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August 04, 2011 1:30 PM The scope, the scale, and the solution

By Steve Benen

The last time I looked, the Dow Jones had lost about 300 points today and over 1,100 points in two weeks. The European debt crisis is intensifying; austerity measures are preventing growth; and the stalled U.S. economy is exacerbating global anxiety.

In Washington, of course, Republicans won’t let Congress act and the Fed doesn’t want to act. And what of the Obama White House? The president and his team are not without ideas, and the administration in the process of “exploring new proposals,” which they hope can attract “broad” support.

White House officials are weighing a proposal to offer tax cuts to employers in return for hiring new workers. The administration considered this idea last year, but it gave way to a broader payroll tax deduction for workers in a bipartisan deal in December.

In addition, administration officials are considering proposing new investments in domestic clean energy as well as renewing tax breaks for companies using renewable energy — particularly wind power — that are to expire this year.

Also on the table is an initiative designed to help the ailing housing market without the need for more public spending. Under that proposal, the government-controlled mortgage giants Fannie Mae and Freddie Mac would rent out foreclosed properties that they own rather than try to sell them at depressed prices. That approach could relieve pressure on the housing market, one of the main drags on the economy.

Former administration officials are pushing other initiatives, such as a program to rebuild and rehabilitate schools as a way to improve education and stimulate the economy. A fan of this approach, Jared Bernstein, a former chief economist for Vice President Biden, calls the program “Fix America’s Schools Today.”

Most, if not all, of these ideas have real merit, and it’s encouraging the White House is prepared to make a concerted push on this front.

But we keep running into the same problems. For one thing, regardless of the measures’ value, congressional Republicans will almost certainly reject any ideas that might help the economy. This is partly due to their radical ideology, partly due to their reflexive opposition to anything the president wants, and perhaps motivated by the belief that economic suffering should be encouraged in the hopes that it will make President Obama easier to defeat next November.

For another, even if all of the administration’s measure were somehow adopted immediately, we’re talking about a fairly modest agenda. The size and scope of our economic difficulties are serious and intensifying, and this moderate response is unlikely to make a dramatic impact. Obama could be more ambitious, but he probably realizes by now Republicans hate him far more than they want to help the economy.

Are there alternatives? Jonathan Alter has a creative solution involving allowing states to convert their unemployment insurance payments from checks sent to the jobless into vouchers that can be used by companies to hire workers. Also, Suzy Khimm talked to some economists and policy analysts yesterday, and presented a series of other ideas that used to enjoy bipartisan support before madness overtook the GOP.

One thing is for sure: sitting back and waiting for improvements won’t cut it.

Steve Benen is a contributing writer to the Washington Monthly, joining the publication in August, 2008 as chief blogger for the Washington Monthly blog, Political Animal.

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  • Burr Deming on August 04, 2011 1:47 PM:

    Slashing taxes for the wealthy was supposed to create jobs, right? I mean, what could go wrong?

  • taritac on August 04, 2011 1:57 PM:

    Tax cuts and vouchers for employers won't induce them to hire. Higher demand will.

  • taritac on August 04, 2011 1:58 PM:

    Tax cuts and vouchers for employers won't induce them to hire. Higher demand will.

  • stormskies on August 04, 2011 1:59 PM:

    The actual solution is to elect individuals whose orientation to reality is defined by the common good. That used to be the Democrats. There still are some, but they are a dwindling minority. Still they exist. And then to have an electorate that would actually elect them so that a majority of such individuals would exist in the Congress, Senate, and of course the Presidency. As a result they would of course they utterly restructure our society that is then defined by the core principle of the common good. Yet that implies an electorate that has some degree of intelligence. It would also require an honest media that itself was defined by this one principle of the common good so that they could provide the critical function of having the population at large be aware of the issues, and how to solve those issues defined by the common good.

    Alas, we neither have a intelligent population, 40% percent for example 'believes' the Earth is less that 10,000 years old in which humans co-mingled with the Dinosaurs, but of course an utterly corrupt media that is owned by the corporations who are defined by the core principle of profit for the corporations themselves.

    So, in essence, this country is utterly corrupt and is full of the land of the stupid who vote against their own self interest and actually advance the reality of the corporations that end up making their lives even worse.

    So our country is indeed the United Stupid America.

