent of the nation's factory capacity is idle. Three quarters of the nation's home building capacity is idle. More workers are out of work longer that at any time since such statistics started being collected, in 1948. The results are cataclysmic.

Ten thousand homes enter foreclosure every day. More than 39 million Americans - one out of eight - are on food stamps. Half of all American children will be on food stamps at some point in their lives! Seventy-seven million Baby Boomers stand on the threshold of retirement, expecting, hoping, praying that the nation will honor the promises it has made to them for the last 50 years. It will not, because it cannot.

The national debt that stood at $1 trillion in 1980 now stands at $12 trillion. And this was run up over a period of supposed economic prosperity! Personal debt has risen from 65% of income in 1980 to 125% today. The nation's unfunded liabilities - debts it has committed to pay but for which there is no identifiable source of funding - exceed $65 trillion. The U.S. economy must borrow more than $5 billion every day just to keep its lights on. Most of that comes from foreign creditors-China, Japan, Saudi Arabia and such. Interest payments on this debt will soon reach $1 trillion a year. Not since before the Civil War has the U.S. been so dependent on foreign capital.

When all the assets that are pledged as collateral against this borrowing have been exhausted, the lights will go out, as they must. The creditors will simply pull their capital out of the economy as they did from the Asian countries in the Asian financial crisis of the late 1990s. The U.S. has become a banana republic, ruled by a small, ultra-rich oligarchy who look after themselves, with everybody else living entirely at the mercy of their wealthy masters.

http://www.commondreams.org/view/2010/01/17

[stray cat]

1. The authors plan is a good way to spend an extra trillion dollars

I don't think it is likely to pass the congress or senate and people don't want a gas tax on top of already high prices - but the country needs to do alot of things that people won't like and so far the democracy prevents effective but painful decisions

[FreakinDJ]

2. There will be No Economic Recovery without Manufacturing

unless you talk to 1 of those "Clueless Free-Traders"

[ProSense]

3. LOL! "Here's the program. "

Here's the program.

The federal government should commit $1 trillion to refitting the U.S. economy for dramatically more efficient energy usage and improved energy generation. This is less than one tenth the sum it has committed to bailing out the failed financial services industry. Half the money should go for transportation, one quarter for residences, and one quarter for energy generation.

In transportation, the government should commit $100 billion to development of the most energy efficient automobile in the world, one that can achieve 200 miles per gallon and be produced in volume and sold for $15,000 apiece. This is within reach of existing technology. All component manufacturing and assembly would be required to take place within the United States.

It should then spend $400 billion in incentives to spur Americans to buy the cars. If each automobile carried an incentive of $7,500 - half the price of the car - the $400 billion would make possible the purchase of 53 million such automobiles. The program would extend over five years for an average of 10.3 million cars a year. In 2008, GM sold 3 million cars in North America while Ford sold 2 million. Chrysler and foreign manufacturers could make up the difference, provided they manufactured in the U.S. The program would replace a sizable portion of the U.S. automobile fleet.

At the same time, the government should announce irrevocable, gradually escalating taxes on gasoline. For three years, the gas tax would increase by 5 cents per month or 60 cents per year. After that, it would increase by 10 cents a month. In five years, gasoline would cost $4.20 more per gallon than whatever the market price of gasoline was. This would provide consumers both the incentive and the planning horizon to make the move to the new cars.

When are these cars going to be ready? Obama's economic plan will not work, let's do blah, blah, blah...

Get real.

Here's a better idea: stimulus (working), health reform, jobs program, climate change bill.

[IndianaGreen]

4. Tell to the 17% unemployed that the stimulus is working

and those are the real numbers of unemployed not captured by Big Brother's official figures.

Your precious Health Insurance Bail-Out will put an additional burden on already burdened families.

What jobs program?

Climate change bill? Have you been keeping up with the news on that?

[Jackpine Radical]

5. I think he's got it exactly right.

But I'm afraid the death-grip of the oligarchs will be pretty hard to break.

[IndianaGreen]

6. The wars are bleeding our country dry

while the people suffer.

[HughBeaumont]

7. Is fighting wealth like fighting terrorism?

When one looks on the surface of the War on Terror, one sees the futility in vacuuming billions upon billions to fight what amounts to a mobile swarm of locusts. Terrorists are so splintered and spread out all across the planet, not concentrated in one set area. Even our ubiquitous military and it's intelligence can't possibly contain an ideology.

