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Picking up the pieces, part 2: 10 steps to rebuild the economy
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Let's start with this joke of a bailout, in which it is now entirely clear that the American public has been punk'd:
1. Hammer your local congressman on this. They're lying when they tell you that the damage is done, that they can't do anything about the lack of accountability in the bailout, that they have to just keep forking over billions of dollars to their campaign contributors. If your local congressman is on board, then hammer Wall Street errand boy Charles Schumer. Tell them that if the Bush administration requests the release of the next $350 billion of the bailout with no strings attached, reject the request.
2. Congress has the power to add the caveats that the original critics of the bailout argued for: limiting executive pay, preventing taxpayer money from going to shareholders, forcing the government to own voting shares of bank stock, and making any remaining money contingent on increased lending. Britain did this, and we haven't yet. Isn't this embarrassing?
3. Congress also has the power, right now, to use the unspent bailout money on a recovery package focused on job-creating infrastructure and healthcare. More on that, in terms of how aggressive a stimulus should be, below.
And now on to budgetary priorities... I'm no expert on this, but it is clear that there is some seriously wasteful military spending. This money could be spent much more productively, as step 6 will illustrate.
4. There is a new General Accounting Office report that indicates costly waste in the military procurement process at the Pentagon. More than half of the Air Force's secondary inventory, with a total value of $31.4 billion, was not needed to support service requirements. Scrap the secondary inventory. This $30 billion, astute observers will note, is twice the size of the first payment of $15 billion, in the form of a loan, no less, to the automotive industry. Do the math.
5. According to the report, the Department of Defense has already "marked for disposal" hundreds of millions of dollars worth of spare parts. These are parts that have not even been used, parts that are still on order. In other words, we're spending a boatload of money just to throw this crap away. We're also spending more than $30 million a year just to store these spare parts, which again, have been marked for disposal, and therefore, we do not need. End this insanity.
6. Health care costs are responsible for half of the personal bankruptcies in America. Senator Bernie Sanders from Vermont has argued, repeatedly, that basic primary health care for every American could be provided for $5 billion a year. The Federally Qualified Health Care program, which finances community health centers across the country that give primary health access to more than 15 million Americans every year, was appropriated for $2.9 billion in 2008, which is about what we spend every two days in Iraq. Again, for another $2 billion, basic primary health care could be provided for every American.
And finally, on to stimulative spending, including help for the American automotive industry:
7. Senate Republicans, especially Richard Shelby (R-Hyundai), Bob Corker (R-Nissan), Jim DeMint (R-BMW), Mitch McConnell (R-Toyota), and Saxby Chambliss (R-Kia), should be ignored entirely in the debate about the Big Three car companies. These men do not represent the best interests of America, they represent the foreign car industries that are headquartered in their home states. Screw them. An e-mail circulated between Senate Republicans even admits that denying the auto industry a bailout represents a chance for Republicans to "take their first shot against organized labor."
8. Bail out General Motors. This must be done. Our automotive industry is highly interdependent, these companies do not simply stand alone. They draw on the same network of suppliers, and if one of them goes down, all three will go down. This will cost America more than one million jobs in the middle of the worst recession since the 1930s.
9. Paul Krugman of the New York Times argues that the Obama administration should not be stingy with their stimulus package, that instead, they should figure out how much help they think the economy needs, then add 50 percent. Krugman just won a Nobel Prize, so I'll roll with him. There are two historical proofs to Krugman's argument: first, in 1937, after he took a beating in the midterms, FDR began worrying about the deficit. He cut the Works Progress Administration in half and raised taxes, and a steep recession was the result, followed by a huge drop in private investment. Second, 60 years later, when Japan had responded to a bad recession with a large stimulus, they panicked just like FDR did, cutting spending and raising taxes. The result was exactly the same. The lesson here is not to panic: as long as the stimulus includes a ton of public investment in roads and bridges, America will be richer in the long run.
10. And finally, if we want to build a new economy based around green manufacturing jobs, then we have to develop an industrial policy to keep those jobs here. The jobs must be structured around infrastructure, since those jobs cannot be outsourced. China already produces one-third of the world's solar cells.
When the Berlin Wall fell, everyone mistakenly thought that a bipolar wold had become unipolar. Well, America's pole, so to speak, has turned out to be much smaller than we thought it was. Global capitalism has invested itself like never before in the cheap labor business, as China and dictatorships in the third world have become the world's sweatshops. America's manufacturing economy was effectively exported, and now our service/managerial economy is failing to support our middle class. Both of our political parties are at fault here: Republicans have become so anti-union (read: anti-working Americans) that they are now fighting an auto bailout that could save millions of jobs. The Democrats aren't far behind: in the last thirty years, they've become lackeys for big business, mostly because they took corporate America's money in a desperate attempt to stay relevant in the Reagan and Bush years.
This is not an irreversible trend: we have to continue electing worker-friendly politicians like Sherrod Brown, Amy Klobuchar and Bernie Sanders. This is still potentially the greatest country in the world, but we're going to have to hold the Obama administration's feet to the fire if we're going to turn this thing around. The debate over how to handle the bailout is slowly turning into America's second civil war, and if the middle class loses its voice in the government, then we're doomed.
