President Barack Obama is holding a "jobs summit" today, and Congress is currently discussing a jobs bill. Unfortunately, the current talk of combating unemployment has been plagued by false assumptions encapsulated in the word "stimulus," which evokes an organism that can quickly generate the desired response with the right "input." In reality, the U.S. economy will falter for many years unless a government-led jobs program recognizes new economic and environmental realities and confronts the challenges before us.
Facing peak oil and global competition for scarce natural resources, we must repair and reform the physical and intellectual undergirding of our economy to build a broad base of prosperity. That means major infrastructure investments in public works, communications and energy.
False optimism for a quick recovery ignores the fact that U.S. economic growth from the Reagan era through 2007 was built on bubbles - a series of overvalued assets leading to bailouts. The banking system remains vulnerable to commercial real estate defaults, and credit is scarce.
Those who oppose a jobs bill to avoid "socialism" are either misled or misleaders. In reality, 25 years of unrelenting propaganda about the benefits of completely free markets masked an orgy of tax giveaways and corporate welfare (think Halliburton). By 2007, the top 1 percent of U.S. earners had 23.5 percent of the income. Already wealthy, many investors nevertheless borrowed money in order to multiply profits on risky ventures. The drive for ever-higher returns diverted investment from the "real economy" in favor of complex financial assets. This cost jobs along the way - and led to a hemorrhage of jobs when the crash came.
A major reason the old U.S. economy cannot easily be "stimulated" back to prosperity is that various mountains of debt - mortgages ($14.5 trillion), consumer borrowing ($2.7 trillion, up from $1.7 trillion in 2000), trade deficits ($7 trillion since Reagan was inaugurated), leveraged buyouts and government ($10.6 trillion when Mr. Obama took office) - cannot just be piled higher.
It will take $2.2 trillion to bring the nation's infrastructure - water and sewage, waste disposal, energy, parks and school facilities - into good repair. We cannot continue the trend of wasteful spending and massive increases in health costs. And we must change massively wasteful energy and land use patterns and begin to address environmental damage, resource depletion and climate change. For all these reasons, a longer-term approach to job creation is needed.
Without a "New New Deal," we are headed for a decade or more of continued high unemployment and further deterioration in the standard of living. Because of unemployment and the credit squeeze, consumers are paying off debt and will not return to previous levels of spending any time soon. With consumer spending down, there is not likely to be any rejuvenation fueled by business investment unless there is a government-driven push from revamped energy, agriculture and health care incentives and direct investments.
The jobs bill passed by Congress last winter was not large enough to reduce unemployment or address critical needs, such as:
* Promoting equality and rebuilding the middle class by funding youth jobs and college for all via a new GI bill.
* Building the physical and intellectual/institutional infrastructure for a new economy, including supporting public education, building a truly national fiber optic network and increasing funding for basic and applied scientific research.
* Repairing and renewing transportation and water/sewer systems.
* Revising land use policies to counter sprawl, building mass transit and promoting transit-oriented development, including low- and moderate-income housing.
* Limiting carbon emissions by funding energy-efficiency projects as well as clean energy research and installation.
* Shifting our orientation more to exporting and less to importing of goods.
To pay for this type of massive reinvestment, the government should initiate a massive marketing campaign to sell U.S. bonds to the American public, and a financial transactions tax (not just on stocks) should be implemented both to raise funds for the jobs program and to dampen the kind of financial speculation that caused the crash.
We should also accept Rep. Barney Frank's proposal to cut defense spending by $150 billion per year. Other corporate welfare such as ethanol and agribusiness subsidies could also be eliminated.
If we wish to avoid a decade or more of recession, we must accept that recovery will take time and not attempt "quick fixes" like consumer-oriented tax cuts. Such measures would fail to address critical challenges and would not build the human and physical capital needed for future prosperity.
Charlie Cooper is a Baltimore activist who helped found the Baltimore Economic Crisis Response Network. His e-mail is email@example.com.