The economy is said to be recovering, but the people are not. The jobs are gone, and haven't started to come back. 25 million people are in need of full time work. Incomes are stagnant; more and more are losing health care. Even the uptick in jobs that will be reported on Friday is misleading, reflecting temporary hiring for the census and recovery from snow bound February.
So what is the strategy? Obama initially got the big things right. A big recovery plan -- featuring deficit financed investment in infrastructure, aid to states and localities, a boost to new energy -- would stem the collapse and put people to work. The bank rescue would get the financial system lending again. Investments in new energy -- and in education, research and development and infrastructure -- would rebuild the economy on a new foundation, while capturing a leading role in the new green industrial revolution.
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First, the president needs to explain to Americans where we are. That we can't wait for a recovery to create jobs, because there is no recovery to the old economy. That economy was based on debt financed bubbles that burst. We can't go back there and should not want to.
That requires we dig out of a very deep hole. This will take time. In the short term, the president should get back in front of the jobs debate in Washington. He put some $260 billion in his budget for jobs creation and unemployment support -- but has said little about it since. It is time to champion measures big enough to deal with the scope of the challenge. 105 co-sponsors have joined Rep. George Miller on legislation calling for $100 billion to go to localities and non-profits for jobs. Estimates are that it could save or generate over a million jobs. Conservatives in both parties scorn spending more money on jobs, even as layoffs of teachers and police and fire fighters increase. The president should take this on and champion the bill as one part of the response, calling for paying for it by reviving his tax on the banks to get our money back.
Then the White House should turn tax day, April 15, into trade day. On that date, the Treasury must decide whether to recognize reality and name China, among others, as a country that is manipulating its currency to gain trade advantage. Do it. Speak truth. Enlist allies to join. Declare that the US will no longer simply ignore the reality that some countries are playing by a different set of rules. While the president takes the issue to the G-20, the Congress will start hearing s on tariffs to counter the effect of undervalued currencies. The labor movement could launch a drive across the country to pass buy America standards for public procurement at the state and local level. The common sense proposition - that taxpayer dollars should be spent to create maximum jobs here, not abroad - is popular across the political divides.
The point of all of this is simple and necessary. China and the mercantilist nations have to be confronted with the reality that we are not going back to the old economy -- where the US borrows money to serve as the consumer of last resort to the world and they can depend totally on export led growth.
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