Why wasn’t job creation the president’s No. 1 priority when he took office? Why didn’t he make a serious, steady effort to get the real economy back on track? Did he really think the bailed-out banks — the banks that caused the crash — would lend the sort of money needed for massive re-employment projects?
You may have noticed that the same renowned economists are still urging the common-sense remedies that were ignored by Obama when he had the clout to implement real change. Here’s Joseph Stiglitz, in the recent Vanity Fair:
… What we need to do… is embark on a massive investment program-as we did, virtually by accident, 80 years ago-that will increase our productivity for years to come, and will also increase employment now. This public investment, and the resultant restoration in G.D.P., increases the returns to private investment. Public investments could be directed at improving the quality of life and real productivity-unlike the private-sector investments in financial innovations, which turned out to be more akin to financial weapons of mass destruction.
Can we actually bring ourselves to do this, in the absence of mobilization for global war? Maybe not. The good news (in a sense) is that the United States has under-invested in infrastructure, technology, and education for decades, so the return on additional investment is high, while the cost of capital is at an unprecedented low. If we borrow today to finance high-return investments, our debt-to-G.D.P. ratio-the usual measure of debt sustainability-will be markedly improved. If we simultaneously increased taxes-for instance, on the top 1 percent of all households, measured by income-our debt sustainability would be improved even more…
And here’s Paul Krugman today, reminding us of what he wrote three years ago:
… In Washington, in particular, the failure of the Obama stimulus package to produce an employment boom is generally seen as having proved that government spending can’t create jobs. But those of us who did the math realized, right from the beginning, that the Recovery and Reinvestment Act of 2009 (more than a third of which, by the way, took the relatively ineffective form of tax cuts) was much too small given the depth of the slump. And we also predicted the resulting political backlash…
Why didn’t Obama — and Congressional Democrats — realize there would be a backlash in the midterm elections if they failed to take a strong, determined stand against Republicans who, from the beginning, were dead-set on hurting recovery efforts? Why did Obama shun the Congressional Dems who urged him early on to change Washington’s cozy relationship with the so-called financial industry? (See Ron Suskind’s Confidence Men, Chapter 10.)
Yes, I know, dumb questions. Obama and the horrible Republicans who have a shot at the presidency, and most of the people in Congress, are products of a corrupt system that won’t change until laws are passed that prohibit the flow of big money to candidates who automatically become the property of the people who provided the money.