Posts Tagged ‘economy’

Demanding an Efficient Government

Democrats and Republicans often get into arguments about the size and role of government. Liberals believe in a strong role to protect the most vulnerable in society while conservatives favor the private sector, stressing personal responsibility. Both sides should at least agree that fixing America’s broken economy is the country’s top priority and that an efficient government will be needed to accomplish that goal.

Unfortunately, too often the government has proven to be slow to respond to the needs of its citizens. The unemployment crisis is a good example of this. The Recovery Act (also known as the stimulus) was passed with mostly Democratic support in 2009. The result was over 3 million jobs created. Many Republicans will have you believe that it created no jobs, including elected officials that know better, especially since many of these same people (Michele Bachmann for instance) were lobbying for money to go to their districts.

Now that the stimulus has run out the economy has slowed. A new round of economic measures were proposed by President Obama and rejected by Republicans who control the House. Democrats should rightly condemn their obstructionism as purely political. Their top goal, as stated by Senate Minority Leader Mitch McConnell, is to defeat President Obama. The American people deserve better than that. But to ignore the Recovery Act’s mistakes would itself be a mistake.

Looking back at the Recovery Act there are a few things that we can say that today is obvious. For one, it was too small in size. The United States economy was nearly $15 trillion in 2010. The Recovery Act – extended over the course of roughly two years – pumped the economy with spending that equated to only 2.6 percent of GDP. Compounding this problem was the fact that the Recovery Act was a smorgasbord of spending that Democrats had sought for a long time after over 12 years of Republican rule in Congress, but was not necessarily the most effective way at reducing unemployment. Republican plans that focused solely on tax cuts were even less likely to cause a boost to the economy.

East Fork Bitterroot Road Recovery Act Project
We need more signs like this on the road.

As they say hindsight is always 20/20 yet it should have been clear at the time that what was being done would not nearly be enough. The federal government was essentially paying to fill the budget holes of states like Texas, which cut funding to schools only to replace that money with stimulus money. The stimulative result was minimal since they were essentially swapping state money for federal money. This could have easily been predicted and rectified, perhaps by adding provisions requiring the states to maintain current funding levels if they were to accept federal dollars.

Other problems included a high-speed rail network that gave out grants to states rather than directing the funding through the Department of Transportation. After Republican governors took control of states like Florida, Ohio and Wisconsin, they quickly rejected the money, putting major gaps in the future rail network. If President Obama really believed in the future of high-speed rail and the economic opportunities that come with it, why were the details left to the states? Like much of the Recovery Act this reliance on state government, often run by inefficient and politically hostile officials, hurt the prospect of job growth.

Ultimately, fixing America’s broken economy will take cooperation. Republicans will have to assume responsibility instead of sitting on the sidelines and attacking the president. Democrats will have to demand more efficient programs. A bipartisan coalition of left-leaning unions and the right-wing Chamber of Commerce came out in support of infrastructure spending. This would be a good start. Providing tax credits for small businesses that hire workers would also be a good idea that should win broad support. I would even advocate reducing America’s corporate tax rate, making American business more competitive, if it were met with an increase in the tax rate for the top 1% to offset the lost revenue. It’s time to get smart and efficient with government.

Democrats Win By Defending Middle Class

President Obama is holding up remarkably well against his potential Republican challengers, despite low approval ratings. The economy is in a state of disarray with wild swings in the stock market and evidence that we may be heading into a second recession. Politically, it could not happen at a worse time for the president as he gears up for re-election.

However, history shows that when Democrats stand for middle class voters, they win elections. Franklin D. Roosevelt won four consecutive terms as president in the 1930s and 40s, despite entering during the Great Depression, which did not completely end until our entrance into World War II. A lot of this had to do with the public’s trust in the president that he was looking out for their interests against a Republican Party that looked out for big-business.

