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President Obama Needs To “Go Big, Go Long, And Go Global” In Economic Speech

August 20, 2011

This is a part of the article penned by E.J. Dionne  due for release on Monday which deals with the upcoming economic message from President Obama.   I very much agree with the suggestions, and the reasoning.  I also was one that wanted a larger and more inclusive stimulus package in 2009.

 “President Obama has only one option as he ponders a world economy teetering on the edge: He needs to go big, go long and go global. Obama should not be constrained by what the tea party might allow … Republican leaders in Congress to do. He should state plainly, eloquently and in detail what he thinks needs to be happening. Neither history nor the voters will be kind to him if he lets caution and political calculation get in the way. Going big means immediate action to boost the economy, even though this will increase the short-term deficit. His proposals to continue the payroll tax cut, extend unemployment insurance and enact patent reform are good, but not enough. The federal government needs to come to the aid of state and local governments again … We must find ways of boosting spending … on roads, bridges, transit and other building projects, including a new program to rehabilitate the nation’s dilapidated schools. …

“Over the last week, big investors and business leaders have largely stopped talking about budget balancing and started issuing panicky calls for the world’s governments to … avoid … a second recession by spending more money. … Obama should not be shy about urging eventual tax increases, particularly on the wealthy. … Any plausible plan should include at least $2 trillion to $2.5 trillion in new revenues over a decade. … A carbon tax, partly offset by tax cuts or rebates for middle-income and poorer taxpayers, could provide additional revenue. … World leaders came together in 2009 and stopped the slide toward depression. Obama should take the lead in bringing them together … again. Ah, but won’t congressional Republicans block as much of this program as they can? … The point is to insist on a rational plan and to challenge the political system to act rationally. … Obama should explain what needs to be done and then fight for it. It’s the only way it will have any chance of happening.”

7 Comments
  1. Patrick permalink
    August 23, 2011 11:10 PM

    Your comment requires that I clarify my own. Yes, you are right to cite that government does create jobs when it orders a road to be built or orders products from a supplier. But what is important to remember is that the 24,000 woorkers in the counties you cited are funded entirely by the local, state, and federal tax payers. In contrast, the private sector worker is creating a good or service that will be sold–we hope–for a profit. Somebody has risked capital and made money–in addition to paying for the wages of those 24,000 workers.

    While it is true that governments can best arrange for the construction of new roads and other types or goods and services–like police and fire protection, for example–we need to question and constantly evaluate which services and goods government should provide and which should be the responsibility of the individual. Our current financial troubles reflect an imbalance. Stimulus spending has not corrected the imbalance or addressed the financial problems associated with a recession which has gone on for too long. If the current ideas are not working, the president must use his great “intellectual heft” to chart a new path.

    The president is not perceived as pro-business. While this might or might not be fair, he needs to do something drastic to reverse this opinion. He needs to stop criticizing “fat-cats” and demonstrate that he is pro-profit, pro big profits. Profits are what pays for the liberal social agenda; Obama and the left need profits to tax.

    A large segment of the business community is concerned that the climate or future of taxes and regulations is–in part–what keeps them from investing. They want to have a better idea of what the tax and regulation environment will be in five years or ten. The president needs to lay some clear ground rules for the future. Announcing new fuel standards or tens of billions in new regulations does not help.

    The president needs to return social safety-net programs to their historical and original precedents. When social security, for example, was created, people did not have the life expectancy they have today. People were expected to save and provide for their own retirement. The President should stop misrepresenting the Ryan plan and seek a real solution to the safety-net funding problem.

    Finally, the president needs to get congress and his administration to stop wasting money. Ethanol–why are we still giving 50 cents a gallon? Windmills? Really? 70 million dollar trains which run in two-mile loops through downtown milwaukee? Really, again? Research is one thing, but wasting money on unproven or disproven crap is fatal. It is this thinking which explains that while government does “save or create” jobs, it does so at a cost of 286K!

  2. August 22, 2011 12:08 AM

    Patrick,

    So I was in the FL news section of google for the last comment I posted and ran into this column from Sarasota, FL and think it really quite well done and to the points of this post.

    http://www.heraldtribune.com/article/20110821/COLUMNIST/110819494/-1/sports?p=all&tc=pgall

    Here goes….it is a bit long….

