How Stimulus One could be working for us now

President Barack Obama’s speech before Congress on September 8 regarding jobs may have been his most effective remarks since his […]

President Barack Obama’s speech before Congress on September 8 regarding jobs may have been his most effective remarks since his speech on race in Philadelphia in April 2008, when he was still running for the Democratic nomination for president.

One word that he did not use in this speech was “stimulus,” but Republicans were quick and accurate to point out that his American Jobs Act has the look and feel of a stimulus. If that were true, and if the proposal were to pass intact (doubtful), then after a year’s lag, Stimulus I would be followed by a smaller Stimulus II.

What’s a shame is that may never have been a need for a Stimulus II, if the first stimulus had been the real thing. Granted, the $700 billion cost of Stimulus I was significant, but hardly excessive. Opponents stated that additional spending and debt would set off a spiral of inflation. An inflation rate of less than 2%, which is what we have had, hardly qualifies as out of control, or even significant.

The state of the American economy was dire in 2009 when President Obama asked for the stimulus, and a Democratic Congress passed it. The “fierce urgency of now” was very much in play as money needed to be pumped into the economy, and pumped in quickly. When President Obama indicated that the program would focus on shovel-ready jobs, many indicated that few projects would be shovel-ready upon passage of the bill. Big projects need planning and assessment, including important criteria such as environmental impact studies. So, the president was forced to go with relatively small tasks that were already in the works.

The Obama Administration hoped that a one-shot stimulus would jump-start the economy and generate massive hiring in the private sector. It helped, but not enough. Conservatives may have been correct in arguing that businesses would be reluctant to hire if uncertainty was what lay beyond this quick-fix stimulus.

As economists such as PBS’s Paul Salmon pointed out, the stimulus was not to be confused with a New Deal program. 1930s programs such as the CCC, WPA, CWA, NRA and TVA were designed to last as long as they were needed. That meant that a project could go through all the necessary steps of development with the agency in place. First there would be planning, then review, then construction, and finally evaluation.

The TVA (Tennessee Valley Authority) was a huge program that brought electric power to impacted areas of Appalachia. The TVA was primarily a series of dams that produced hydroelectric power. It now serves over 9 million customers. The Grand Coulee Dam on the Columbia River and the Hoover Dam on the Colorado River were two other massive water projects in the New Deal. Hundreds of courthouses, post offices, schools, hospitals and parks were built during the New Deal.

Even though America did not come out of the Great Depression until it entered World War II, Roosevelt was able to cut unemployment in half and instill renewed spirit in the American people. Perhaps most relevant to President Obama is that FDR satisfied the needs of his political base and was re-elected in 1936, 1940, and 1944.

As inspiring as President Obama’s September 8 speech was, it can be argued that it would have been unnecessary had he successfully promoted an initial stimulus that was similar in magnitude to the beginning of FDR’s New Deal. Such a program would have initially put hundreds of thousands or millions of unemployed people to work. It would have initiated the planning for a series of projects that would have been phased in for as long a period as was necessary to regenerate private hiring and also meet basic social needs of the country.

It is true that, when President Obama entered office, he had far less of a majority in Congress than FDR did. The House was solidly Democratic, but many of the “Blue” were “blue dogs” – Democrats who were leery of excessive federal spending. However, many of the “blue dogs” represented economically depressed areas, such as West Virginia and southern regions of Pennsylvania, Ohio and Indiana. Additional spending would have had a direct and positive impact on the constituents of these representatives. Additionally, Nancy Pelosi was a very savvy Speaker of the House who was eager to advance progressive policies.

With independents Bernie Sanders and Joe Lieberman, the Democrats theoretically held fifty-nine of the one hundred seats in the Senate. One more would have been needed to make their majority veto-proof. However, some of the Democrats were either DINOs (Democrats in Name Only) or more interested in pork for their states than good policy. The shenanigans of Sen. Ben Nelson of Nebraska and Sen. Mary Landrieu of Louisiana in the debate on the Patient Protection and Affordable Care Act were both cynical and deplorable.

However, had President Obama taken a page from Lyndon Johnson’s playbook, he may well have brought Nelson, Landrieu and others along without paying a heavy penalty. Johnson had been a master at getting both southern Democrat and Republican votes for the series of civil rights acts that were passed in the 1960s. President Obama needed one or two Republican votes as well, but one state, Maine, with Senators Susan Collins and Olympia Snowe, might have given him a veto-proof majority. Had the president traveled to Maine to explain to the voters how a state with aging industry would have benefited from full-scale stimulus, he may well have gained their votes.

Even had President Obama not been able to persuade Congress in 2009 to pass a comprehensive stimulus bill, he would have put the arguments on the table, and it would have been much easier now to explain now how much more was needed.

All of that is history. What is important now is the future. President Obama’s proposed $450 billion stimulus (of which half is tax reductions) is short-range. If he is fortunate enough to get Congress to pass his current proposals (somewhat of a longshot), the stimulus will end in short order. The private sector knows that, and it will be reluctant to assume the risks of large-scale hiring if they are staring an uncertain future in the face.

It is not enough for us to take President Obama’s advice and urge our representatives to pass what he has proposed. We need them to pass the real thing – a stimulus that is of such a critical mass that it is powerful enough to overcome the horrible damage inflicted upon our economy by eight years of George W. Bush.

President Obama is now acting like a Democrat. It is incumbent upon us as citizens to let us know that that is not enough; we need a strong Democrat. He can be that person. It will be good for both his political and presidential legacy.


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Arthur Lieber

About Arthur Lieber

Since 1969, Arthur Lieber has been teaching and working in non-profit educational organizations. His focus has been on promoting critical, creative, and enjoyable learning for students in informal settings. In the 2010 mid-term elections, he was the Democratic nominee for US Congress from Missouri’s 2nd Congressional District.