A Spending Freeze Could Worsen Jobs/Economic Crisis, and Follows the Path of Herbert Hoover rather than Roosevelt

Will President Obama follow the path of Herbert Hoover or Franklin D. Roosevelt in his attempt to lead the nation to economic recovery? That is the question that still remains to be answered, after his State of the Union Address.

Lawrence Mishel, president of the Economic Policy Institute, had the following to say about the Obama administration’s proposal to ‘freeze’ overall non-defense discretionary spending for three years starting with fiscal year 2011:

In all likelihood the unemployment rate will be higher in October than it is now, yet somehow the White House thinks it’s appropriate to begin reducing domestic discretionary spending at that time. Reducing overall spending when tens of millions of Americans remain out of work would be a disaster. It will condemn millions of families to years of avoidable economic hardships.

President Obama's . . . proposed ‘freeze’ is bad economic policy. It ignores the basic facts that deficit reduction must begin with job creation and economic recovery, offers little more than window-dressing on long-term deficit reduction, and inappropriately vilifies domestic spending.

Shifting federal spending from less effective to more effective programs is certainly welcome, but it doesn’t justify an overall spending reduction — especially not at a time when we need the federal government to inject demand into a severely weakened economy in order to create jobs. What President Obama should offer . . . is a bold plan to put millions of Americans back to work. To do anything less is to turn a cold shoulder to the needless suffering of millions of Americans and make any focus on ‘jobs’ simply rhetorical.

For more of Lawrence Mishel's statement, click here.

Five-Point Plan to Put U.S. on Path Out of the Economic/Jobs Crisis, from the Economic Policy Institute

Five-Point Plan for U.S. Recovery: American Jobs Plan

In addition to the AFL-CIO, the Economic Policy Institute has a similar Five-Point Plan, backed up by research to support each of its key points for moving the U.S. Economy into a Path to real recovery--

The United States is experiencing its worst jobs crisis since the Great Depression. Nearly 16 million Americans—our family, friends, and neighbors—are out of work. This national crisis demands a bold plan to put people back to work. The Economic Policy Institute proposes the American Jobs Plan, a plan that would create at least 4.6 million jobs in one year.

Here you will find EPI's comprehensive research and analysis of the jobs crisis—how severe it has grown and why—and the details of EPI's American Jobs Plan.

We can—and must—put America back to work.

One BIG Reason Pres. Obama's Approach to State of the Union MAY be TOO LITTLE TOO LATE for the Economy and Jobs (unless more direct approach is taken)

Michigan Indefinitely Delays 200 Road & Bridge Projects

Lansing Associated Press writer KATHY BARKS HOFFMAN just posted a report, which NPR picked up, that underlines the reasons we may still be on the path to a second great depression.

And unless President Obama and Congress develop a quick and aggressive response to this economic reality in Michigan and many other states, he will be following the path of Herbert Hoover rather than F.D. Roosevelt.

According to Hoffman's report:

Michigan transportation officials have voted to delay more than 200 road and bridge projects previously planned for the next five years because the state is running low on money.

And, according to Hoffman, "Michigan could go from spending roughly $1.4 billion on roads this year with the help of federal stimulus money to less than $600 million three out of the next four years."

And this is just the tip of the iceberg of the additional economic decline and job loss in store for many states like Michigan in the coming years, unless something is done immediately to prevent states from heading down this path toward delaying and canceling major infrastructure projects, which must be the base of any economic recovery.

Unless President Obama and Congress support a major new economic stimulus package directed at helping the States to avoid massive additional job loss across Michigan and many other states as the result of cancellation of infrastructure projects like these in Michigan, the success Obama had in slowing job losses in 2009 (although we're still losing jobs each month) will quickly reverse, and we'll be sliding backwards again. And this time the Democrats won't simply be able to blame the Republicans, since when this downward spiral begins, it will be as much a result of insufficient and weak Democratic policy response, as due to Republican obstructionism.

The fact that even last night in his State of the Union speech President Obama continued to appeal to a hope that the Republican party would come around to support a "common sense" bipartisan strategy to help the country rise out of its crisis, would seem to indicate that he and his advisors have barely begun to reckon with the banality of evil that has been driving the Republican strategy for more than eight years now.

