The Political timing and the needs of the country have merged into a cosmic cataclysmic collision that the Large Haydron Collider only wishes it could duplicate.
The Democrats are on their way to a stunning defeat in 2010 if they don't do something, or at least have a plan, to lower unemployment. The country desperately needs to start putting people back to work in order to halt the spreading Conservative depression.
This ain't high energy physics! FDR faced a very similar problem in 1933 and came up with the CCC.
I wouldn't describe Stimulus I as a complete failure, but it's tax cuts and wasteful cars for clunkers and first time home buyers program was pretty close to flushing money down the toilet. The congress's renewal of the real estate bail-out program does not bode well for their understanding of the economic problems the country faces.
Thanks to the Rubin prodogies Geithner/Summers, the president has been led to believe that he can reinflate the Finance-Real Estate bubble economy. He has yet to learn the lessons of FDR, and still follows the muddied path of Reagan/Clinton/Bushes. I am sure he is now beginning to realize that China, Japan, Germany ... are no longer willing to lend America money so they can try and inflate asset bubbles like real estate and the stock market which eventually threaten the entire worlds economy.
There are 2 main reasons the FIRE (Finance,Insurance,Real Estate) economy can't be revived. Peak Cheap Oil, and Global Warming. I briefly discussed the reasons why these 2 factors put us at one of the most critical points in human history, in a recent diary. Krugman nails it
The Democrats face heavy losses at the polls next year if the unemployment rate is still high and they have no solid program to bring the rate down. Millions of people in the country are suffering because they lost their jobs and are hanging on by the life line of unemployment extensions that the congress throws them every 6 months or so.
It's time for Stimulus II, the Green Jobs Program to invest in America's future and put Americans back to work. Stimulus II must be VERY different than the weak and ineffective Stimulus I. It must, in it's entirety, be directed at putting people back to work. No more bank bail-outs, no more tax cuts, no paying businesses to hire people they probably would have hired anyway, no state bail-outs to save an expensive job that takes the place of 2 inexpensive green jobs.
FDR built the CCC in his first year in office. This was a government program, at low wages, to put as many Americans back to work as soon as possible. It was an emergency program, and if we don't have an emergency facing us now, I'm not sure what constitutes an emergency.
Of course this is not 1933 and the problems the president faces are different, and I consider more severe, than the problems FDR faced. The 1933 depression was a more classical economic depression and we had the natural resources to manufacture and export our way out of that depression. We didn't have to borrow money from China, and we had the energy production (OIL) capacity to build new manufacturing for the export markets.
Because of the limitations of Peak Cheap Oil and Global Warming, we can't get out of this depression the same way we got out of the last one. To get out of this one requires a fundamental shift in where we get the energy to fuel a real economy, not a gambling casino based economy of Credit Default Swaps and Mortgage Backed Securities.
The GJC (Green Jobs Corp) funded by Stimulus II should be directed at hiring unemployed workers, by the government at modest wages, to install American made solar panels on every government (Fed, State, Local) building in the U.S. where solar is feasible. They could also provide the labor to do energy conservation retrofits on all government buildings, and help with the building of the smart grid. I'm sure you can come up with many other projects the GJC could be involved with.
Most of the rest of Stimulus II should go for tax credits for ALT-E installation and conservation retrofits of residential and commercial buildings. By credits, I mean as much as 50%! Stimulus II should also provide a several fold increase in Alt-E/conservation research, especially battery technology. Once we can start transitioning the transportation sector to electricity, Alt-E becomes a true game changer, and we need better batteries to do it.
The Economics and Politics of a Green Jobs Stimulus II are so favorable to the Dems that they would have to be complete fools to turn it down. It costs VERY little extra to employ someone in the GJC than to pay them unemployment to sit home. And when you consider the energy savings to the government, the CBO would have to rule the program as a deficit reducer over 10 years.
In 1933, those who went to work for the CCC, and their families, were so grateful to have the very little the program provided that they became Dems for life. Every person who is on the verge of bankruptcy because they don't have a job, and now has a green job because of Stimulus II will be eternally grateful. And let the Republicans try to block a program that will put people, who lost their jobs because of Conservative economic policies, back to work. This is an absolute political win for the Democrats and could snatch victory from what could be a huge defeat in 2010.
This moment in history is so critical because of Peak Cheap Oil and Global Warming, that the President and Dems have to Ram these programs through at ALL costs. Either the Republicans get on board and help prevent America from becoming a 3rd world country facing constant national security problems, or the Dems do it on their own. I would much rather see the nuclear option used to change the senate rules than to see it used in a desperate attempt to capture the critical natural resources of another country.