The nation’s employers cut 533,000 jobs in November, the Bureau of Labor Statistics reported last week – the greatest single month loss since December 1974, toward the end of a severe recession.
And this is not the end, but rather the beginning of what most likely will be an even longer recession than what was experienced in the 1970s.
President-elect Barack Obama, on “Meet the Press” this past Sunday, said, “things are going to get worse before they get better.” The President-elect, who does not take office for another 43 days, promised a stimulus plan “large enough to get the economy moving.”
The unemployment rate is at 6.7 percent, up just two-tenths of a percentage point from October, but up six-tenths over the last three months. Some 2 million jobs have been lost in the past year.
On Saturday, in his weekly YouTube-side chat, President-Elect Obama vaguely outlined his economic stimulus proposal and the infrastructure needs it will fulfill.
The President-elect said he plans to create the largest public works project since the building of the federal highway system in the 1950s with programs, for example, focused on repairing roads and schools.
The five key parts to President-elect Obama’s stimulus proposal:
ENERGY: “[W]e will launch a massive effort to make public buildings more energy-efficient. Our government now pays the highest energy bill in the world. We need to change that. We need to upgrade our federal buildings by replacing old heating systems and installing efficient light bulbs. That won’t just save you, the American taxpayer, billions of dollars each year. It will put people back to work.”
ROADS AND BRIDGES: “[W]e will create millions of jobs by making the single largest new investment in our national infrastructure since the creation of the federal highway system in the 1950s. We’ll invest your precious tax dollars in new and smarter ways, and we’ll set a simple rule – use it or lose it. If a state doesn’t act quickly to invest in roads and bridges in their communities, they’ll lose the money.”
SCHOOLS: “[M]y economic recovery plan will launch the most sweeping effort to modernize and upgrade school buildings that this country has ever seen. We will repair broken schools, make them energy-efficient, and put new computers in our classrooms. Because to help our children compete in a 21st century economy, we need to send them to 21st century schools.”
BROADBAND: “As we renew our schools and highways, we’ll also renew our information superhighway. It is unacceptable that the United States ranks 15th in the world in broadband adoption. Here, in the country that invented the Internet, every child should have the chance to get online, and they’ll get that chance when I’m president – because that’s how we’ll strengthen America’s competitiveness in the world.”
ELECTRONIC MEDICAL RECORDS: “In addition to connecting our libraries and schools to the Internet, we must also ensure that our hospitals are connected to each other through the Internet. That is why the economic recovery plan I’m proposing will help modernize our health care system – and that won’t just save jobs, it will save lives. We will make sure that every doctor’s office and hospital in this country is using cutting edge technology and electronic medical records so that we can cut red tape, prevent medical mistakes, and help save billions of dollars each year.”
An argument for similar government spending – directed mainly at green alternatives – has been made by the Political Economy Research Institute at the University of Massachusetts and the Center for American Progress, a Washington research organization founded by John D. Podesta, who is a co-chairman of Mr. Obama’s transition team.
But as Nicole Gelinas, a Chartered Financial Analyst, notes in the Wall Street Journal, “It’s important that the elected officials view public works investment not as a short-term stimulus for stimulus’ stake, or a vehicle for politically driven job creation. The goal should be to create the best and broadest necessary and permanent infrastructure for the most responsible minimal price needed to build it. Being careful here is necessary because this is borrowed, finite money; it could become prohibitively expensive for the feds to borrow as debt levels skyrocket. Spending is not investing.”
Following calls from U.S. mayors and governors across the country to invest in infrastructure projects, the American Association of State Highway and Transportation Officials said there are more than 5,000 highway projects ready to go if Congress will devote $64.3 billion in funding.
The group said 1.8 million Americans could be put back to work as a result of the public investment.
Current President George W. Bush and other Republicans have resisted such a large investment in infrastructure in part due to the ever-increasing federal budget deficit, which could easily hit $1 trillion this year. Borrowing hundreds of billions of dollars today to try to fix the economy, they argue, will leave a huge bill for the next generation. The President-elect and democratic leaders in Congress have yet to address this concern.