On Tuesday night, Obama is set to give a speech on the U.S. military pullout from Iraq. While this war is an important issue for discussion—a war which has wasted billions of taxpayer dollars with nothing to show for it—now is the time for the president to get serious about the economy and job creation. He must decide now if he wants to get the country out of this quagmire that is the Great Recession.
With sluggish economic growth at only 1.6 percent in the second quarter, on Monday the president acknowledged that the economy is still struggling and too many people are looking for work. He also urged the Senate to pass a major bill that would help small businesses with billions of dollars in loans and tax breaks. The bill “has been held up by a partisan minority that won’t even allow it to go for a vote,” Obama said while commenting on the economy in the White House Rose Garden. “That makes no sense. This bill is fully paid for, it will not add to the deficit, there is no reason to hold it except for partisan politics,” the president added.
This statement from Obama comes after weeks and months of denial by an administration set on convincing everyone that America is back on the road to recovery. But no one was convinced, and now there is a clarion call being led by the New York Times and others, warning of a double dip recession, a decade-long, Japan-style recession, the need for a second stimulus if not a second New Deal program, and warning against fiscal austerity measures that would create another financial crisis. Further, there is a bipartisan consensus building that Obama fire his economic team, especially Treasury Secretary Tim Geithner and Larry Summers, Director of the National Economic Council.
The fact is that Wall Street insiders Geithner and Summers were part of the policies that brought the nation’s economy down in the first place. They shouldn’t have been rewarded for their failure through appointments to such prominent and powerful roles in a White House bent on change and disrupting the status quo. Unfortunately these two men have a direct line to the president. And they have failed him miserably as other advisors with a different point of view were left out in the cold.
WATCH VIDEO ON THE IRAQ WITHDRAWAL HERE
Taking bad advice from people who should have been tossed out long ago, public perception began to associate Obama with the wrong side of the economic fence, as Newsweek reported this week. The president could have been tougher on Wall Street bankers, some of whom now received bonuses in the tens of millions, larger than before the financial meltdown and the subsequent bank bailout. He ignored part-time adviser and former Fed chair Paul Volcker, who is skeptical of deregulation and the risky derivatives markets that added little to the economy.
Under the advice of the Geithner-Summers faction, the administration opted for a relatively modest and paltry $800 billion economic stimulus package, as opposed to a $1.2 trillion suggested by Christina Romer, then-chair of the Council of Economic Advisers who recently resigned over frustration over being left out of the decision-making process. Financial reform was watered down and defanged to keep Wall Street lobbyists happy and calm the nerves of conservative Democrats and Republicans who never stood with this president.
And in the middle of the worst recession in modern times, the president has taken the ill-advised step of convening a sham of a deficit reduction commission stacked with insensitive conservatives intent on getting rid of Social Security. The body has been nicknamed the “cat food commission” because cat food is what seniors will be eating if the commission members have their way. At a time when state coffers are depleted and more money is needed to invigorate the economy, such a move is irresponsible. Besides, if the so-called deficit hawks were so concerned about the deficit, they would attack its primary sources wars in Iraq and Afghanistan, and the Bush tax cuts. America is spending as much as the rest of the world combined on defense, with 1,000 military bases around the world. Certainly the U.S. cannot afford to protect Europe and Japan against imaginary enemies when multitudes are unemployed and descending into poverty, and 40 million are dependent upon food stamps.
The White House also forecasted that unemployment would not exceed 8 percent following passage of the stimulus, but the jobless rate was over 10 percent at one point, and now hovers at a 9.5 percent. Word on the street is that this figure is kept artificially low. The real or effective unemployment rate— which includes those who just gave up hope or are working part-time but want full-time job— is more like somewhere between 16.5 and 22 percent, depending on who you ask. Youth unemployment hit record levels of over 51 percent this summer, the first time since they began keeping records in 1948 that fewer youth were employed than were not. Young people in their late teens and twenties are a lost generation without jobs, beginning their career, fresh out of the gate after graduation, with no employment prospects. This reality takes a profound psychic toll on the millions of people who are affected. And of course, black unemployment is typically double the national rate, thanks to the problems of structural racism and the policy of “last hired, first fired.” Only 1 in 7 black male teens had a job in the first quarter of 2010, and merely 1 in 10 low income black men had work of any type during that time period.
The U.S. must produce millions of new jobs if it has any hope of digging out of this economic morass. Only government has the ability to jump-start the economy under these dire conditions. And yet the opportunities to turn things around are many. America suffers from a crumbling Third World infrastructure. Bridges and roads are crumbling, and New Orleans needs world class levees to protect from hurricanes. In addition, the country has an early 20th century rail system, and needs high speed rail to stimulate the economy. It is estimated that every $1 billion of capital investment in rail will produce 24,000 construction and manufacturing jobs, and $1 billion in operating investment will produce 41,000 operation and maintenance jobs. President Obama has pledged $8 billion for rail projects around the country, with promises for $5 billion more over five years. To put that in context, China plans to build a $295 billion high speed train network by 2020, and other countries such as Spain are already far ahead of the U.S.
A president with an approval rating in the mid 40s, Obama is a victim of circumstance. He spent a great deal of political capital on the health care debate, and the public’s attention turned to jobs. And first-term presidents typically experience midterm election losses in Congress, and in any case the economic mess was not his doing.
Nevertheless, the voters are angry, anxious and hurting, and President Obama bears responsibility simply because he inherited the problems we face. Now, he must decide what type of president he wants to become: A Herbert Hoover or a Franklin D. Roosevelt. Hoover was a one-term president who meant well, but his ideas were too small. He tried too little too late in his attempt to overcome the Great Depression. FDR, on the other hand, was able to summon the power of government and mobilize the nation with big ideas and huge programs. He saved the people from capitalism, if he didn’t save capitalism from itself.
It is certain that we need big ideas for an economy that needs a major overhaul. On the job front, the Obama White House has to date presented a modest, lackluster, uninspiring policy agenda. This must change if the U.S. is to recover, and if Obama is to have a second term in office. The stakes are high, and the Republicans are both an unacceptable and dangerous option