by Stack Kenny

After a whirlwind first eight weeks in office, President Barack Obama’s new administration has laid  out a general outline for a stimulus fix to try to halt a free-falling economy that has Americans shocked and frightened by prospects of the next Great Depression.

In his first Presidential address in February, Mr. Obama sketched a blueprint for an ambitious collection of programs which he hopes will jump start the economy and return people back to the millions of lost jobs that continue to fall monthly.

Through a combination of project stimulus spending, tax cuts to small businesses and middle class workers, and tax increases on wealthy individuals and corporations, the new administration attempts to offer an about-face to the past practices of a Republican majority that aligned itself with blanket deregulation and trickle-down capitalism, and the mega-wealthy corporations that profited from those practices.

With almost another $1 trillion promised to bail out Wall Street and the banking industry, and the continuing soaring costs of military occupations in Iraq and Afghanistan, American taxpayers are being told we must now fund the largest debt in our nation’s history in order to get us out of this predicament.

As Americans try to make sense of this complicated economic package to see how we all might be affected, the only thing that analysts agree on is that no immediate relief will be available. While we wonder how the stimulus will play out in Asheville and Western North Carolina, the President’s outline will not be made more specific until late April. Even then, most economists predict 2009 will continue in steady decline and that any hope of turning the tide would not begin to be noticed until 2010.

For some, these are optimistic figures; while out-of-touch Republicans decry the package and offer no other solutions, many progressive economists believe Obama’s stimulus spending will not be nearly enough to stop a full-fledged Depression. Still, an overwhelming majority of Americans approve of the new government’s attempt to slow down the oncoming economic disaster.

Job Creation
With another 700,000 jobs lost in February, plus the millions lost in the past few months, America is watching with concern as the unemployment rate approaches 10%. With the prospect of unemployment reaching 15% by the end of 2009, it is estimated that 10 million new Americans will be forced into poverty, with 6 million falling into deep poverty.

Pulitzer Prize-winning economist Paul Krugman suggests the administration will need to create at least a million new jobs a year just to keep up with population increases and to keep individual states solvent as their tax revenues diminish as a result of the ever-growing unemployment numbers.

Obama’s policy addresses this major dilemma by pumping billions of dollars into new jobs to secure the economy, including 1.85 million jobs by the end of the year, mostly in construction for projects to rebuild the nation’s infrastructure — an infrastructure that has seriously deteriorated from 30 years of underfunding.

Additional employment should be available by the infusion of dollars into the “Green Sector,” creating new jobs in an attempt to address the troubles surrounding global warming and greenhouse emissions. More jobs are expected enacting the necessary modernization of the nation’s electrical grid. The bill also calls for new jobs for teachers and education administrators, as well as jobs associated with a $19 billion allocation for updating health information technology.

While almost half of all states are in danger of running out of unemployment funds, and 4.5 million people are out of work (with only 37% eligible for unemployment benefits), Obama is right to prioritize the creation of new jobs and extend unemployment benefits, to fire up the economy and to cut back on the suffering of so many Americans.

Health Care Reform
The American health care system is in shambles. As Americans lose their jobs and accompanying health insurance, as medical costs continue to skyrocket and 37% percent of Americans admit to cutting back on medicine to save money, it becomes more apparent that something drastic has to happen to steer the country away from the excessive profit system of privatized health insurance into a universal health care system designed to protect all Americans. While our national automobile manufacturing industry dies a slow death, mostly due to the exorbitant costs of health care for workers, (along with many faulty narrow-minded business practices), the need for health care reform soars up to the top of the list for the new Administration.

Most of the appropriations in the new budget are stopgap measures only, providing billions for existing state programs, extensions to Cobra unemployment benefits, additional financing for research and information technology, and additional funds to prevent cutbacks to health care providers. But more than financial obstacles may delay Obama’s drive for universal health care: House Majority leader Steny Hoyer (D-MD) is quoted as saying there is too much to do before health reform can take center stage, and probably will not be addressed until 2010 or later.

Education
The new economy pledges to concentrate on a much needed influx of capital into the education and job training sector. $54 billion has been allocated just to prevent states from defaulting on essential education services. Additional billions have been set aside in accounts for programs serving low-income and special-needs families, including the highly successful Head Start program. Other funds will be sent into modernizing schools and upgrading technology and Internet services. A good portion of the education allocations will be put aside for job training in such needed areas as health care and green technology. Additional funds have been given to strengthen college funds, such as Pell Grants and Hope Credits for families with children in college.

This all seems like common sense. To bolster the quality of life for Americans, and to insure that true democracy becomes the nation’s backbone, education must be affordable and equitable for all.

Tax Reform
Over the past four decades, the gap between the rich and poor has widened to levels not seen since before the last Great Depression. From a secure and satisfied middle-class-oriented economy found during the mid 20th century, the United States has morphed into a nation where most of the country’s wealth is now controlled by the top 10% of its earners. We moved from a successful system of taxing profits and not wages to a “trickle-down, free-market” economy instituted by Ronald Reagan in 1980, and reinforced by every President since.

Reaganomics heavily taxes worker’s wages but gives huge tax breaks to the corporations and wealthy individuals who profit from the simultaneous deregulation of industry. This great wealth was supposed to create new jobs and “trickle down” prosperity to the workers whose taxes and cost of living had already greatly increased. We are now seeing the ultimate results of this greedy and deceitful mentality and the true cause of the mess Mr. Obama has inherited.