And if Obama and his advisors think they can confront and reverse this nihilistic and destructive Republican political force by appeals to common sense, they have apparently not even begun to think seriously about the lessons the struggles of the civil rights movement and the work of Dr. Martin Luther King have to teach us.

President Obama said in his speech that he was not naive. Unfortunately, based on the lack of a clear strategy and focus for supporting a strong economic/jobs recovery in his speech, I'm not convinced he is right about himself or his administration.

Based on the speech last night, the Obama administration continues to pursue an extremely naive political strategy, which sacrifices the power of popular progressive mobilization that could carry it forward, to a weak political strategy that keeps him hostage to the Republicans.

The continuing insistence on appealing to a Republican Party that has shown it is primarily invested in the destruction of the Obama Presidency at all costs, and that it has little concern for common sense or the good of the country, is bizarre and tragic from a President who should know better. After all, if the Republican Party had any concern for the country's welfare and the welfare of people, it would never have landed us in this economic mess in the first place!

The great slide into the first great Depression of the 1930s occurred largely because under President Hoover the Federal Government failed to help states avoid exactly the kinds of severe cut-backs states are now facing, and instead tried to focus on traditional business incentives to stimulate the economy.

Unless President Obama's administration and Congress wake up to the hard lessons of the previous great depression, and quickly, we will find ourselves repeating the mistakes of the past, and of President Hoover, who like Obama was a good man with good intentions who wanted to help his country, and even had a great resume of past experience for doing so.

But when it comes to the hard reality of capitalist economic cycles, good intentions that are not backed up with necessary and informed policy action, are utterly meaningless. And if we end up in another great depression, history will not remember Obama's good intentions. It will record and remember his failure to listen to the lessons of history, and to act on the advice of historically-informed economists like Paul Krugman, who should be put in charge of running Obama's economic team (though I suspect he may not want such a thankless job)....

See Krugman's recent blog post on the stupidity of the approach suggested by Obama's speech last night, which according to Krugman (and I agree) completely failed to change the narrative that has put the Republicans in charge of the rhetorical battle over both policy and politics in 2010.

I love Krugman because he pulls no punches, while his critiques also go to the core of what is wrong with the entire framework of both the Republican and Democratic approaches to policy in this crisis.

And unless politicians in charge of policy strategy begin to listen to Krugman and other economists like him, the consequences of all the premature 2009 talk of having avoided another great depression, which merely continues the delusional detachment from reality of the Bush era, will soon be coming home to roost.

The illusion-creating stock market "recovery" will be forced to meet the reality of continuing job loss, as our whole economy turns around for its "second dip." And this time, since we're starting at 10% unemployment (which hides a much larger unemployment rate that is structural and not even being counted--in cities like Detroit, for example, the real unemployment rate is around 30%, even higher than national rate in depths of the 1930s depression), we'll be entering depression era territory pretty quickly--thanks to the feckless policies of both political parties.

Who Will Pay the Bills for Iraq War and Financial Bail-Out Under the McCain/Palin Plan?: A TIME FOR QUESTIONS

From Great Crisis of 2008:

This past week, as the financial system teetered on the verge of collapse because of the Republicans' anti-government, anti-regulation, anti-tax laissez-faire ideology, we were offered the spectacle of Republican VP nominee Sarah Palin underlining the irrationality of this Republican ideology by arguing that raising taxes on the wealthy would be both unpatriotic and harmful to the nation.

According to the Republican logic of Palin and McCain, asking the wealthy to pay more taxes (as Joe Biden proposed) "is not patriotism," but is "about killing jobs and hurting small businesses and making things worse." (And McCain said the idea of asking the wealthy to pay more taxes was "dumb.")

It must be nice for those like Palin and McCain to think such things, as the Republicans continue to uphold a policy of protecting the wealthy from taxation while the middle class and poor are burdened with the explosive growth of the national bill for fighting unnecessary wars and providing gigantic trillion-dollar bail-outs to pay for the consequences of failed Republican economic policies.