    USA ! USA ! USA !

  • August on August 04, 2011 2:02 PM:

    "Perhaps motivated"? Benen, you are far too kind.

  • bob h on August 04, 2011 2:05 PM:

    I've been a market watcher and participant for 40 years, and I am pretty sure the turmoil is due to this: Wall St. now realizes that the Republicans have put handcuffs on the President's ability to do anything to accelerate economic growth. (They might have thought of this before shovelling money to the GOP last Fall).

  • DAY on August 04, 2011 2:06 PM:

    taritac's comment is good enough to post twice.
    No sane employer will hire a worker when there is no work for him to do. That's what the gummint does. . .(Anyone remember the We Poke Along, aka WPA?)

  • Anonymous on August 04, 2011 2:10 PM:

    "perhaps motivated by the belief that economic suffering should be encouraged in the hopes that it will make President Obama easier to defeat "

    You think? Steve, let me tell you something that maybe you only dimly are aware of. I don't mean to upset you and cause all sorts of painful psychological trauma, but the republicans have NO other objective than to do whatever is necessary to defeat Obama. They are willing to cut their own throats (and ours with it) in order to get rid of Obama.

  • sparky on August 04, 2011 2:17 PM:

    There is plenty of work to be done around the country right now--trillions of dollars worth of infrastructure repairs. Gotta be done someday--why not start today? Not today because that would create good jobs and demand for U S made building materials. Can't let that happen when the republican party's main goal in to make Obama a one term president. Do whatever it takes to keep the economy in the hole as long as possible. Trouble is the dummies don't have a plan to get us out of the hole if they ever take control. We're screwed!!!

  • Ron Byers on August 04, 2011 2:19 PM:

    taritac on August 04, 2011 1:57 PM:

    Tax cuts and vouchers for employers won't induce them to hire. Higher demand will.

    Burr Deming on August 04, 2011 1:47 PM:

    Slashing taxes for the wealthy was supposed to create jobs, right? I mean, what could go wrong?

    Well taritac is right, increasing demand is the key to increasing jobs, and demand for luxury items by billionaires and millionaires is soaring.

    I guess the only thing wrong with the plan is there just aren't enough billionaires and millionaires.

    Oh, snap. Maybe it will work if we lower taxes on billionaires and millionaires some more.

  • CDW on August 04, 2011 2:32 PM:

    I don't think he realizes how much the republicans hate him. But even if he does, in fact especially if he does, he should be more ambitious for political reasons. He should, for once, put the republicans on the spot and make it clear who is preventing effective measures for being implemented. Although, I doubt the measures mentioned above are effective measures.

    I feel sure that "employer tax cut" is the employer payroll tax, which, along with the employee cuts, serve to further weaken Social Security and Medicare. I want to tear my hair out and scream!

  • bdop4 on August 04, 2011 2:35 PM:

    "White House officials are weighing a proposal to offer tax cuts to employers in return for hiring new workers. The administration considered this idea last year, but it gave way to a broader payroll tax deduction for workers in a bipartisan deal in December."

    This kind of shit makes me crazy.

    Does the Obama administration seriously think that a business, whose demand does not exceed is current labor force, is going to hire more people to get a tax credit?!

    All it does is invite scammers, who have no business or products, to abuse the system by claiming credits for non-existent workers.

    For god's sake, find public projects and services that are desparately needed and DIRECTLY PUT PEOPLE TO WORK doing them.

    Don't offer some obtuse credit that may or may not be put to good use.

    We really need to start getting some bang for our buck. This is not the way to do it.

  • QuestionEverything on August 04, 2011 2:37 PM:

    I don't think this is enough. We probably need another stimulus and one without the majority of it being TAX CUTS, which we know are not stimulative.

    We need more than these helpful, but probably not enough to help, ideas. Steve, you've written about how dire the economic situation is, that it's worse than even Obama was expecting and my question is are these things going to be enough?

    Republicans can and WILL tie Obama's hands in dealing with the economic weakness that we're experiencing and then blame him for it anyway, ignoring that they kept Obama from doing what he wanted to do to fix it along the way.

    The GOP has two choices:

    A)Keep Obama from doing what he wants to do to fix our economy and (the GOP) take the blame for it.

