Pres.-elect Obama Announces Sweeping New Economic Recovery Plan
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Related subjects: Economic Recovery, Energy Supply, Healthcare Policy, J.E. Robertson, Mortgage & Credit Crisis, U.S. news, U.S. Politics Comments Off
President-elect Barack Obama today announced his comprehensive economic recovery plan, warning that inaction could lead to a deepening and prolonged recession and double-digit figures of unemployment. Obama’s plan calls for a massive economic stimulus package, tax-cuts friendly to small businesses, and building a new economy through investment and innovation in healthcare, infrastructure and energy.
Last month, US government economic officials reported that revised analysis showed that the current recession began in December 2007 and showed signs of deepening. Jobless figures showed a further 693,000 jobs lost in December, bringing the total for 2008 to 2.6 million jobs shed.
Ian Shepherdson, US economic analyst for High Frequency Economics has reportedly said the December job losses are “shockingly awful”. More than 1.1 million jobs were lost in the last two months of 2008 alone, raising the stakes significantly for any policy proposal Obama will put forth in the early months of 2009.
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“Reducing expectations” is a major requirement for Obama at present, as many note even a seriously effective economic recovery plan could show slow signs of change in early months. MSNBC’s Chris Matthews called the address “probably the most important speech [Obama]‘s delivered as … president-elect”, and it is expected there will be immediate reaction from markets and even banking interests.
Obama will take office facing the most dire economic crisis since the Great Depression, likely requiring nothing less than an aggressive approach to overhauling major components of economic output, to do away with inefficiencies and reduce to near zero the drain on vital resources. With unemployment dramatically escalating, and fears of the attendant social and economic ills that may come as fallout, taking hold, the new administration’s approach is that action is needed, without delay.
Obama led into his plan’s specifics by warning of the extreme nature of the current situation:
If nothing is done, this recession could linger for years. The unemployment rate could reach double digits. Our economy could fall $1 trillion short of its full capacity, which translates into more than $12,000 in lost income for a family of four. We could lose a generation of potential and promise, as more young Americans are forced to forgo dreams of college or the chance to train for the jobs of the future. And our nation could lose the competitive edge that has served as a foundation for our strength and standing in the world.
Community reinvestment, infrastructure renewal and entirely new energy infrastructure, along with a restoration of the highest standards for America’s public schools, are all priorities designed to not just stimulate the economy, but to build a more resilient, more dynamic, more intelligent economic system, with training and innovation capable of meeting the daunting demands of the 21st century.
It will be a high-stakes, ambitious undertaking, but Obama has been careful to keep public attention focused on the longer term. Act now, implement a major stimulus, but keep our eyes on the prize, which is a full recovery and the reinvention of our energy and innovation infrastructure, the dynamization of our workforce, the bias toward promoting education as a social value worth investing in, the quality of which corresponds to real national security interest.
Obama warned of the bad habits, the greed and laissez-faire attitudes, that led to the current crisis, saying:
This crisis did not happen solely by some accident of history or normal turn of the business cycle, and we won’t get out of it by simply waiting for a better day to come, or relying on the worn-out dogmas of the past. We arrived at this point due to an era of profound irresponsibility that stretched from corporate boardrooms to the halls of power in Washington, DC.
Responsibility is an issue that relates directly to regulation: lax or non-existent regulation assumes either that nothing will go wrong or that if there is “wrongdoing”, it will not cause any serious negative effects. Serious regulation will be part of Obama’s economic recovery strategy, but regulation along with the setting and funding of ambitious priorities that represent a more responsible approach to economic policy.
He pledges that:
It is not just another public works program. It’s a plan that recognizes both the paradox and the promise of this moment – the fact that there are millions of Americans trying to find work, even as, all around the country, there is so much work to be done. That’s why we’ll invest in priorities like energy and education; health care and a new infrastructure that are necessary to keep us strong and competitive in the 21st century.
The president-elect promised that his plan “will begin to rebuild America”. He wants to create at least 3 million new jobs related to the projects that will emerge from the plan. There may need to be a kind of ripple effect that will spur new directions in energy and technology innovation and lead to yet more new jobs, as those 3 million will just about cover those jobs lost in the bleeding of 2008.
The plan entails “updating the way we get our electricity by starting to build a new smart grid that will save us money, protect our power sources from blackout or attack” and privileging new renewable sources of energy. Obama also promised “immediate relief to states, workers, and families who are bearing the brunt of this recession”, including a $1,000 tax-cut to 95% of working families, “the first stage” of the massive middle-class tax cuts he pledged during the campaign.
The president-elect also signalled that transparency must be a hallmark of this new economic strategy. He has pledged that information will be fully available to the public about how money is being spent, hinting that he willl work with members of Congress who want to hold the Treasury accountable for how it spends money rescuing banks, and direct those firms to work with borrowers to prevent further bankruptcies and foreclosures.
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