In response to these revealing comments on taxation and patriotism by Palin and McCain, the corporate media needs to be shamed into asking serious questions about the Palin/McCain-Hoover vision of tax policy and government finance, since we now know these questions will be at the center of the next administration's attention:

If taxation of the wealthy is now unpatriotic, how will the Republicans propose to pay the tremendous costs of fighting their wars and bailing out the financial system that has been brought to the brink of collapse under their watch? How will the Republican ticket of Palin/McCain pay the gigantic bill for the bail-out of the entire financial system that their own failed economic and war policies have now forced us into, as a new phase of the Republican "shock doctrine" is applied to the national economy?

And we would also like to ask the corporate media when they will begin to uphold their own patriotic duty by asking the Palin/McCain Republican ticket some fundamental questions about patriotism, taxation, and basic economics (since Palin has raised this issue for discussion, and the financial health of even the corporate media depends on the maintenance of an ordered national financial system):

--If taxation of the wealthy is now unpatriotic, how do the Republicans propose to pay for their 3 trillion-dollar war in Iraq? (Answer: continue to charge the cost to the Chinese-financed national credit card for the next generation to pay back!)

--If taxation is unpatriotic, is paying for the war in Iraq also unpatriotic? If it's unpatriotic for the wealthy to pay more taxes, is it not even more unpatriotic to be placing ever greater burdens of taxation on the next generation, and on the middle and lower classes?

Republicans like Palin and McCain would like to continue to avoid any responsibility for answering questions about how they expect the nation to pay the gigantic debt-load of the failed policies the Republicans have imposed on our country. (This involves, after all, some "looking backwards," which Palin and McCain would like to avoid at all costs, for obvious reasons.) And unfortunately the corporate media often seems completely willing to allow them to continue to avoid answering questions that require some "looking backwards" in order to understand how their past beliefs and decisions would influence future policies.

According to the logic of Palin/McCain, if it is unpatriotic to ask the wealthy to pay more taxes, guess who will end up paying these gigantic expenses under another Republican administration--even as the corporate CEOs are allowed to continue to walk away with million dollar salaries for running our financial system and country into the ground!

Palin/McCain would love to continue to get away with calling taxation of the wealthy unpatriotic, even while they continue to ignore the gigantic tsunami of expenses that Republican policies have imposed on the American people.

Republicans like McCain and Palin would like to separate themselves from the Bush legacy by claiming they will now come to the rescue of the middle class they have helped to destroy, even while they would also love to continue to be seen as the ones who will protect the wealthy while the middle class and poor are burdened with the ever-growing cost of paying for the failed Republican policies of the past.

Actually, the Republicans would like to be able to get away with having no one pay for the disastrous economic policies of the past eight years, which was also Hoover's strategy after the Crash of 1929--a do-nothing strategy that drove an economy in crisis into a great economic depression:

As John Kenneth Galbraith noted in his book The Great Crash 1929,

"In November of 1929, Mr. Hoover announced a cut in taxes ... [while he] asked business firms to keep up their capital investment and to maintain wages ... [both measures that] were largely without effect....

And, like McCain in the first debate, the Hoover policy insisted that there should be a major cut in government expenditures, to go along with the tax cuts....

As Galbraith summarizes, this combined commitment to tax cuts and decreasing government expenditures amounted to a fundamental rejection of the use of fiscal policy, and thus

"amounted precisely to a rejection of all affirmative government economic policy," and a disavowal of "all the available steps to check deflation and depression."

And it was this "triumph of dogma over thought" that turned the economic crisis of 1929-30 into the decade-long great depression of the 1930s (Galbraith, pp. 182-186).

In October 2008 the American nation faces a clear choice between a Democratic candidate who at least acknowledges and understands that the policies of the past have failed, and that we need a fundamentally new approach to things (even if he cannot yet be clear about what that approach will be (even Roosevelt was not clear about what he would do until AFTER he took office in 1933), and a Republican candidate who, up until a week or so ago, was still declaring--like the Bush/Hoover administrations--that the "fundamentals of the US economy were sound," and who would solve this crisis by applying the depression-creating policies of the Hoover administration: tax cuts and decreases in government spending.

And of course the Republicans rely on the silence of the corporate media and the stupidity of half of the American public to get them into office again in the face of their continuing commitment to burdening the middle class with the bills of failed policies favoring the superwealthy.

