Robert Reich: Obama's Tiny Jobs Ideas for Main Street, A Big Spending Freeze for Wall Street

[highplainsdem]

http://robertreich.org/post/353436115/obamas-tiny-jobs-ideas-for-main-street-a-big-spending

Monday, January 25, 2010

President Obama today offered a set of proposals for helping America’s troubled middle class. All are sensible and worthwhile. But none will bring jobs back. And Americans could be forgiven for wondering how the President plans to enact any of these ideas anyway, when he can no longer muster 60 votes in the Senate.

The bigger news is Obama is planning a three-year budget freeze on a big chunk of discretionary spending. Wall Street is delighted. But it means Main Street is in worse trouble than ever.

A spending freeze will make it even harder to get jobs back because government is the last spender around. Consumers have pulled back, investors won’t do much until they know consumers are out there, and exports are miniscule.

-snip-

Like Clinton’s, Obama’s package of middle class benefits is small potatoes. They’re worthwhile but they pale relative to the size and scale of the challenge America’s middle class is now facing. Obama can no longer afford to come up with lists of nice things to do. At the least, he’s got to do two very big and important things: (1) Enact a second stimulus. It should mainly focus on bailing out state and local governments that are now cutting services and raising taxes, and squeezing the middle class. This would be the best way to reinvigorate the economy quickly. (2) Help distressed homeowners by allowing them to include their mortgage debt in personal bankruptcy — which will give them far more bargaining leverage with morgage lenders. (Wall Street hates this.)

Yet instead of moving in this direction, Obama is moving in the opposite one. His three-year freeze on a large portion of discretionary spending will make it impossible for him to do much of anything for the middle class that’s important. Chalk up another win for Wall Street, another loss for Main.

[Phoebe Loosinhouse]

1. One of the guys President Obama SHOULD be listening to. nt

[JCMach1]

2. Exactly, explain to me why Bernanke would be better than Reich

or another economists who is a democrat and was spot-on with the current economic mess.

[TexasObserver]

3. If the president freezes spending and doesn't have a 2nd stimulus ...

... the recovery will stall by this summer.

Ironically, the same people who like it for Wall Street now won't like it in six months. Spending cuts never work out the way the "conservatives" think they will. When consumers aren't buying, those stocks in recovery will falter. It all comes down to whether consumers are buying, whether people are building or otherwise engaging in new ventures.

If the president is naive enough to continue listening to the Wall Street shills who have gotten him into this mess, they will take him down with their bad advice. He's got one chance to pull this out, and that's to get busy with a Stimulus/Jobs Program now. He has to ram it through, and get it done. If he doesn't his presidency will probably never recover. His chance at retaining the congress this fall is to act forcefully now to deliver more jobs. If he is seen as Wall Street's protector and emissary, we will have no chance of retaining the House this fall.

[Leopolds Ghost]

4. Why not take that $trillion back from Wall St and spend it on discretionary spending?

You could build a subway system in Kansas City for a few billion dollars. (Not that anyone in America supports real mass transit anymore)

No wonder Obama said he idolized Ronald Reagan.

Never in his wildest dreams could Ronald Reagan or Bill Clinton have gotten away with this. Are we gonna roll over and take it?