The markets are down today -- so far -- by almost 3%, possibly in reaction to the House's stimulus package. At least in part.
James Galbraith thinks the package is okay but doesn't go far enough.
Another package will be needed, and here’s what it should include:
– Open-ended support for the current operations of state and local governments for the duration of the crisis, including open-ended support for public capital investment. All the resources being released from residential and commercial construction should be taken up in public building. At the federal level, strategic investments in mass transit and other long-term improvements — largely omitted from the current package — should be authorized via a permanent National Infrastructure Fund.
– Comprehensive foreclosure relief, through a 90-day moratorium followed by restructuring except in cases of demonstrable borrower fraud.
– Increase Social Security benefits, say by 30 percent, and a lower the eligibility age of Medicare to (say) 55 years of age. This would offset the deep drop in equity wealth of the elderly population, while favoring the poor. Expanding Medicare eligibility would permit more workers to retire, freeing firms from carrying health care costs for older workers.
– A payroll tax holiday to restore the purchasing power of working families. By setting the payroll tax rate at zero (and letting the government write a check to the Social Security Trust Fund for the uncollected sums), tax relief can be delivered at large scale and with immediate effect. Later, if growth resumes rapidly, this measure could be scaled back.
– A Reconstruction Finance Corporation, to meet industrial needs for credit and to help with restructuring and modernization.
– Jobs programs, in the spirit of the New Deal, to hire people to do what they do best, including art, letters, drama, dance, music, scientific research, university teaching and the work of the non-profit sector — including for community organizations.
– An energy program with a framework adequate to meet the climate crisis and sufficient to reduce demand for oil and quell speculation as the economy recovers.
Galbraith is the economist (and social philosopher) with whom I most closely agree. I think he's got it right and I think politics will surely stand in the way. Hint: Over the past few days, when time has allowed, I've been transcribing an interesting, long interview about the grip of the military-industrial-congressional complex conspiracy. Exaggeration? Not hardly.
Clearing Bush and Cheney out is just the beginning. A wide sector of our society and our leadership will work tenaciously against any transparency, any fiscal responsibility, and any return to progressive politics. I don't think we have the slightest idea of the mountain we've chosen to scale when we elected Obama without, at the same time, cleaning House.