    Or B) Let Obama fix the problems and if it doesn't work, then blame him.

    They instead are keeping Obama from fixing it and then blaming Obama for not fixing the problem even though Obama probably has the best solutions for fixing it, if they'd just let him do his job.

    And a very large number of Americans are not paying attention, and will agree with the GOP, blame Obama, and vote against him.

    Obama can either let the GOP do this or he can fight them and appear less bipartisan. He's tried being the adult, bipartisan, and he doesn't get any credit for it anyway. Some people (the GOP) just need their teeth kicked in. They don't understand the self-imposed rules that Obama plays by and are just asking to be treated like the irresponsible, self-serving, non-credible obstructionists that they are.

  • efgoldman on August 04, 2011 3:00 PM:

    Don't any of the TeaTards have portfolios?
    Bleepholes!

    http://money.cnn.com/

    captcha ialrela r8oth

  • Ron Byers on August 04, 2011 3:02 PM:

    bdop4 on August 04, 2011 2:35 PM:

    "White House officials are weighing a proposal to offer tax cuts to employers in return for hiring new workers. The administration considered this idea last year, but it gave way to a broader payroll tax deduction for workers in a bipartisan deal in December."

    This kind of shit makes me crazy

    Makes me crazy too. The problem is Obama is being advised by bankers and political types. He doesn't get much advise from people with real business experience. Lord knows he never ran a business. Neither has Joe Biden.

    The President needs to do a lot more listening and a lot less talking.

    That is not to say bad stuff about Obama. It is entirely possible there are no good ways to stimulate the economy given the very low interest rates and businesses and banks have parked trillions with no place to spend.

    The real problem is automation. I know nobody wants to listen to this, but we don't need a lot of the people who were laid off in 2008. We won't need them again. We don't need them to build things that can be built by robots and we don't need them to work in offices shuffling paper in a world with less and less paper.

    We need to start thinking outside the box.

  • Varecia on August 04, 2011 3:13 PM:

    There should be an immediate incentive for the so-called 'job creators' to hire: losing their Bush tax cuts very soon rather than later. Put up and hire or lose it now. That's why they received them, right? Not because they're just really swell people.

  • Anonymous on August 04, 2011 3:14 PM:

    The president needs to be bold - propose large scale projects and funding state public workers - and he and the Dems need to frame it as "putting America back to work while re-building the country"... and then say anyone who disagrees doesn't have the best interests of the American people at heart. He needs to repeat what we all know, that when the private and public sectors are not hiring, that the government needs to act. That when people are working they are spending money, creating demand, paying taxes and not on the public dole. Have a whole line up of economists of all stripes speak out in favor. And present charts! It makes sense which means about 70% of the people will get it. We'll never get through to the rest, we just need a majority. And then the president needs to urge people to call their legislators. Why not?

  • Myrna on August 04, 2011 3:33 PM:

    "White House officials are weighing a proposal to offer tax cuts to employers in return for hiring new workers"

    Employers will not hire new workers until they have the customers to justify expanding. Period. Tax breaks will make no difference. It doesn't take an advanced degree in economics to figure this out. Who is coming up with these proposals, and why is the President wasting time with them? For a dose of reality he should be talking to people who actually own businesses.

  • JM917 on August 04, 2011 3:59 PM:

    Obama can argue for new jobs initiatives and new relief measures till he's blue in the face and the Repugs in Congress won't budge. The House will reject him out of hand and the Repug senators will threaten a filibuster.

    OK, the next step is to raise a hue and cry in the land that the Republican Party is deliberately engaging in economic SABOTAGE. Damn them up hill and down dale for that. Starting this fall, Obama should go into every state he can visit and hold big rallies built around that theme. Go to Republican House districts and to states with Republican senators--that includes Pennsylvania, Ohio, Wisconsin, Indiana, and even Scott Brown's Massachusetts--and raise an outcry. Pin it on the Republican Party! Don't wait for next year's nominating convention and fall campaign trail. The big, noisy campaign begins NOW! Jobs and relief--jobs and relief--and damn the do-nothing Republicans in Congress. Obama and the Dems have to hammer that every day.

    Harry Truman did it in 1947-48. Barack Obama had better start doing it yesterday.

    Good to see that some ideas along these lines are already percolating in the White House, for the situation is getting dire. People are hurting, and the fear and pain are only going to get worse.

