The Public Option
By David Glenn Cox
The sales of new homes fell by 33 percent in May to an all time record low of 300,000 new homes. The previous all time lows were recorded last November, December and January. It means that for every new home built in America this year fifteen existing homes will be foreclosed upon.
The Federal government's $8,000 tax credit for first-time home buyers caused sales to rise by 29 percent in the worst market ever known. It made things look better than they really were. It gave a comforting illusion that things weren't so bad and times weren't so hard. The program is estimated to cost $12.6 billion for a four-month rise in new homes sales and that's not much bang for the buck as the sales numbers were revised downward in each of the last three months. Home prices fell 9.3 percent to where the average home value equals its 1993 level.
The answer Congress debated was a call to expand the program to allow incomes as high as $300,000 to qualify. The program had run through the fodder of all those who could afford to purchase a new home. This year fifteen million cars will be scrapped but only eleven million new vehicles will be sold. These numbers are staggering; it is nothing less than an economic Pearl Harbor.
Barack Obama inherited these problems in this economy but his answers have been to tinker in the margins. His solutions have been the solutions that big business would have chosen had their been no Barack Obama.
"But they seem to be beyond the concern of a National Administration which can think in terms only of the top of the social and economic structure. They have sought temporary relief from the top down rather than permanent relief from the bottom up. They have totally failed to plan ahead in a comprehensive way. They have waited until something has cracked and then at the last moment have sought to prevent total collapse." Franklin Delano Roosevelt
I quote FDR not to rub Obama's nose in it but only to point out the similarity of Obama's policies to those of FDR's opponent, Herbert Hoover. Hoover wasn't a bad man; he didn't have two heads or breathe fire. Hoover was a Quaker, his cabinet would exercise on the White house lawn in the morning and then have a breakfast of fresh fruit and juice. In his spirituality he genuinely believed it to be wrong for the government to intervene to help the poor. His political beliefs held no such qualms towards assisting big business. He just thought that big business and corporations knew more about the economy and had a vested interest in repairing it.
The crisis Hoover faced was ten years in the making and Hoover didn't cause it. He just couldn't fix it because he couldn't move outside his own beliefs. He would have agreed with Obama on the $786 billion bailout. Not too much, too much is worse. Hoover read the statistics about Americans living in ditches and holes in the ground and he was profoundly troubled by them. It's one thing to read about the hungry and suffering while it is another thing to actually know these people or to miss a meal yourself. In the Washington fishbowl the water is always just right.
When the Obama administration guided GM and Chrysler into bankruptcy the car companies had come to Washington looking for loans similar to the Chrysler bailout in the 1980s. It was the Republicans who pushed for bankruptcy and the Democrats in Congress who were against it. The Republican position prevailed, decided by Obama's car czar. The right wing press screamed that Obama had nationalized GM when the opposite was true. GM had privatized the government.
Bankruptcy was beyond their wildest expectations. The car companies were allowed to void union contracts, supplier contracts and dealer contracts. Thousands of non-union middle mangers were ejected from this speeding juggernaut and landed on the roadside without a job, without healthcare and without a retirement package. Sorry, that contract is gone. Many union retirement programs were shifted to the public pension guaranty program, or in other words from now on the tax payers would pay GM's retirement obligations.
This program caused tens of thousands of job losses but it was not based on mean-spiritedness, just on the belief that if you assist the banks and corporations they will turn the economy around. The Obama program to take gas guzzlers off the road was actually a program that Ford Motor Company had tried during the last depression. Ford would buy your Model T and crush it when you came in and bought a new Model A. Ford realized with the glut of used cars on the road in a falling market buyers could pick up a bargain on used cars. So Ford wanted to sop up the oversupply of used cars, but the program didn't work because there were so few able to purchase a new car.
The Obama administration spent three billion dollars to sop up the oversupply of GM and Chrysler leased cars coming back to the lots each month. The beneficiaries were GM and Chrysler, and those with jobs, money and credit to buy new cars. The benefits to the unemployed and the struggling were nothing as the used car shopper faced higher used car prices.
The healthcare debate was won handily by the health care industry. The financial reform legislation offers Americans financial protection from inside the Federal Reserve. Consumer protection will now be led by a private corporation.
It was these same thought processes that prompted Obama to lift the moratorium on deep water coastal oil drilling. He campaigned against it and apparently had no idea that the original moratorium was put in place after an identical accident. He placed his trust in big corporations. He knew that the MMS was a defective organization but he trusted to big oil that everything would work out fine.
Despite campaigning against nuclear power the President is now in favor of it and wants to build more nuclear plants and put up nine billion dollars in government guaranties to help industry along. He calls it alternative energy now, and when he says his administration has spent more than all others on alternative energy he's talking about nuclear power where a leak or a blowout could depopulate a state.
In a similar circumstance FDR set the TVA into motion building hundreds of dams across the southeastern United States. There was survey work, road construction, contracts to supply concrete, lumber, steel, trucks, drills and hardware. And when it was finished the byproduct was cheap electricity and a competitive advantage for industry. The TVA strung thousands of miles of electrical lines far past the distances big business thought were profitable. Whole new industries sprang up and the region prospered to levels undreamed of a generation before.
When the TVA began to sell off these dams the same Republican leaders who once called them boondoggles now stood in line to bid on these money makers. Rural farmland was transformed into recreational property. Marinas sprang up and then boat shops then restaurants and hotels and then cities which required more roads. Not fifty miles from here are lake front properties selling for over a million dollars that barely a generation ago were scrub land.
The New Deal invested in infrastructure and trusted that the prosperity would come out the other end. In the meantime it put people to work by kick starting the local economies with government employment. It not only gave people hope for a better future but a tangible belief that a better future was possible.
For the price of Obama's two nuclear plants, 9000 wind turbines could be built. For the price of the homeowners' tax credit to goose sales for four months, 12,000 more could have been built. It takes specialized skills to build a nuclear plant but just basic construction skills to build wind turbines. Like the TVA they would need surveys and roads and trucks and tools. A prolonged investment would give us safe, clean, renewable energy forever and everybody is in favor of that. Right?
Well, no, the coal industry wouldn't be in favor of that, nor would the oil and natural gas industry, and most of all Obama's friends in the nuclear power industry would never be in favor of that sort of program. As we see every day the corporations rule the roost. Obama bans deep water drilling after the worst environmental accident since Chernobyl and a federal judge with ties to the oil industry sides with the corporations. Imagine if a wing had fallen off a Boeing airliner and the FAA grounded the fleet for inspection and a federal judge reversed the order.
"Netflix Inc., which says it’s the largest-growing first-class U.S. Postal Service customer, gave its support to ending Saturday mail delivery. The approval of Netflix, which has more than 14 million subscribers, follows that of Time Warner Inc., publisher of more than 20 U.S. magazines including Sports Illustrated and People. The Postal Service, which says eliminating Saturday delivery would save $3 billion a year, wants to reduce the service to five days a week. The proposal is among a suite of possible changes to plug its deficit."
Sure, that's a great plan! Let's cut back on everything and eliminate as many employees as we can and good times will be back with us again before we know it! A corporation's goal is to produce as much as it can with as few employees as possible and return the profits to the investors. A government's role is to keep as many people working as possible while making the country a better place to live in for its investors, otherwise known as its citizens. It's like being lost in the woods and asking a hungry bear for directions. The choice is obvious, the public option or the corporate option.
"If we can boondoggle ourselves out of this depression, that word is going to be enshrined in the hearts of the American people for years to come."
Franklin Delano Roosevelt