Wisconsin is a prime modern-day example of this. Republicans rode into office in 2010 with a message about economics and jobs. They quickly turned towards dismantling unions, a traditional protector of the middle class, despite the fact that they never even ran on it. The result: a historic six Republicans in the state senate faced recall elections. Two of them were defeated and the other four were all under 60% in traditionally Republican districts. Democrats moved from a 19-14 minority with little power to a 17-16 minority that will effectively stop radical legislation.

Rick Perlstein, author of the new book Nixonland, writes about how defending the social safety net helps Democrats to win elections:

…there’s also a story in Nixonland about how the Democratic Party wins, why it loses and the good things that happen when the party gets the formula right. I surely hope Obama did not miss it.

It concerns the two major axes upon which major national elections get fought. Sometimes they become battles over the cultural and social anxieties that ordinary Americans suffer. Other times they are showdowns about middle-class anxieties when the free market fails. Normally, in the former sort of election, Republicans win. In the latter, Democrats do—as we saw in 2008, when the tide turned after John McCain said “the fundamentals of the economy are strong.

I hope that the president learns a thing or two from Perlstein’s book. His move towards what he perceives as the political middle with incessant talk about deficit-cutting has hurt his standing among middle class voters. There is no doubt that the country faces long-term deficit issues, but the jobs picture is far more serious and urgent. President Obama should pivot towards jobs by unveiling a bold and detailed jobs plan while at the same time defending programs like Social Security and Medicare that the middle class rely on. Take it to the American people. Dare the Republicans in Congress to rebuff your plan. Not only would it be good politics, it would be good for the country to see real economic leadership. We need it.

The Stimulus Saved the Economy

The Obama administration has been building up its contention that the American Recovery and Reinvestment Act, also known as the stimulus, saved the economy from economic depression. The numbers lay this out clearly. During the last months of the Bush administration, the economy was shedding 800,000 jobs a month. After the stimulus passed and began funding projects, cutting taxes for 95% of families and saving everything from teacher’s jobs to police officer’s, the unemployment numbers began to decline.

While the rate of unemployment continued to increase, this slowed dramatically until in November 2009, when the economy finally began to create jobs again. As the president has said continuously, we have a long way to go before everyone that wants a job can find one. But to deny that the stimulus is working is to deny reality. Congress should follow up by passing a new jobs bill to spur further employment opportunities for our citizens. Republicans that block a jobs bill should be punished by voters for playing politics with the health of our economy.

Indiana Senate: Bayh Leads Coats by 20

Just a day after former senator Dan Coats announced his entrance into the Indiana Senate race, a poll shows that he has a lot of ground to make up before he can call himself a “current senator”. Incumbent Democrat Evan Bayh, who enjoys a 61% approval rating in the state, leads Coats by 20 points. If the race were held today, Bayh would win 55% of the vote to Coats’ 35%. Bayh does particularly well in Democratic strongholds of Indianapolis and Northwest Indiana – garnering 68% in both.

Research 2000 also polled President Obama. Barack Obama was the first Democrat to win Indiana since Lyndon Johnson’s 1964 landslide victory. Despite a dip in support, the president is doing surprisingly well in this traditionally Republican state. His approval rating stands at 46%, only a few points below the national average of 50%, with 49% disapproving. While there is certainly room for improvement, he has a good chance of winning Indiana again in 2012 as the economy improves (and his approval rating with it).

President Obama Meets with Republicans for Q&A

President Obama went full steam into the lion’s den on Friday as he joined Republicans at their annual retreat in Baltimore, Maryland. While he gave a speech that sounded similar themes to his State of the Union, such as a shared burden on solving America’s problems, he also took questions from House Republicans. It was televised on C-Span and many of the cable networks picked it up as well.

This event was a first. While President Obama last year met with Republicans on several occasions, no television cameras were allowed into the meeting. Certainly this is a big departure from the days of President Bush, who would never meet with Congressional Democrats other than in the White House. President Obama showed a great deal of confidence going into a room with 178 members that are openly hostile towards him. Many of them were publicly pushing ideas that he would set up “death panels” on grandma and even raised questions over whether he was an American citizen.

