Friday, March 1, 2013

Why doesn't Obama call for more stimulus?

Make the Republicans say "no"

Barack Obama's big win in November could have been a springboard for moving American political dialogue to the left. Arguably, it has done that, at least a little bit. Of course, Sandy Hook and Hurricane Sandy have had a role in that, too.

After all, state legislatures and Congress are seriously considering tighter restrictions on guns (Maryland, for example), state legislatures are advancing action on climate change over right-wing objections (Kansas, for example), and six Republican governors are going ahead with a Medicaid expansion they had previously opposed.

But Obama's decision to focus on potential damage caused by the sequester misses an opportunity to push political dialogue even further to the left. And, as Robert Reich argues in a column carried by the Huffington Post, focusing on the damage isn't effective tactically, either.

However real that damage might be, it probably won't be obvious to most Americans, Reich says. "Moreover, the blame game can be played both ways, and Republicans are adept at slinging mud," he wrote.

Instead, Obama should "...directly rebut the two big lies that fuel the Republican assault," Reich writes. "The first big lie is austerity economics--the claim that the budget deficit is the nation's biggest economic problem now, responsible for the anemic recovery.

"The second big lie is trickle-down economics--the claim that we get more jobs and more growth if corporations and the rich have more money because their the job creators, and job growth would be hurt if their taxes were hiked."

Reich's piece doesn't outline what Obama should be offering in opposition to austerity and trickle-down economics, but he's right that swapping accusations over the sequester helps Republicans avoid the debate over how much damage right-wing economic policy has caused over the past three decades, and especially since the collapse of the housing market dumped the country into a recession that caused job losses from which we still have not recovered. That recovery should remain the priority for national economic policy and President Obama is in the best position to make that argument.

He could begin by reviewing the work of the Center for Economic Policy and Research (CEPR), still the best source for a full look at the high price of deficit reduction at this time and what additional stimulus might accomplish. And, if the president needs to look at new ways of generating revenue, he should study CEPR's carefully documented argument for a financial transaction tax.

A bill in the Senate calls for the imposition of just such a tax. A press release from CEPR summarizes the benefits of the tax.

"The Harkin-DeFazio bill provides a way to raise a substantial amount of revenue while at the same time making our financial markets more efficient."

"The modest tax would discourage an enormous amount of short-term trading while having almost no impact on the ability of markets to finance productive investment. The cost of the tax would be born almost entirely by the financial industry, since for most investors the money saved as a result of lower trading volume will offset the higher cost of trades.

"At a time when Congress and the President are looking to cut Social Security, Medicare, and other essential programs, the idea of getting $40 billion a year from taxing speculation in the financial industry looks very attractive."

Wouldn't that move the debate in a progressive direction?

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