    Government doesn’t create jobs.

    Government doesn’t create jobs. Government doesn’t create jobs.

    Say it again, y’all. Government. Doesn’t. Create. Jobs.

    Say it so many times, with certainty, that people won’t even challenge the assertion.

    Such was the case during a Tiger Bay forum on the local economy. The “government does not create jobs” mantra was repeated over and over, yet no one in the audience of 300 — including local government leaders — stood up and said: Huh?

    Say it so many times that people — including Democrats, Republicans and independents — accept the statement at face value.

    U.S. President Barack Obama and British Prime Minister David Cameron wrote a column for the Times of London in which they stated, in part: “Governments do not create jobs: bold people and innovative businesses do.”

    It’s true that bold people and innovative businesses create jobs. The same can be said for timid people and stodgy businesses. One result is that more people work in the private sector than in government.

    But it’s wrong to intimate that government doesn’t create jobs.

    Government does create jobs — both directly and indirectly.

    Want evidence?

    Just consider Manatee and Sarasota counties.

    According to a report released Friday by the Bureau of Labor statistics, 19,000 people were employed, as of last month, by local governments. Add state and federal employees working in the region and the number of government workers rises to 24,000 in the newly designated North Port-Bradenton-Sarasota metropolitan statistical area.

    Major employer in region

    Government hasn’t contributed to the net creation of jobs in recent months; there were 3,000 fewer government jobs in the MSA last month than in February, according to the Bureau of Labor.

    The public sector does not come close to being the largest source of jobs in our MSA.

    Nongovernment jobs are tops, by a wide margin. Last month, according to the Bureau of Labor statistics, there were 210,900 workers in the private sector.

    Nevertheless, in our area, government directly provides 10 percent of all non-farm jobs.

    In raw terms, the government directly provides more jobs than some categories of the private-sector economy — such as construction, 14,800 jobs; financial, 13,300; or manufacturing, 13,200.

    Bottom line: Government directly creates a substantial percentage of the jobs that make up this area’s economy.

    Whether that percentage is too large or small is a matter for debate. But it seems clear that government is a job creator.

    What’s more, government’s contributions to job creation and the economy extend far beyond direct employment through public-sector jobs.

    The private sector creates an unspecified number of jobs — a safe guess would be in the tens of thousands — to do projects and provide services outsourced by government. The private sector also creates jobs in order to make and sell products to government.

    For example, in our region, the two counties plan to spend $300 million in local capital-improvement funds on road construction and maintenance, as well as other transportation-related projects. Except for some design planning and inspections, nearly all of that work will be performed by private-sector companies — and their employees — working under contract.

    Private firms play the same role in the construction and maintenance of bridges, utility systems, airports, seaports, sports stadiums, museums, municipal office buildings, schools — assets owned by government on behalf of the public and taxpayers.

    Paper clips to elder care

    When Manatee and Sarasota counties each accelerated infrastructure spending in 2008, credible projections indicated that 3,000 to 4,000 jobs would be created or preserved.

    Governments buy hundreds of millions of dollars worth of goods — from paper clips to personal computers to pipes for utility lines. They also purchase the services of architects, engineers and financial advisers, all from the private sector.

    Likewise, social services funded by government — substance-abuse or mental-health treatment for those who cannot afford it, child protection and elderly care — are largely performed by private-sector providers.

    Government may not directly create these jobs — as in hiring people to perform them — but it plays a huge role in the creation or maintenance of private-sector employment. Through the use of incentives, the economic development corporations in Manatee and Sarasota have partnered with the private sector to create or sustain thousands of jobs.

    I recognize the arguments that excessive or bad government can inhibit job creation and economic growth in the private sector. Expansion of the public sector and government influence over private business affairs warrants the exercise of care and fairness, with an eye toward balancing public and private interests.

    There is a lot of talk about how the 2012 elections will shape the future and scope of government’s role. That debate will be more productive if it recognizes the reality of government’s current role in the economy.