Why are the corporate media not asking the most fundamental questions about failed Republican economic policy? These media corporations (even FOX News) should recognize that the failure of the US and global financial system will also bring about the bankruptcy of much of the corporate media structure (while their CEOs walk away with whatever remains)??!!

It is precisely the corporate media's silence and lack of critical attention to the fundamentally irrational and unsustainable approach of Republicans to taxation, regulation, and economic policy that has allowed the country to fall into this mess, and even now--as things fall apart-- the corporate media continues to ignore the many ways the Palin/McCain team would simply like to continue this same absurd economy-killing set of Hooverian policies toward national finance and taxation!

When will the corporate media begin to challenge the way Republican policy is fundamentally undermining the future of this country and of their own corporate jobs and future?!--along with the ability of the vast majority of the people of this country to live decent lives?!! When will the media begin to challenge directly the fundamental lack of patriotism in Republican policies that continue to destroy the foundations that support national finance and economy?

What is more unpatriotic than a national media that continues to pass over the ways Republican policy has destroyed our national economy during the last eight years?

And so we need to challenge and shame the corporate media into asking these critical questions by challenging those in the corporate media: If you care at all about patriotism, why aren't you asking these kinds of critical questions of the Republicans, to make clear to the American public how utterly absurd is so much of what the McCain/Palin ticket is offering to the American public?!! If Palin/McCain think that taxing the wealthy is unpatriotic even in the face of this gigantic meltdown, what principles will guide another Republican administration when they are elected?!!

At a time when the entire economy of the nation and the globe is teetering on the edge of the abyss, the U.S. media continues to be facile and stupid in the face of the destructive irrationality of ideas and policy that the Republican candidates, and often also the Democratic party (since Robert Rubin, former Treasury Secretary under Clinton and now apparently an Obama advisor, is almost just as bad as the Republicans!) continue to dish out to us.

ENOUGH!!! When will the individual citizens and taxpayers who are part of the corporate media rise up against the destructive stupidity of their bosses and the policies that have been destroying our country? When will all members of the media, across the nation, get mad enough at what the Republicans are proposing to continue to do to our country, and begin to raise these fundamental questions in public, for all to hear??!!

The McCain/Palin ticket survives only because they think they can continue to get away with dishing out bullshit to the American people. When will the corporate media reveal the absurd emptiness of the Republican campaign as the bullshit it really is-- protecting the wealthiest while piling the expensive burden on generations to come of the middle class, until all but a small corporate and government elite in this country will be reduced to poverty (as in the last days of the Soviet Union)?

Democratic VP nominee Joe Biden made a clear, straight-forward and rational statement about the responsibility of ALL American citizens, including the wealthy, to take on a fair part of the burden of paying for the privilege of being a citizen of this country. Biden was making the point that the wealthy have not been asked by the Republicans or the Democrats to pay their fair share of the costs of war and failed economic policies that benefited the wealthy. (And intelligent and patriotic wealthy people like Warren Buffett would agree with Biden's point, and would favor higher rates of taxation for the wealthy.)

Paying taxes is the way we all support our country and our government. If this is unpatriotic, what does patriotism mean? And this is why we all have a stake in using our powers of citizenship to determine the character and quality of our government, since when it fails, we all end up paying the costs of this failure.

So it's high time for all people, and especially those in the corporate media, to ask the Republican candidates: if they think raising taxes on the wealthy is unpatriotic, how do they propose to pay the exploding costs of the gigantic failures of war and financial policy that their eight years of rule have imposed on the people of this country!!!?

When will the so-called "fourth estate" of the media begin to uphold its responsibility and patriotic duty by asking these basic questions of those who would have us elect them to continue to run the country into the ground by continuing the same irrational policies that have guided the Bush administration?!

If the corporate media cannot be responsible for patriotic reasons, they might at least realize they need to ask these questions for the sake of their own survival. For if there is a great crash of 2008 or 2009 (the crash of 1929 did not occur until several months after Republican Hoover took over from Republican Coolidge, on the promise of "change" that never came), employees of the corporate media will suffer right along with the rest of us.