Wednesday, October 29, 2008

Kerry's Path Out of Economic Hell

"Now, (as during the New Deal time), we need fundamental change — not bit sized ideas that are poll tested, sound-bite ready and destined to be mere footnotes to the times we live in," U.S. Sen. John Kerry said yesterday. "It's time we end the era of inncrementalism and begin a bold new age in progressive politics."

Regular readers don't click here for newspaper-style full speech coverage. More often when I attend a political speech, I get snippets and the gist, as in Kerry's address last week at Tufts' Fletcher School.

That was one bookend of a pair. Designed as the foreign-policy/security portion, it was as much an Obama rallying cry as Kerry's ideas. In contrast, this economics address was the real thing. After the opening oral glad handing, it was all Kerry and all significant.

I didn't see the dailies in Lynn in the North Shore Community College's gym, nor do today's papers carry Kerry coverage. They truly missed out and will have to get with the program. Fortunately, Kerry's people sent the text of the speech around by email.

Our junior Senator is a key player here. Assuming an Obama victory and maybe even a 60-seat/filibuster resistant Senate majority, we can expect progressives to begin fixing the economic failures.

Podcast note: Over at Left Ahead!, we didn't do our usual Tuesday podcast, so the three of us could attend this one and get a 10-minute interview after it. We're still hoping for the real thing, but that's a start.

In Lynne, Kerry stepped up to the mic with everyone likely thinking, "Bailout. Okay. What now?" After buffeting us with a grim recounting of our national and local troubles, and how they came to visit us, he laid it out.

Kerry doesn't do folksy all that well. He started by saying "I didn't come her to be the skunk at the party" in describing the economic chaos and wall of challenges. He later roasted that chestnut about the man not sending his brother who thinks he's a chicken to a mental institution — because we need the eggs — as a metaphor for financial institutions' fantasies about the many billions of dollars of instruments that failed. The latter trope served to muddle the serious subject rather than distract from it.

What he does well is reasoned strategy and tactics. He is the candid and complete strategist that current GOP nominee and Prez pretend to be be.

His address was on national needs and solutions, but he didn't spare the local details. A home somewhere is foreclosed on every 10 seconds and 160,000 lost U.S. jobs last month (over 4,000 in Massachusetts). Also, here home values continuing to drop, recently by 9%, and five metropolitan areas in the nation's top 100 foreclosure locales.

Even in the years leading to the current crisis, "as the Dow reached an all-time high, average real income stayed flat while the cost of health card, education, food, gas and home heating oil have soared," he said, adding "I all that 'Bushonomics' (which) may be felt for some time to come."

Bitter Shot, Hope Chaser

The I-am-not-the-skunk still iterated what he said at Tufts, that the worst of the economic collapse continues. More people will lose jobs, more companies and banks will fail, and in general, we are looking at only the beginning of the recovery.

Like a true progressive though, Kerry said he was excited out the upside on the other side of this mess. That is because we have a chance, and really no option, but to fix the fundamentals. That includes finally paying the bill for our crumbling national infrastructure, much as President Franklin Roosevelt did during the New Deal. We can also reverse the absurd and untenable transfer of wealth from the middle class and small businesses to the top tiny percentage of people and corporations.

As my own comment not and not Kerry's, it is three decades past time to call Randist free-market scheme as practiced under Alan Greenspan, as well Reaganomics and the Bush/Bush variations for the unworkable lies they are. The crazy, irrational and often disproved trickle-down theory doesn't, hasn't and won't work. The wealthiest companies and pseudo-aristocrats almost to a one do not let their money help the plebes. It wasn't true in the 1890 or the 1990s or now.

Instead, Kerry calls for:
  • Meaningful financial-industry regulation. The GOP strategy of deregulation led to, among many defects, banks and brokerages having up to 44:1 leverage on investment, impossible to pay back when called. The crisis reflects "a profound failure to govern the market," said Kerry.
  • Bailout mandates. "(W)e still need to do more to get this right and make sure banks don’t just take taxpayer dollars—but keep their promise to lend it back to hardworking people."
  • Bailout repayment. Our now breathtaking national debt is, on paper, in for the bailout. Kerry joins the call to buy those bad assets at 10¢ to 30¢ on the original dollar. He anticipates that they will appreciate in a few years to 60¢ to 80¢ and when the government resells the mortgages and other securities, the relative profit goes back in to reduce that national obligation.
  • Infrastructure overhaul and improvement. At least $100 billion to bring efficiencies and new jobs through energy, transportation and technology is sort of a new New Deal.
  • Small biz boost. Temporarily eliminate small-business stock capital-gains taxes and providing better lines of credit for these companies. A corollary to that is eliminating tax breaks for companies who send U.S. jobs off shore.
  • Help for the poor. Costs for the poorest are up while income is steady or down. Kerry proposed temporarily increasing Earned Income Tax Credits by $300.
  • More jobs now and soon. A WPA-style set of transportation projects (59 totalling over $180 million in this state ready to go right now if funded) would put more people to work and more money in the economy
  • Help for states. Half the states already have deficits (we are looking at over $1 billion this time here). "Washington needs to send $25 billion to states for health care, education and basic social services."
The infrastructure aspect was particularly keen for Kerry both in Somerville and Lynn. Central to the program would be massive investments — through deficits if necessary (likely) — to invest in energy technologies. This would have two major aims: 1) virtually eliminating the need for petroleum fuels by innovating in solar, thermal, wind and other clean, renewable forms and 2) creating millions of new, sustainable U.S. jobs and making America the sources for licensing and leading as it used to be in computers and software. Along the ways, the hundreds of billions of dollars a year that go overseas would stay here.

Beyond the financial institution bailout, the other components make up the larger economic stimulus Kerry sees at steps to a stable future. Drawing comparisons to Roosevelt's recovery plans, he added " tough economic times, the government needs to step up and do what it takes to keep the lights on. Now, as then, crisis brings with it an opportunity to invest in rebuilding America. And if we’re living in the greatest financial crisis since the Great Depression, why not respond with the greatest national rebuilding since the New Deal?"

Kerry said it will be a slow slog out the mess that took so many so long to produce. As he put it, "This won't happen overnight, but it will happen much faster if we invest today and drive innovation in a way we haven't seen since FDR first brought electricity to million s of homes across America. " At Tufts too, he said we can't drill our way out of trouble, but we can invent our way out. I'd add that this is an economic strategy that, unlike trickle-down theor, has reason and history behind it.

He concluded with a rousing call:
History gives us moments. It’s up to us to decide what to do with them. Let’s use this one to make hardworking America more secure in the short run, stronger in the long run, and ready to make the 21st century an American century.
I actually preferred what I see as a great conclusion earlier in the address — "We don't need leaders who will tell voters, 'The fundamentals of our economy are strong.' We need leaders who will make them strong!"

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