Wednesday, February 27, 2008

Economic Crisis Requires New Solutions

by Joel Wendland

On Tuesday, Reuters reported that George W. Bush thinks our economy is neither in recession nor headed for recession. It must be nice to live in a dream world.

Bush main reason for stating so is political, however. He wants to try to avoid criticism of his remaining days in office, for one. But he also is planning to block renewed calls for economic stimulus that focuses on giving aid to state governments facing fiscal crisis – and some such calls are coming from both Democratic and Republican governors – and on investments in infrastructure.

Recall that Bush and previous Republican controlled Congresses collaborated to slash grants to states for programs like Medicaid. Not only has this been a public health disaster, but it also means that states are forced to shift more resources from things like public education and public safety to cover Medicaid recipients.

Arizona Gov. Janet Napolitano (D) (along with others) recently called for a rejection of the Bush Medicaid cuts. And labor is leading the political charge to pass new investments in infrastructure reconstruction.

It is pretty clear that the economic crisis is quickly eroding dedication to hardline Republican ideological demands for cutting social programs to pay for tax breaks for the rich and endless war in Iraq.

But their are even newer signs that the economic problems we face are not so readily solved merely by adjusting interest rates or dishing out tax rebates.

The housing crisis has caused a huge credit crunch. Homes are not worth as much as the mortgages owed to banks. On the other hand, inflation is growing, driven by higher food and energy costs (a la the Iraq war). The Fed's instinct is to cut interest rates. But won't that fuel inflation? How do working families deal with losing more homes, higher prices, unemployment, and weakening wages?

Obviously political leaders are going to have to start thinking outside of the "free market," individualist, business-interests-first box they have constructed that got us into the mess in the first place.

1. End the war
2. Invest in U.S. infrastructure (both physical and social)
3. Invest in alternative energy
4. Expand anti-poverty and public health care programs: from food stamps to unemployment compensation to Medicare and Medicaid and S-CHIP
5. Impose an indefinite moratorium on home foreclosures.

1 comment:

Jaded Prole said...

This country must be retooled to face the reality of ecological change. We cannot continue to function as we have in the past. Doing this will take a massive public works effort to build a national sustainable alternative energy grid and rail system as well as rebuilding infrastucture. This would also boost the economy by creating jobs. I sent letters of all the front-runners regarding the necessity of this effort though I don't expect them to listen. I pointed out that failure to act would make anything else they do meaningless because failure to do the needed restructuring would ensure that this society and system would not even exist by the end of the century otherwise due to economic collapse.