To jump-start the economy and give back some of the dignity working people have lost to the interests of the wealthy, the stimulus package has put aside $116.2 billion in tax breaks for Americans making under $250,000 a year, or roughly 90% of the population. Obama’s proposal would save the average worker roughly $900 in taxes.

In addition to this base-line tax reform on wages, other tax issues include expanding incentives and credits for small businesses, first time homeowners, new car buyers, renewable energy projects, and mass transit use. There is a long way to go to undo the tax injustice and income disparity that has taken over the country. Once again, at least the new economic policy attempts to point us back to a strong middle class.

Environment and Energy
As the world’s top polluter and user of fossil fuels, America has lagged far behind the rest of the world in admitting to our responsibility for the problems of global warming. The Obama Administration is facing up to this cold reality by taking an honest look into the future and recognizing that to keep the planet habitable, we must be part of the change to reduce greenhouse emissions.

While $11 billion has been set aside to modernize the national electrical grid, billions more have been put into programs stressing energy efficiency on the federal, state and individual levels. Additional funds have been allocated for toxic cleanup projects, water source projects, and renewable energy research.
President Obama is also a proponent of the “cap and trade” program of toxic emissions in industry, or the carbon tax, a system used somewhat successfully in Europe to curtail emissions by charging polluters a tax and then giving them a polluter’s credit that they can buy and sell. Famous NASA climatologist James Hansen, who first sounded the global warming alarm over a decade ago, still affirms that we need greenhouse gas emissions to be reduced by 80% before 2050 to save the planet. Most cap and trade theorists set their sites as low as 10%-20%.

Despite money in the new bill for wind farms and green technology it may be all for naught without a stronger policy on carbon emissions by coal, oil and other heavy polluting industries. Still, compared to previous administrations, it’s a start in the right direction.

Housing
The current economic breakdown has been attributed to the reckless behavior of the mortgage industry, banks, and Wall Street investors who bought, bundled, traded and sold people’s houses at inflated prices for huge profits. The result, as we all know, was that people either bought or refinanced their houses at prices far above actual values and are now losing their homes at alarming rates as their true worth is revealed.

A populist uproar erupted when Congress and the Bush administration decided to bail out the mortgage industry and not the homeowners. Although the Obama administration shamefully continues in this policy of bailouts to the very people who created the problem in the first place, the current budget proposal also seeks to address some of these issues by reforming and strengthening Fannie Mae and Freddie Mac, and asking banks to set up re-mortgage policies that would offer relief to homeowners facing foreclosure. Other housing initiatives include financing for Community Development Block Grants, modernization of low-income housing, homelessness programs and Section 8 housing.
Many critics argue that the appropriations for the millions of families under pressure of losing their homes is too little and far too late. But with the rising costs of food and energy, it’s almost impossible to envision a country of millions of Americans thrown out of their homes and no means to find shelter. It is imperative that the new economy immediately works to keep people in their homes.

Where Will the Money Come From?
The American people, where else? Most Americans give between 25% and 35% percent of their income to the government. Most of those funds are spent on the military, the single largest part of the budget, and a good portion of it on the social safety nets of Social Security, Medicaid, and Medicare.
President Obama maintains he will fund the new economic stimulus programs by taxing wealthy individuals and corporations and by ending the occupation in Iraq. But as ambitious as his tax plan seems on its surface, the tax reform actually only rolls back statistics to pre-George Bush levels, which even then gave the wealthy huge tax breaks. In addition, these rollbacks will not occur until the current tax laws phase out at the end of next year.

Having recently put a timetable on removing troops in Iraq, but not for another 18 months, Mr. Obama followed that announcement with a 4% increase in the military budget and the promise to keep 50,000 non combat troops in Iraq while simultaneously committing to deploy more resources to a renewed military effort in Afghanistan. These numbers do not include an undisclosed number of military contractors remaining in both countries, paid for by American taxpayers.

With Obama’s hawkish foreign policy hitting full stride, it’s safe to say there might not be much money left in the coffers after a partial drawdown of troops in Iraq. Rep. Barney Frank (D-MA), Chairman of the House Finance Committee, recently claimed that we would have to reduce our financial commitment to Defense Department spending by 25% to even begin paying for the programs included in the stimulus package. It is unlikely that President Obama would initiate any such commitment. So as more and more Americans lose their jobs and are unable to pay their taxes, the most probable funding for the stimulus package will be to borrow it, from the World Bank, and liquid foreign countries. With interest. In the American taxpayers’ name.

Uncharted Territory
Many economists have put the American crisis into “uncharted territory.” Perhaps this is what we finally all have in common: no one knows how this will resolve, no one knows if the economic stimulus plan will work, or who will be at the receiving end if it does. Most analysts agree there will be a waiting line for the money and that by the time it passes down to the inner cities and small rural communities that really need it, the money will have passed through so many hands that we can only hope the appropriations go to the right place and the right people.

Since the gold standard has been removed as the basis of the American economy, it is now only public confidence in the worth of the American dollar that keeps our system alive. This confidence has been profoundly shaken and now sits in the hands of Barack Obama and his new administration. Let us hope, and then make sure, that they are up to the job.