Category Archives: The Economy

Well, this is definitely a step in the right direction.  It should have been part of a larger stimulus in the first place.  Of course, it’s probably too little too late.

I still think President Obama blew his FDR Moment when he could have given hope and heart to the county, started to rebuild our crumbling infrastructure and started to turn the economy around all at the same time if he had stood up to the GOP and pushed through a visionary, larger stimulus bill in the first place.

Political timidity and an impractical need to seek a bi-partisianship, which the Republicans will never support, has quite possibly undermined his presidency to the point that he’s lost his audience and his chance at greatness.

Now my fear his lack of coherent message and vision and political guts has given the short sighted, ill-informed, petulant American Electorate the impetus to irrationally vote the Republican’s back into power…

God help us all if that happens….

WASHINGTON — President Barack Obama is asking Congress to approve at least $50 billion in long-term investments in the nation’s roads, railways and runways in a pre-election effort to show he’s trying to stimulate the sputtering economy.

The infrastructure investments are part of a package of targeted proposals the White House announced on Monday. With November’s elections for control of Congress approaching, Obama planned to discuss the proposal later Monday at a Labor Day event in Milwaukee.

The proposals would require congressional approval, which is highly uncertain at a time when many legislators and voters are worried about adding to federal deficits that are already sky-high.

Even if lawmakers could pass a bill in the short window between their return to Capitol Hill in mid-September and the elections, it’s unlikely the spending would give the economy a significant boost by the time voters head to the polls.

While the proposal calls for investments over six years, the White House said spending would be front-loaded with an initial $50 billion to help create jobs in the near future.

The goals of the infrastructure plan include: rebuilding 150,000 miles of roads; constructing and maintaining 4,000 miles of railways, enough to go coast-to-coast; and rehabilitating or reconstructing 150 miles of airport runways, while also installing a new air navigation system designed to reduce travel times and delays.

MORE:  via Obama To Back $50 Billion Infrastructure Plan For Roads, Rail, Air Travel.

Very, very good article from former Secretary of Labor Robert Reich.

Here is an excerpt and I encourage you to click the link to the entire Op Ed.

This crisis began decades ago when a new wave of technology — things like satellite communications, container ships, computers and eventually the Internet — made it cheaper for American employers to use low-wage labor abroad or labor-replacing software here at home than to continue paying the typical worker a middle-class wage. Even though the American economy kept growing, hourly wages flattened. The median male worker earns less today, adjusted for inflation, than he did 30 years ago.

But for years American families kept spending as if their incomes were keeping pace with overall economic growth. And their spending fueled continued growth. How did families manage this trick? First, women streamed into the paid work force. By the late 1990s, more than 60 percent of mothers with young children worked outside the home (in 1966, only 24 percent did).

Second, everyone put in more hours. What families didn’t receive in wage increases they made up for in work increases. By the mid-2000s, the typical male worker was putting in roughly 100 hours more each year than two decades before, and the typical female worker about 200 hours more.

When American families couldn’t squeeze any more income out of these two coping mechanisms, they embarked on a third: going ever deeper into debt. This seemed painless — as long as home prices were soaring. From 2002 to 2007, American households extracted $2.3 trillion from their homes.

Eventually, of course, the debt bubble burst — and with it, the last coping mechanism. Now we’re left to deal with the underlying problem that we’ve avoided for decades. Even if nearly everyone was employed, the vast middle class still wouldn’t have enough money to buy what the economy is capable of producing.

Where have all the economic gains gone? Mostly to the top. The economists Emmanuel Saez and Thomas Piketty examined tax returns from 1913 to 2008. They discovered an interesting pattern. In the late 1970s, the richest 1 percent of American families took in about 9 percent of the nation’s total income; by 2007, the top 1 percent took in 23.5 percent of total income.

It’s no coincidence that the last time income was this concentrated was in 1928. I do not mean to suggest that such astonishing consolidations of income at the top directly cause sharp economic declines. The connection is more subtle.

The rich spend a much smaller proportion of their incomes than the rest of us. So when they get a disproportionate share of total income, the economy is robbed of the demand it needs to keep growing and creating jobs.

via Op-Ed Contributor – How to End the Great Recession – NYTimes.com.

What’s more, the rich don’t necessarily invest their earnings and savings in the American economy; they send them anywhere around the globe where they’ll summon the highest returns — sometimes that’s here, but often it’s the Cayman Islands, China or elsewhere. The rich also put their money into assets most likely to attract other big investors (commodities, stocks, dot-coms or real estate), which can become wildly inflated as a result.

This is rich. Koch Industries, led by the “billionaire brothers” who “have funded opposition campaigns against so many Obama Administration policies—from health-care reform to the economic-stimulus program—that, in political circles, their ideological network is known as the Kochtopus.”

They spent millions in astro-turf efforts against health insurance reform, in the guise of Americans for Prosperity ginning up the teabagger August revolt. So guess who’s on the list of employers lining up for money from the Affordable Care Act? Yep.

More:  via Daily Kos: Koch conglomerate applying for funds it tried to kill.

Great Editorial today in the New York Times:

If President Obama has a big economic initiative up his sleeve, as he hinted recently, now would be a good time to let the rest of us in on it.

