No president in modern times walks a tightrope as exquisitely as this one. His balance is a thing of beauty. But when it comes to this economy right now -- an economy fundamentally out of balance -- we need a federal government that moves boldly and swiftly to counter-balance the huge recessionary forces still at large.
States and cities, for example, are estimated to be $350 billion hole this year and next. They can't run deficits so they're wildly cutting spending, cutting jobs, cutting contracts, and raising taxes and fees. That's a huge anti-stimulus package roughly as big as the remaining direct spending in the old federal stimulus package. Which means, Obama's "new" stimulus, announced today, is about all we have, and it's not nearly enough.
There is no reason to tolerate this degree of misery. We know exactly what to do. The government has the fiscal tools to do it. Start by bailing out state and local governments (if Congress would prefer to call it a loan and require payback over the next five years, fine). Renew unemployment and COBRA benefits. Increase federal spending on infrastructure. If we have to, hire people directly. The package should be $400 billion over two years.
When Ed Schultz noted that the credit markets need to be loosened up for small businesses and that he thought the TARP money should be used for that and not only for government jobs, Reich responded:
Ed it is the right thing to do. I wish though when we bailed out the big banks, one of the reasons we bailed out the big banks was so they would turn around and provide credit for small businesses. Actually nothing like that happened. We bailed out the big banks and now we're bailing out small businesses.
Just one more of the many strings that should have been attached to that money. Of course the Republicans won't want to go along with any of it and scream more about the need for deficit reductions. Unless of course that interferes with tax cuts for the rich or military spending. Then the sky's the limit and deficits don't matter.