Build Our Way Out Of Depression, Dems Say

By Cernig

Democratic lawmakers are planning a massive infrastructure package as an economic stimulus after the November elections.

"Not only is Wall Street frozen, but Main Street is in real trouble. A stimulus aimed at Main Street makes sense," New York Sen. Charles Schumer told CNN.

He said the plan should "get into the guts of the economy" by boosting spending on infrastructure such as roads, sewer and water projects.

Former Treasury Secretary Robert Rubin, who served under President Bill Clinton, told CNN that an infrastructure plan that could quickly pump money into the economy was the most important action that U.S. authorities could take to help deal with the current economic crisis.

"I would put in place an infrastructure piece... bridges, water systems roads, highways, but not new projects that are going to take a long time to set up," Rubin said. "There are a lot of existing projects where states and cities are having a hard time finding a lot of financing where you could funnel that money right into existing activities where you would be able to act very very quickly."

Barney Frank, chairman of the House Financial Services Committee, told ABC he'll be spearheading the House version of the package.

Meanwhile, Republicans are apparently set on "staying the course" on tax cuts, which have failed to prevent the economy getting into such dire straits in the first place.

Rep. Roy Blunt, the Missouri Republican who serves as House minority leader, said he would support a stimulus plan if it did not include massive public works spending and budget bailouts for states that overspent on health care and other social programs.

Not that Republican recalcitrance may have a lot of say in the matter.

Barring a dramatic change in the political landscape over the next three weeks, Democrats appear headed toward a decisive victory on Election Day that would give them broad power over the federal government.

The victory would send Barack Obama to the White House and give him larger Democratic majorities in both the House of Representatives and the Senate — and perhaps a filibuster-proof margin there.

It's all deficit spending now, of course, but as I've said before, which is better - to sit at home because you've only got $5 and a $1,000 dollar debt, throw that $5 at the debt, or to spend that $5 on getting to work and earning a paycheck? Simple "kitchen table" economics?

Comments

[Linda in Texas]

This is a very good plan. It will create jobs as long as it includes hiring the unemployed. Everyone knows that income received turns over 7 times in the local economy and will pay the government back in no time. This is a very good plan it will grow the economy!

[Mark]

The problem is - having already passed many hundreds of billions of dollars in deficit spending, and having recently tried a failed stimulus package for many billions more, where are we going to get more money for stimulus.

Also - I'm not necessarily opposed to spending on infrastructure as opposed to other forms of spending. But infrastructure requires years from approval to actually beginning construction, and although I could be wrong, I highly doubt that there are $150 billion worth of projects that are ready for construction but are being held up only due to a lack of state-level funds. Which makes this a less-than-ideal form of stimulus.

Even if you accept the notion that FDR's public works programs helped get the nation out of the Great Depression, it's worth noting that it took nearly 10 years thereafter to end the Depression - and that was at a time when there were relatively few bureaucratic hurdles to beginning large-scale construction projects. In this case, though, we're not trying to climb out of a depression, but rather prevent one, so you need a package that will get into peoples' hands more quickly if you are going to have a new stimulus package at all.
I haven't given it much thought, but one thing that may be comparatively effective (keeping in mind that I am opposed to any additional deficit spending) would be a significant expansion of the food stamps program, with the expansion set for gradual phasing out after a set period of time (leaving in tact, of course, the currently-existing size of the progra).