No Relief in Sight
How bad is it out there? Even a cursory scan of the news paints a grim picture of an America on the brink: broken roads, crumbling bridges, dimmed streetlights, shuttered clinics and scrapped school programs. Everywhere one turns, the nation's basic infrastructure—built in the twentieth century to connect communities and care for the sick, the young and the old—is being abandoned, as if there were not enough workers to keep it up. Yet the exact opposite is true: more than one in ten Americans are out of work, and more than half of those have been unemployed for more than six months.
Even the normally inflation-obsessed Fed, worried that the economy is headed into a deflationary spiral, bought billions in Treasury securities to keep money flowing through the financial system. But monetary policy can only do so much. The short-term solution to the crisis is obvious: get cash pumping through states and cities to create and preserve jobs. So too are the obstacles: a breathtakingly cynical GOP hellbent on opposing anything that might improve the economy—in the hopes that voters will blame Democrats in November—and an ill-timed, baseless bipartisan hysteria over deficits.
There is no clearer sign of the poisonous environment created by these factions than the battle to pass a $26 billion package to help states and local governments make Medicaid payments and avoid laying off 140,000 teachers. The only way Senate majority leader Harry Reid was able to break a Republican filibuster was with offsets, largely through—if you can believe it—$12 billion in cuts to food stamps. Reid had to table his initial proposal to cut "only" $6.7 billion in food stamps because the Congressional Budget Office (CBO) said the bill would still add $4.9 billion to the deficit. Only by nearly doubling the food stamp cut were Democrats able to win the votes of Republican Senators Olympia Snowe and Susan Collins.
The political calculus is stunning. More than $1 trillion for the banks? No problem. But $10 billion for teachers and $16 billion to help the poor get healthcare? Only if it's deficit-neutral and offset by other cuts to social spending. Never mind that many people using food stamps are already living through a depression or that food stamps are one of the most reliable ways to stimulate spending. The food stamp lobby doesn't have quite the same pull as the Chamber of Commerce or US corporations—which have seen their profits rise by 36 percent this year and enjoy profit margins as a share of GDP that are near postwar records.
With this kind of downsized politics, many good proposals are left foundering. Take the infrastructure bank proposed by Michael Lind and Sherle Schwenninger of the New America Foundation and championed by Congresswoman Rosa DeLauro. By investing private and public funds in America's roads, rails, electrical grid and telecommunications systems, an infrastructure bank would create the jobs Americans so desperately need; as Washington Post columnist Harold Meyerson points out, infrastructure is "the investment with the highest multiplier effect." It's also the first move in restructuring the economy so that it's more stable and productive and less at the mercy of financial bubbles and busts. This kind of long-term rewiring will also require more progressive taxation to reduce gilded-age inequality and strengthen labor protections for workers. But when the CBO, centrist deficit hawks and obstinate Republicans call the shots, it seems the chances for good proposals like these are slim to none.