A cry is going up from conservatives. The Obama administration's economic stimulus plan is a failure, they say.
We think it's too soon to say it's a failure, but it's not too soon to say that liberal economists such as Paul Krugman, Dean Baker, James K. Galbraith and Robert Reich correctly predicted that the plan was not big enough to deal with the biggest recession since the 1930s.
They were among the most persistent critics of the inadequacy of the $787 billion package passed in February. They, and other liberal economists, believed that at least twice that amount was needed to make a difference.
Only about 10 percent of the stimulus money has left Washington, mostly in the form of the tax cut that most working Americans have noticed in their pay stubs. We were told by the Obama administration that it will take time to get this much money into the economy, at least 18 months, so patience is in order. But it still seems to us that more federal money has gone to Wall Street than to Main Street, and that many Americans are still hurting.
"In a recession this deep, recovery doesn't depend on investors," Reich wrote last week. "It depends on consumers who, after all, are 70 percent of the U.S. economy. And this time consumers got really whacked. Until consumers start spending again, you can forget any recovery."
Why is consumer spending down? People don't have money, and they haven't the ability to borrow money. Home equity loans and credit cards accounted for much of the prosperity in this decade, but one out of 10 American home owners now owe more on their homes than their homes are worth.
Reich's prediction? "This economy can't get back on track because the track we were on for years -- featuring flat or declining median wages, mounting consumer debt, and widening insecurity, not to mention increasing carbon in the atmosphere -- simply cannot be sustained."
That's why the next round of stimulus needs to do what wasn't done the first time around -- make significant investments in projects to lay the groundwork for recovery and create more jobs.
We're coming up on the 40th anniversary of the Apollo 11 moon mission, the culmination of a massive effort put in motion by President Kennedy in 1961 to put an American on the moon by 1970. Why can't we have a similar "can do" moment today? Why can't we have something big and visionary to put Americans to work repairing and rebuilding the nation's infrastructure?
According to the U.S. Bureau of Labor Statistics, the U6 Unemployment Rate (which includes the unemployed, the underemployed and the discouraged) rose to a record high of 16.5 percent last month. That's more than 20 million Americans that need full-time employment and can't find it. Many of these people have skills to offer.
It's time to put money and muscle into projects such as upgrading the nation's electrical power and broadband Internet grids, rebuilding our nation's railroad and mass transit networks and funding innovative environmental initiatives to create a "greener" economy.
If this sounds like a 21st century version of Franklin Roosevelt's Works Progress Administration, you're right. The political pressure against doing something like this will be great, but we think the consequences for the nation if we don't do this are greater.