Most of the questions were framed in a way that you would expect on Fox News: loaded with a bunch of commentary, followed by a “why do you hate America so much?” Congressman Mike Pence asked the president whether he would embrace tax cuts. Of course the stimulus package last year, which Republicans opposed unanimously in the House, was nearly 1/3 tax cuts to the middle class. The Republican idea of “across the board tax cuts” are tax cuts to millionaires and corporations, similar to what we saw during the Bush years. President Obama rightly questioned why the Republican Party opposed a bill that included such large amounts of tax relief, as well as funding to cities and states that were laying off teachers, police officers, firefighters and health care professionals to ensure that they kept their jobs.

Another major point of contention was the idea that President Obama and the Democrats have set the country on a path to fiscal disaster. That simply is untrue. As President Obama pointed out, he inherited a $1.2 trillion annual deficit from President Bush. Yes, the size of the deficit increased last year, but only marginally. Passing the stimulus package was the main reason for that. When Obama took office a year ago, in the first quarter of 2009, the GDP fell 6.4%. If we had not passed the stimulus act, most economists agree that we would not have seen the kind of business growth that led to a nearly 6% increase in GDP for the 4th quarter of 2009. That is a hugely positive sign that you won’t hear Republicans touting. We are on the road to economic recovery. Jobs will not appear overnight, but they will come. Returning to the failed policies of the Bush years, however, will only ensure another economic disaster.

Detroit: A City on the Brink #1 on Amazon.com

It’s not every day that an author can say that they are #1. Last week I found out that my e-book, Detroit: A City on the Brink, achieved just that. It was the best selling Urban Planning & Development e-book on Amazon.com. Help keep it there by buying your own copy for $1.99. You can also purchase a version that works with iPhones, iPod Touches, Sony Reader and other devices by buying at Smashwords. Thank you for the support everyone! This is a great honor for an up-and-coming author!

#1

Th!nk Electric Car Plant Coming to Elkhart

We’ve done a lot of reporting about Elkhart and the state of the economy on this blog. President Obama of course brought national attention when he visited the city twice, once to announce an electric vehicle that would be made in the city. Another electric car company will be moving to town in the near future with a vehicle that is fully electric.

Th!nk announced last week that they would be making the Th!nk City in Elkhart. The manufacturing plant will be capable of producing 20,000 vehicles per year once it is fully operational. While production will not begin until early 2011, it is yet another sign that the economy is rebounding. The company says they will create 400 jobs by the year 2013.

joeandthinkcar

Detroit: City on the Brink

I wanted to take the time to promote three of the e-books that I have published online at Amazon.com. All three of these works are adapted from papers that I wrote for my political science classes at IUSB. The first of these that I am going to highlight is an 8 page paper I did on the rise and fall of Detroit, Michigan:

I have always been fascinated by cities: large, small and anywhere in between. Cities are the life blood of the world economy, culture and politics. Over the past many decades, starting with the end to revenue sharing between the federal government and cities, with the economic turmoil of de-industrialization and the migration of “snow birds” to the South, many cities have found it difficult to survive.

Being born and raised in South Bend, Indiana, I have first hand experience with the hardships that cities face today. Right next door in nearby Elkhart County the unemployment rate has soared as the RV and other industries have suffered from high gas prices and deteriorating economic conditions across the country. The problems in Indiana pale in comparison to those of our neighbor to the north in the state of Michigan.

I took a class this past semester titled POLS-B 399 Urban Politics (a big thanks goes out to Professor James Smith for a wonderful experience) at Indiana University South Bend. This work is the culmination of a semester’s worth of studying and research on urban politics with my term paper focusing on the city of Detroit. I hope you find this short report on the state of affairs in Detroit, Michigan to be both informative and useful.

That is just the Prologue. You can find the full version of Detroit: City on the Brink at SmashWords (iPhone/Sony Reader/iPod Touch/PDF) and on Amazon if you have a Kindle for $1.99.

