Time to Trickle Up - A Trillion in New Stimulus
Posted by Bruce Bourgoine who blogs at Dirigo Blue and Kennebec Blues.
The proposed $300 billion in tax cuts will not excite many Americans but far, far more importantly will not lead to any respectable number of "trickle down" jobs. In fact it may lead to small companies in particular holding on to more profits rather than reinvestment in jobs precisely because their balance sheets have been so terribly wacked recently by the poor economy and the economic malpractice of large financial institutions. The additional proposed timid $50 billion investment in infrastructure will lead to some jobs but not the type of substantial jolt really needed.
Listen to Paul Krugman and others, Mr. President. Go large!
Here is a reasonable and doable "pay-go" $1 trillion solution for starters (feel free to expand liberally):
A.
$250 billion cut from defense over 5 years.
$250 billion in infrastructure spending over 5 years.
This is the $50 billion currently proposed for jobs times 5.
B.
Take in over $500 billion in revenue over 10 years by letting the Bush tax gift (misnamed a tax cut) to the ultra-rich expire. We need to confront the foolish myth that these tax cuts are good for all Americans rather than an extremely limited few.
Invest $250 billion immediately in direct graduated grants to small businesses of less than $1 million in gross revenues for direct hiring based on good ROI plans to increase the health of their companies and sustain the employment for a reasonable projected period of years.
Invest $250 billion over five years in educational restructuring that removes the burden and cost of special education from states/communities by making special education a federally funded mandate; also apply direct aid to schools that have demonstrable need based in part on not winning Race to the Top funding but can benefit from undertaking solid student focused projects; fund hundreds of early childhood initiatives.
Here is a huge number of new jobs in small business and the creation of many jobs to be invested in the future through education.
C.
Redirect $250 billion over 5 years from corporate subsidies, breaks, and loopholes given to big agri-business, big energy companies, and other large corporations to small local farming initiatives and sustainable energy projects.
The redirecting of this money will directly create many local small business jobs vs. the inefficient corporate welfare that provides little in return and corrupts our politics.
The preceding is the power of government at work. Paul Krugman’s observation that
"World War II was, above all, a burst of deficit-financed government spending, on a scale that would never have been approved otherwise" is a lesson we should heed:
Over the course of the war the federal government borrowed an amount equal to roughly twice the value of G.D.P. in 1940 — the equivalent of roughly $30 trillion today.
Had anyone proposed spending even a fraction that much before the war, people would have said the same things they’re saying today. They would have warned about crushing debt and runaway inflation. They would also have said, rightly, that the Depression was in large part caused by excess debt — and then have declared that it was impossible to fix this problem by issuing even more debt.
But guess what? Deficit spending created an economic boom — and the boom laid the foundation for long-run prosperity. Overall debt in the economy — public plus private — actually fell as a percentage of G.D.P., thanks to economic growth and, yes, some inflation, which reduced the real value of outstanding debts. And after the war, thanks to the improved financial position of the private sector, the economy was able to thrive without continuing deficits.
The economic moral is clear: when the economy is deeply depressed, the usual rules don’t apply. Austerity is self-defeating: when everyone tries to pay down debt at the same time, the result is depression and deflation, and debt problems grow even worse. And conversely, it is possible — indeed, necessary — for the nation as a whole to spend its way out of debt: a temporary surge of deficit spending, on a sufficient scale, can cure problems brought on by past excesses.
We need to make direct investments in jobs. That will help our economy, improve individual lives, stabilize social costs of unemployment social and yes, add to business stability and profits. It is time to invest in the most jobs possible for every dollar expended through trickle up and not wish and hope for a few jobs after filling a few wealthy bank accounts, increased company profits, and other corporate priorities through trickle down.
Certainly these numbers and priorities can be juggled. Hiring researchers for medical goals of curing disease, which also harm our econimy in may ways, would be laudable and productive for example. If we hold as our constant goal is the greatest number of jobs directly created for the money spent or a direct correlation of as near to a dollar invested yielding a dollar in payroll as possible, then we can set ourselves on a path to a wider prosperity as discussed by Robert Reich that is not a technical divining of a tepid end to recession with a jobless recovery but one of confidence gained through actual wellbeing by many average citizens with new sustainable jobs and an end to job insecurity by those currently employed but fearing the worst.