  • JackD on August 04, 2011 4:11 PM:

    Well, Steve, it ended up down 500 points. It really is time to get off the deficit reduction theme that Obama has adopted at the urging of Axelrod and Plouffe in an effort to woo "independents" and do the Harry Truman move: propose appropriate measures and blame the do nothing Congressional Republicans for failing to act. It will help his reelection campaign and that of the Democratic House candidates.

  • Zorro on August 04, 2011 4:20 PM:

    The GOP's clarion call: "Don't do something! Just sit there!"

    -Z

  • bdop4 on August 04, 2011 6:02 PM:

    @ Ron Byers -

    Some very good points concerning automation and labor, which is why adaptability by the labor force is another crucial key to real recovery. Key technologies need to be energized, and businesses within those industries need to be motivated to hire and retrain workers who have transferable skills.

    Those who don't have transferable skills will need to be supported as they rebuild their skill base, or in the case of older workers, retire to open positions for younger workers.

    This is why a strong safety net is so critical to the resilience of our economy. We can't take hits like this when it throws large segments of our society into abject poverty.

    We need to separate healthcare from the employment dynamic and provide our older citizens with a HUMANE retirement scenario if we are to maintain a vital, functioning labor force.

    A lot of big ideas, I know, which is why I don't expect the teatard dullards to have a fucking clue as to what I'm talking about.

    People are going to have to start wrapping their heads around the fact that this country is going to have to make some MAJOR, FUNDAMENTAL CHANGES in order to survive.

    They can either be good changes, or very very bad changes. It's all up to us.

  • Robert Abbott on August 04, 2011 6:17 PM:

    Business won't hire until there is sufficient demand to justify it. Business will simply pocket the unemployment checks so it makes more economic sense to give the money to the unemployed so they can help create demand.

  • Doug on August 04, 2011 8:58 PM:

    We are currently suffering from a demand shortage, caused by a rapid increase in unemployment in 2008-09. Until the number of unemployed is reduced, we will continue to suffer this demand shortage. Unemployment insurance just does not provide the "extra" funds necessary for the economy to expand; at best, unemployment insurance may prevent further increases in the number of unemployed, but that is an "at best" scenario.
    The ONLY way to reduce unemployment in this country is for the Federal government to increase spending, by a very large amount, on our "infrastructure. That can include HSR, road/bridge rebuilding, rebates/subsidies for "green" energy start-ups, even "weather-proofing" rebates. As some have so aptly stated: "Ain't gonna happen."
    Democrats don't need to offer "big" programs now, they won't get out of the House. Democrats DO need to continually offer ideas and proposals, however limited, that will provide ANY stimulus to growth, even while knowing the Republicans will shoot them down.
    Our counter to Republican/Teabaggers claims that the country can't afford such expenditures need only be: "We can't AFFORD to help our fellow citizens? Since when?"

  • mcrip on August 05, 2011 8:44 PM:

    I am amazed at the comments on here about the need for more stimulus (it has been proven time and again that the Keynesian economic model of the government being able to "stimulate"/spend the country out of a recession/depression just does not work - heck Roosevelt needed a World War to cover his ass after trying the "New Deal". As for bob h who has" been in the market for 40 years and thinks the gop is "handcuffing" Obama and his plans" - I bet you loved the double digit interest under Carter while the rest of the country was being crushed by the double digit inflation due to his failed economic policies - just like what is starting/ has been to happening under Obama (i.e. beef price in june 2008 was 1.30 per lb and june 2011 is 1.78 per lb or maybe a can of corn that was .25 each in 2008 and is now 1.25 (or .92 on sale)) but the media says we have little to no inflation?
    Geez it is sad to see our country sliding down the drain pipe because we have no leadership - on either side. When will all Americans start taking responsibility for themselves and stop expecting someone else or the government to take care of them? How does anyone expect to have a strong country when 47% of the population pays zero taxes but still reaps the benefits of this fine country - from medical care to food?
    If Obama would spend less time at fund raising dinners and more time trying to figure out why his policies are failing so bad, he might have a chance - no but wait as the ideologue he does not see that he is driving the country into the trash and those who blindly follow him will go right down with him - and maybe even our country - would not be the first time.

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