News on Friday confirmed that the economy was far weaker in the second quarter than originally believed, growing at 1.6 percent versus an initial reading of 2.4 percent. Grim reports on housing sales indicate that the slowdown has continued. In a normal recession, housing would lead the way up from the depths. Today, it appears to be leading the way back down.

Which brings us back to Mr. Obama. The fiscal stimulus of 2009, coupled with low interest rates and other Federal Reserve interventions, kept the recession from being much worse. But it has not been enough to revive hiring, without which a real recovery is impossible. In the meantime and even more ominously, economic policy making has all but ground to a halt.

Congress is gridlocked. For nearly two months, Republicans blocked an extension of unemployment benefits, a basic recovery measure. They are still holding up a bill to spur more lending to small businesses.

In a much-anticipated speech on Friday, Ben Bernanke, the Federal Reserve chairman, reiterated his vow to do more to boost the economy if conditions worsened. He did not seem particularly convinced that anything the Fed could do would be enough.

The question then is whether Mr. Obama will lead. He cannot force Congress to act, but he could pre-empt Republicans’ diatribes — on the deficit, on small business, on taxes — with tough truths and a big mission that would tie together the strategies and the sacrifices that will be needed to put the economy right.

First, he needs to keep driving home that he is committed to addressing the deficit, and that he will call for widespread sacrifice to do so — starting with letting the Bush tax cuts for the richest Americans expire at year end. Mr. Obama must tell Americans that claims from Republican leaders that the country can both cut taxes and tackle the deficit are absurd and cynical.

Next, he needs to explain why too much sacrifice, too soon, especially from the middle class, would do more harm than good while the economy is weak. More government support is needed until conditions improve.

Mr. Obama also needs to inspire Americans who have been ground down by the economic crisis and Washington’s small-bore sniping. He needs to rally the nation around a big idea — a project that is worth sacrificing for, worth paying for, worth working for. One that lets them know that there is more ahead than just a return to a status quo of lopsided growth in which corporate profits surge while jobs and incomes lag.

That mission could be the “21st century infrastructure,” that Mr. Obama mentioned on a multi-city trip this month, “not just roads and bridges, but faster Internet access and high-speed rail.” It could be energy independence, with high-tech green jobs and a real chance for addressing global warming. Either of the above would make sense, economically and politically.

Mr. Obama and his economic team had clearly hoped for an economic rebound in time for the midterm elections. They are not going to get it. The economic damage they inherited was too deep, and the economic stimulus they pushed through Congress, for all of the fight, was too small. Standing back is not doing the country or his party any good. We believe Americans are ready for hard truths and big ideas.

via Editorial – Waiting for Mr. Obama – NYTimes.com.

This article, by Jane Mayer,  was referenced in Frank Rich’s column today and is really worth reading…

With his brother Charles, who is seventy-four, David Koch owns virtually all of Koch Industries, a conglomerate, headquartered in Wichita, Kansas, whose annual revenues are estimated to be a hundred billion dollars. The company has grown spectacularly since their father, Fred, died, in 1967, and the brothers took charge. The Kochs operate oil refineries in Alaska, Texas, and Minnesota, and control some four thousand miles of pipeline. Koch Industries owns Brawny paper towels, Dixie cups, Georgia-Pacific lumber, Stainmaster carpet, and Lycra, among other products. Forbes ranks it as the second-largest private company in the country, after Cargill, and its consistent profitability has made David and Charles Koch—who, years ago, bought out two other brothers—among the richest men in America. Their combined fortune of thirty-five billion dollars is exceeded only by those of Bill Gates and Warren Buffett.

The Kochs are longtime libertarians who believe in drastically lower personal and corporate taxes, minimal social services for the needy, and much less oversight of industry—especially environmental regulation. These views dovetail with the brothers’ corporate interests. In a study released this spring, the University of Massachusetts at Amherst’s Political Economy Research Institute named Koch Industries one of the top ten air polluters in the United States. And Greenpeace issued a report identifying the company as a “kingpin of climate science denial.” The report showed that, from 2005 to 2008, the Kochs vastly outdid ExxonMobil in giving money to organizations fighting legislation related to climate change, underwriting a huge network of foundations, think tanks, and political front groups. Indeed, the brothers have funded opposition campaigns against so many Obama Administration policies—from health-care reform to the economic-stimulus program—that, in political circles, their ideological network is known as the Kochtopus.

And

The anti-government fervor infusing the 2010 elections represents a political triumph for the Kochs. By giving money to “educate,” fund, and organize Tea Party protesters, they have helped turn their private agenda into a mass movement. Bruce Bartlett, a conservative economist and a historian, who once worked at the National Center for Policy Analysis, a Dallas-based think tank that the Kochs fund, said, “The problem with the whole libertarian movement is that it’s been all chiefs and no Indians. There haven’t been any actual people, like voters, who give a crap about it. So the problem for the Kochs has been trying to create a movement.” With the emergence of the Tea Party, he said, “everyone suddenly sees that for the first time there are Indians out there—people who can provide real ideological power.” The Kochs, he said, are “trying to shape and control and channel the populist uprising into their own policies.”

via The billionaire Koch brothers’ war against Obama : The New Yorker.