  3. August 21, 2011 11:59 PM

    Patrick,

    I read this past week about what Flordia is aiming for with stimulas/federal monies. I was not able to find the orginal version of that text I had read….but here is the story all the same.

    Before I get to the story I must print what the CBO had reported. They are nonpartisan, and highly respected. The stimulus increased employment by between 1.4 million and 3.3 million people, compared with what employment would have been otherwise.

    That all nations were using govt. funds for this purpose underscores the mainstream thinking of using federal funds to prime the pump.

    Now to the story…..

    The U.S. Department of the Treasury and U.S. Sen. Bill Nelson announced Tuesday the allocation of funds to help create new private sector jobs and create a projected $1 billion in lending to small Florida businesses.

    The new funds are expected to help small businesses in the state gain access to capital, something that has become increasingly difficult under a tight credit crunch.

    The approval of the Florida’s State Small Business Credit Initiative (SSBCI) has allowed for the allotment of $97.7 million to flow through state-run programs to encourage banks to lend to small businesses.

    “We are getting dollars out the door to small businesses to help create jobs,” said Don Graves, Treasury’s deputy assistant secretary for small business.

    Job creation is expected to occur through the expansion of companies and the recruiting on new businesses to the state by making funds available. For every $1 of federal funding at least $10 in new private lending is expected to occur, Graves said.

    “This is all about jobs and providing jobs through small businesses, which is the economic driving force for Florida,” Nelson said. “We are creating jobs in Florida.”

    Under the state’s plan money will come through three different stages. The first stage would have approximately $20 million to act as a reserve for banks to encourage lending. The Florida Office of Tourism Trade and Economic Development in partnership with Enterprise Florida, Inc., the public-private economic development arm for the state will oversee the program.

    “Banks are so skittish about lending money they don’t want to make loans,” said Allan Bense, immediate past vice-chair of Enterprise Florida. “This will encourage banks to make loans.”

    An additional $30 million will be used to leverage banks to make more loans and will be available to Enterprise Florida’s Venture Capital Program for venture loans, Bense said.

    The final installment of nearly $40 million will be used to help existing businesses expand and to provide loans to help entice new businesses into the state. Before any federal dollars are spent the Florida Legislature must approve the expenditures.

    “I think this is good for the state,” Bense said. “It helps small businesses and it adds another tool in the toolbox for Enterprise Florida to help recruit new industry.”

    The SSBCI offers every state the opportunity to apply for federal funds for state-run programs that partner with private lenders to increase the amount of credit available to small business owners. The overall federal budget of $1.5 billion for the program is expected to create $15 billion in additional private lending nationwide.

  4. Patrick permalink
    August 21, 2011 10:56 PM

    The unemployment rate is over 9%. Studies done on the relationship between unemployment and stimulus show no correlation. This is even true in democratic districts which recieve 30% more stimulus spending than republican districts. (NRO, The Corner, April,7) Recovery.gov also reports 579,000 jobs “saved or created” at a cost of $286,000 each. This is what the average person calls a disaster. Can you find any more encouraging statistics?

  5. August 21, 2011 8:41 PM

    Yes, the stimulas did work. When the international community met in 2009 and agreed on stimulas measures in the respective countries all were aware that without infusion of funds from governments the edge of the cliff was only going to get closer. It was due to the stimulas funding that the economy did not suffer a depression type seizure. There is no one that suggests with any level of credibility that cutting off govt. sources now will do anything but turn this economy south. There will be a choice made as to how to proceed. The nation will see who stands in the way. I am ready for that battle, and the polls suggest the people will side with more govt. intervention based on the results of where people stood when the debt limit debate was staged. The Tea Party may be loud, but they are not the majority in the land. Not even close.

  6. Patrick permalink
    August 21, 2011 8:28 PM

    If the president follows Dionne’s plan he will be finished. Aside from the pointless school thing, Obama has tried all the other things. Why keep doing the things which do not work and then add on a new energy tax? This is insanity. It is a measure of how few ideas liberals actually have. We have tried stimulus, it did not work.

  7. August 20, 2011 8:52 PM

    Bet he will get some tips on how to fix the Country from the Kennedy Clan while at Martha’s Vineyard.

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