Blame Bush for the Recession, Not Obama

As the townhall protests extend through August, many of the protesters are aiming their anger at a man that had nothing to do with the economic woes that the country now faces today. The policies of the Bush administration got us to the point where we have nearly 10% unemployment, an over trillion dollar deficit and “bailouts” to banks on Wall Street. President Obama inherited this mess and has been trying to dig us out ever since he took the oath of office.

By the way, Obama’s policies are working. The GDP fell by only 1% in the second quarter compared to over 6% in the first quarter of 2009. Most economists believe that the country will see growth in the 3rd quarter of 2009 (July to September). The stimulus did what it was intended for: it slowed the recession, saved jobs that would have been otherwise lost and invested in our country’s economy through infrastructure projects, green jobs and the largest tax cut in American history.

Even (some) Republicans understand. Conservative economist Bruce Bartlett laid out the facts in an article for the Daily Beast:

• Between the fourth quarter of 1992 and the fourth quarter of 2000, real GDP grew 34.7 percent. Between the fourth quarter of 2000 and the fourth quarter of 2008, it grew 15.9 percent, less than half as much.

• Between the fourth quarter of 1992 and the fourth quarter of 2000, real gross private domestic investment almost doubled. By the fourth quarter of 2008, real investment was 6.5 percent lower than it was when Bush was elected.

• Between December 1992 and December 2000, payroll employment increased by more than 23 million jobs, an increase of 21.1 percent. Between December 2000 and December 2008, it rose by a little more than 2.5 million, an increase of 1.9 percent. In short, about 10 percent as many jobs were created on Bush’s watch as were created on Clinton’s.

• During the Bush years, conservative economists often dismissed the dismal performance of the economy by pointing to a rising stock market. But the stock market was lackluster during the Bush years, especially compared to the previous eight. Between December 1992 and December 2000, the S&P 500 Index more than doubled. Between December 2000 and December 2008, it fell 34 percent. People would have been better off putting all their investments into cash under a mattress the day Bush took office.

• Finally, conservatives have an absurdly unjustified view that Republicans have a better record on federal finances. It is well-known that Clinton left office with a budget surplus and Bush left with the largest deficit in history. Less well-known is Clinton’s cutting of spending on his watch, reducing federal outlays from 22.1 percent of GDP to 18.4 percent of GDP. Bush, by contrast, increased spending to 20.9 percent of GDP. Clinton abolished a federal entitlement program, Welfare, for the first time in American history, while Bush established a new one for prescription drugs.

President Obama Visits Elkhart Bringing Promise for Jobs

Yesterday, President Obama paid his seventh visit to the South Bend area (his third as president) in a speech in Wakarusa, Indiana in Elkhart County. Elkhart County, which is just east of South Bend, is nationally known for its incredibly high unemployment of nearly 17 percent. It actually peaked earlier this year and has come down some 2 percentage points.

Part of the president’s visit was to tout the success of the stimulus package his administration passed earlier this year. It’s clear with the GDP falling only 1 percent last quarter that the economy is on the rebound after diving 5.4 percent in the October-December quarter of 2008 and 6.4 percent between January and March 2009. The Bush recession is leading to an Obama stimulus-driven recovery.

Another part of his visit was to announce grants as part of his stimulus package that will both reduce dependency on foreign oil, as well as put people back to work. The president announced $405 million dollars in grants into research and production of electric vehicle batteries for Indiana. $39 million of that will be for Navistar, a company based in Wakarusa. The money will be used to make “400 advanced battery electric trucks with a range of 100 miles,” the president said.

Six other companies in Indiana were awarded grants making Indiana the second largest recipient of money from the federal government. Investments will also be made in Indiana University, Purdue University, Notre Dame and Ivy Tech to train workers. As a state that has historically played a large role in the development of automobiles, it is great to see a president that supports domestic vehicle production. Not just any vehicles, either. Clean, green and energy efficient vehicles taking advantage of American ingenuity. Built right here in America.

Below is President Obama’s speech announcing the grants to Indiana:

NBC’s Chuck Todd also got a chance for a short interview at the Navistar plant:

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