Much of the details of the new stimulus have yet to be known. What's emerging so far is cause for concern. For one thing, the $300 billion in tax cuts may be smart politics, but it's questionable economics and policy. Then there's the issue of how federal dollars might be used to prime the pump, with so much going to backfill basic programs being defunded by cash-strapped states, and lobbyists of the powerful highway-sprawl consortium lining up for the "roads and bridges" money.
George W. Bush and eight years of Republican misrule — really more than a quarter century — are leaving the new administration with the worst mess in nearly 80 years. And remember, all this was validated over and over by a majority of Americans at the polls (maybe not in 2000 and 2004). It's an open question whether any president can lead the changes really necessary to address the Great Disruption, of which the economic collapse is only part. We'll see. But the barriers to real change we can believe in are mammoth.
Paul Krugman lays out some arguments for and against the tax cuts in his blog. Tax relief might provide some immediate boost to consumer spending that won't come from longer term public investment. Yet even crafting this much of the stimulus as tax cuts won't gain Republican support. I agree. The Republican minority will do everything in its power to stymie Barack Obama and make him a failed president, no matter the damage to the country. And, alas, the Senate seems to lack any leader with the effectiveness of Lyndon Johnson.
There are deeper problems. No amount of tax cuts can replace the stunning amount of housing values that have vanshed for most American families. This wealth was particularly chimerical for those who used their houses as credit cards or tried to make it rich flipping properties. Tax cuts can't replace years that should have been spent saving and not racking up debt. Nor can they make up for the lack of well-paid, secure jobs with health care and pensions. Or for the vast amount — perhaps 40 percent — that has been whacked out of the portfolio of the average American who probably shouldn't have been in the stock market to begin with.
On a philosophical level, tax cutting continues the infantalized American belief in a free lunch. Taxes may be relatively high for some lower-income earners, but Americans face a fraction of the taxes paid by those in most other advanced nations. No wonder we have so little to show for our money. The real answer is to restore progressivity to the system, with the rich and corporate tax dodgers brought back into the civic covenant, paying the highest share. But the current conversation seems to avoid this.
Rather than focusing on public investments that could prepare America for a sustainable 21st century, much of the package will likely go to the states. There, it will fund programs already in place for unemployment benefits, healthcare, food stamps and other areas to help the worst off. Here the states have failed in their responsibilities, hamstrung by years of tax cuts, underfunded programs, initiatives that cap taxation, and imbalanced tax systems depend too heavily on (very unprogressive) sales taxes. Thus, the federal dollars will merely be sucked into helping the states tread water. This will do little more than staunch the bleeding.
Meanwhile, the sprawl lords are licking their chops at the prospect of a TARP for their world. For example, South Carolina wants to build an interstate highway into a rural area. I imagine Arizona lining up to pave all of Pinal County. There's only one goal here: to enable the destruction of more farmland and rural eco-systems for subdivisions populated by people who must travel everywhere in long, single-occupancy car trips. These are precisely the wrong projects for a nation facing global warming, global competitors and ongoing ominous environmental degradation. Nor can they revive a business model that is dead.
"Roads and bridges" should be existing arteries only, in populated areas — and the proportion of funding for this transportation system of yesterday should be much smaller than in the past. America should be racing to catch up with Europe and even China in high-speed rail, higher capacity on existing rail lines to handle more freight along with a much muscled-up Amtrak, and mass transit. Suburbia must be retrofitted, where it can be, for mass transit. The time to do all this is now.
Stimulus, too, should address our failing schools, especially in the cities and real towns where people will be living in the future. It should be funding the revival of real industries that can produce goods that can be sold here and abroad, and seeding truly viable green industries. It should ramp up scientific research and the entire value chain that includes blue-collar tech jobs (for example, Phoenix's stimulus should build a complete downtown biomed campus, not some asphalt ribbon to Maricopa Nowhere).
Yet little of this seems to be in play. Perhaps Obama thinks he can build on an early consensus "success" and slowly drop breadcrumbs to lead the American people in the right direction. Maybe he's of the Jack Nicholson school: You can't handle the truth. If so, he will merely be managing the decline of the nation. At least he will do a more competent job of it than his predecessor. But is that really the America we want?
I’m disappointed with Obama, too. We somehow hoped that his outside-the-box political campaign would midwife a creative and challenging administration. But what’s apparent now is how careful Obama has been not to offend certain interests. America’s consumption-based economy is moribund but conventional wisdom still rules. So we’ll throw untold billions at it until the failure becomes obvious. Then for us the real work begins. Let’s just hope it isn’t too late.
Our political and business class may be chastened but they’re not exactly singing from our hymnal. We may as well admit how marginal our viewpoints are in the overall national discourse. It isn’t merely the average American who thinks good times are just a stimulus check away. It’s nearly everyone vested with credibility and air time.
At any rate, Phoenix has already become a case study in how not to build a sustainable and competitive city. The denial here is thick but the old paradigm is cracking. Light rail has served one useful purpose. The central city looks so forlorn that you can ride 22 miles and scarcely see anything that looks like a vibrant city (partial exception: Mill Avenue).