You can see this same futility in trying to compromise with the greedmongers that run this country. The American middle/working/poor classes vastly outnumber those in the upper 5% by about 1000 to 1 (a guess). If we've figured this out (and by every sense of the word, it looks as if we haven't), it's not like anyone has successfully drawn up a plan to get power back in our favor, least of all our Democratic leaders. Since the wealthy are spread out all over this country, dictating national policy, driving down costs ever further in the quest to please major shareholders (who in turn are the same people), it's not likely that an engaging protest by those who are sick of the joblessness and sick of the futility can even take place.

In all senses of the word, the private sector and it's excuse-ridden "free market" way of doing things has FAILED us and we have to operate in the sense that it's failed us for the last time. The fact is that America can no longer survive with this predatory way of doing business. The government has to step in and put a stop to the greed. Start enacting tariffs. End these incredibly costly occupations. Not only roll back the Bewsh tax cuts NOW, but enact more taxes on the wealthy. This debt is ballooning so bad and unemployed people cannot be expected to prop it up. Stop the belief that "they'll just pass their tax onto the consumers" unless you subpoena them and make them admit in front of a camera that they'll do so.

The wealthy are never going to stop hurting us. The reason they do this is not out of love or hate for their employees, because that would imply it's personal. It's something far worse than that: it's that they simply don't CARE about our situations. They simply don't CARE that weakening employee power and continuing to hold mass firings would kill their businesses. Big deal. They'll just drive down costs even further, cut until there's nothing left to cut, import workers until most positions are filled with visa holders, and ramp up productivity on those that feel they're priviliged and HAPPY enough to HAVE a job.

The Republicans who ran this country straight into a chasm, in all of their furious energy to compartmentalize and cheapen business, kind of forgot the notion of replacement. They never replaced the resources they gutted. They never replaced the occupations/careers they destroyed. They never wanted to update the factories to accommodate new technologies. That was never part of their plan. They didn't care about infrastructure, health care, education or social safety nets, because it didn't represent direct profits to THEM. Since they don't see direct benefit to raising our wages, they've stagnated them for three decades straight.

It really makes me wonder why people bristle at the suggestion that Corporate America is sabotaging American progress. The very thought of it gives even some on here the hives. Think about it: viewed in terms of the last 30 years, is it really all that far out of the realm of possibility? Especially with a decade that saw ZERO net job growth? Especially when, according to this article:

Between 1993 and 2007, 50% of all the growth in the U.S. economy went to the richest 1%. Between 2002 and 2006, it was even worse: an astounding three quarters of all the economy's growth was captured by the top 1%. In 2007, this top 1% captured 20% of all the income in the entire nation. The top 10% corralled fully half of all the income earned in the entire country, as much as the bottom 90% combined. Only one time since 1913 has so much of the nation's income been seized by such a small elite. That was 1928, the year before the stock market collapsed, ushering in the Great Depression.

The data on concentration of wealth are even more startling. The top 1% own more than 50% of all assets in the U.S. They own more than 70% of all financial assets. Meanwhile, the bottom 50% of wealth holders own a mere 3.5% of all the assets in the country. The bottom 40% own nothing. They have a combined net worth of zero. Middle class homeowners now own less of the equity in their homes, 45%, than at any time since World War II when the figure stood at 70%. They lost $13 trillion in the housing meltdown, even as the entire past decade produced zero net new jobs.

Seven million high-paying manufacturing jobs have been shipped overseas in the past decade, one third of all those in the entire economy. Twenty per cent of the nation's labor force - thirty million people - are idle or underutilized. Thirty percent of the nation's factory capacity is idle. Three quarters of the nation's home building capacity is idle. More workers are out of work longer that at any time since such statistics started being collected, in 1948. The results are cataclysmic.

Ten thousand homes enter foreclosure every day. More than 39 million Americans - one out of eight - are on food stamps. Half of all American children will be on food stamps at some point in their lives! Seventy-seven million Baby Boomers stand on the threshold of retirement, expecting, hoping, praying that the nation will honor the promises it has made to them for the last 50 years. It will not, because it cannot.

You can't make a public works project when your trillions are being used to prop up the Bewsh occupations. You can't rebuild infrastructure when you're too busy giving trillions of dollars to the very people who ruined the economy in the first place (and by all rights, continue to conduct their businesses in the same Casino/Darwinist manner as they did before the collapse happened). Things have to change expeditiously. It's far beyond time for Americans to start standing up for themselves and stop being a nation of weak "you first"ers.

[Jackpine Radical]

8. The American middle/working/poor classes vastly outnumber those in the upper 5% by about 1000 to 1

Well, actually, I think it would be safe to say that we outnumber the top 5% by exactly 19 to 1. Bit it's the top 0.1% that's the problem, so your point is correct after all.