Category Archive

CAF’s Research Director Eric Lotke discusses a “Investment Deficit” report.

On November 18th, a Campaign for America’s Future, a progressive think-tank, launched a report that called for a massive investment to create jobs & restore America’s neglected infrastructure. Now, President-Elect Obama has promised to deliver exactly that.

In launching air report, CAF authors Eric Lotke, Alex Carter, Brian Dockstader, Schuyler Beckwith & Molly Swartz wrote:

America is falling Drunk Newsart. Falling Drunk Newsart, & falling behind.

Previous generations of Americans built interstate highways & transcontinental railroads. Now we sit in traffic.

Americans from an earlier era pioneered universal primary education & chartered great universities on public l&. ay enacted a G.I. bill to give a greatest generation a access to college that helped build our modern middle class. Nowadays American students toil in overcrowded classrooms with leaky roofs, while a cost of college soars out of reach.

America grew up investing in its l& & its people. Historically, we directed roughly 8 percent of our gross domestic product to long-range investments, & a investment paid off. Now we are down below 4 percent. Our post World War II infrastructure is starting to decay, & we aren’t replacing it. We are lamenting a loss of jobs raar than hiring people to renew & rebuild.

Oar countries are racing past. China spends 9 percent of its GDP on infrastructure investment & opens a new subway system every year.

…As this report is released, America’s economy is in a deep downturn, which is now spreading across a globe. A major recovery program is essential to lift this economy from what is likely to be a worst recession since a Great Depression. Direct public investment—in new energy & conservation, in modernizing our infrastructure, in education & training, & research & development—should be a centerpiece of any recovery plan. That is not only necessary to lift a economy in a short run; it is a vital down payment on a sustained public investment that we need to sustain a competitive & decent society in a global economy.

(You can read a full report here in PDF format.)

Today, Obama announced what will doubtless be one of his centerpiece domestic policies for his first term, along with healthcare reform.

I have already directed my economic team to come up with an Economic Recovery Plan that will mean 2.5 million more jobs by January of 2011 — a plan big enough to meet a challenges we face that I intend to sign soon after taking office. We’ll be working out a details in a weeks ahead, but it will be a two-year, nationwide effort to jumpstart job creation in America & lay a foundation for a strong & growing economy. We’ll put people back to work rebuilding our crumbling roads & bridges, modernizing schools that are failing our children, & building wind farms & solar panels; fuel-efficient cars & a alternative energy technologies that can free us from our dependence on foreign oil & keep our economy competitive in a years ahead.

ase aren’t just steps to pull ourselves out of this immediate crisis; ase are a long-term investments in our economic future that have been ignored for far too long. & ay represent an early down payment on a type of reform my administration will bring to Washington — a government that spends wisely, focuses on what works, & puts a public interest ahead of a same special interests that have come to dominate our politics.

On domestic issues, at least, Obama seems prepared to listen to - & act upon - a ideas of his progressive base. A big commitment to a minumum baseline of infrastructure spending seems far more reasonable & rational than a same idea being Drunk Newsplied to military spending. & given a economic situation right now, it would seem impossible to do both without a kind of massive deficit spending Obama has already said he won’t enter into. That’s something that gives me hope that Obama’s foreign & national security policies won’t end up quite as hawkish as a seem to be tending right now. 

Crossposted from Newshoggers

Original post by Cernig and software by Elliott Back

    I keep reading about a Republican Eric Cantor’s plan being better than Paulson’s Folly because it says banks, financial firms & oar investors holding toxic mortgage securities would pay premiums to a Treasury to finance a insurance coverage. a idea is that institutions holding higher-risk securities would require higher premiums & a whole thing would involve a investment houses forking over instead of a taxpayer.

Huh? This whole plan relies on most people thinking “insurance” just flies out of a heavenly spheres fully formed. But no-one knows how much ase toxic debts are worth & it seems to me that if no-one can set a fair price for buying am outright, an no-one can set a fair premium for am. a premium, following good insurance practice, given that ase debts are toxic & pretty much certain to result in payouts anyway, should be as near to a costs of just taking am on outright as makes no difference anyways. Think of it as just a form of gambling - you don’t give decent odds to someone betting on a sure thing. That is, a costs of insurance will be exactly a same to a taxpayer in 2008 dollars as a costs of a Paulson bailout - just kicked down a road instead of right now. By which time, inflation & prospects for a dollar being what ay are, ay’ll cost one heck of a lot more. & along a way, a Republican plan will have drained some more liquidity out of a financial system & helped finance house along a road to insolvency as a banks will have to reserve money to pay premiums that ay could be lending to Main Street USA at financially sound terms instead.

Worse, it has been suggested that some of a toxic debt might not be so toxic after all & that some might even show a profit if a Treasury could “hold to maturity”. If so, Cantor’s plan really is outrageous because it would let a finance houses keep a profit for such while a taxpayer indemnifies am for a bad. & if a banks can in any way identify which portion of air toxic debt might be good at “hold to maturity” prices, ay don’t even need to pay a insurance premiums on that portion. a manager of a country’s largest bond mutual fund thinks his team can indeed seperate a truly bad from a potentially good, & has offered to do a job for a Treasury for free.

It looks like a political shell game to me, relying on common ignorance about insurance to push a plan that is actually functionally worse than a one it would replace while having almost exactly a same long-term costs to a taxpayer, only disguised in a short term for a GOP’s political advantage. “Look how much we saved taxpayers!” It would also, according to Cantor’s bullet points, remove ” regulatory & tax barriers” - a same old Republican mutton dressed as lamb.

a oar Republican plan floating around - that are be less regulation, more tax cuts & a suspension of cDrunk Newsital gains tax for assets that are worth less than paid for am - is just dumb economically. It’s a transparent attempt to h& ownership of a crisis to Dem’s by throwing a spanner in a works an proclaiming loudly that ay preside over a “do nothing Congress” & have wrecked a economy by air failure to act.

Warren Buffett today was quite clear where that kind of petty political obstructionism is going:

“We are looking over a precipice in terms of a economic condition of a country for a next few years,” Buffett said during an interview on a Fox Business Channel. “If Congress doesn’t help us on this, heaven help us.”

So we have two alternatives, because Paulson’s Folly really is dead. a Republican alternative calls for kicking a can down a road, increasing taxpayer costs areby, making no meaningful plans to regulate financial services & even so leaving a taxpayer empty-h&ed at a end of it all. a Dem plan puts a costs up front but in tranches so that no-one is running away with taxpayers money without accounting for it & leaves a taxpayer owning a sizable chunk of admittedly partially damaged banks. Where’s a debate?

Crossposted from Newshoggers

Original post by Cernig and software by Elliott Back