Posts Tagged ‘Obama stimulus plan’

Rural America invests in high-speed Internet

August 8, 2016

Graphic from YES! magazine

Small American cities and rural communities are developing high-speed Internet service for themselves, following failures of President Obama’s plan to finance such service under his stimulus plan.

I read two articles on-line this morning—an old one in POLITICO about the mismanagement of the stimulus plan by the Rural Utilities Service (successor to the Rural Electrification Administration) and a recent one in YES! magazine about how local governments are acting on their own initiative to provide these services for themselves.

The two articles fit in with a long-held belief of mine—that role of government is to provide public services, such as public roads, public schools and law enforcement, under neutral rules, and not to divide up the public into worthy claimants and unworthy claimants.

I’m sure federal grants have made possible some worthy local projects that otherwise wouldn’t have taken place.  Certainly the original Rural Electrification Administration did a lot to improve the lives of American farm families.

But very often grantsmanship becomes disconnected from actual needs.  There is a cost in going through the grant approval process, maybe with the help of a professional grant application writer, and in documenting compliance with the requirements for the grant, which may have nothing to do with local priorities.


Wired to fail by Tony Romm for POLTICO (2015)

Tired of Waiting for Corporate High-Speed Internet, Minnesota Farm Towns Build Them on Their Own by Ben DeJarnette for YES! magazine.

Paul Krugman’s defense of President Obama

October 15, 2014

I started reading Paul Krugman’s column in the New York Times during the Bush-Cheney administration, and quickly came to respect him for his incisive and fearless criticism of the administration’s policies.  He didn’t have any insider knowledge—just a willingness to look at the facts and state the obvious.

I don’t read his column regularly any more—partly because the New York Times has gone behind a pay wall and I’m not a subscriber.

Paul Krugman

Paul Krugman

Recently he wrote a long article entitled In Defense of Obama for Rolling Stone magazine, which, to me, is an example of how progressives have come to think of peace and prosperity as unattainable ideals.

I think it is worth discussing in some detail, but I first want to mention the way Krugman framed his argument.  He wrote that “the left” did not get all it wanted, like somebody going to a restaurant and not finding everything they like on the menu.

For me, it is not a question of the degree to which you satisfy the desires of “the left” and “the right”.  It is a question of whether the USA can halt its descent into authoritarianism, militarism and oligarchy before it is too late.  Obama, in my opinion, has not done this.  In my opinion, he has not even tried.

I know this language sounds exaggerated.  I don’t think it is and, if you follow this web log, you will see the reasons why I think so.


Now, Krugman on health insurance reform and the Affordable Care Act.

We won’t have the full data on 2014 until next year’s census report, but multiple independent surveys show a sharp drop in the number of Americans without health insurance, probably around 10 million, a number certain to grow greatly over the next two years as more people realize that the program is available and penalties for failure to sign up increase.

Democrat Lady and Her Republican FriendIt’s true that the Affordable Care Act will still leave millions of people in America uninsured. For one thing, it was never intended to cover undocumented immigrants, who are counted in standard measures of the uninsured. Furthermore, millions of low-income Americans will slip into the loophole [Chief Justice John] Roberts created: They were supposed to be covered by a federally funded expansion of Medicaid, but some states are blocking that expansion out of sheer spite. 

obamacare&alternativeFinally, unlike Social Security and Medicare, for which almost everyone is automatically eligible, Obamacare requires beneficiaries to prove their eligibility for Medicaid or choose and then pay for a subsidized private plan. Inevitably, some people will fall through the cracks.

Still, Obamacare means a huge improvement in the quality of life for tens of millions of Americans – not just better care, but greater financial security.  And even those who were already insured have gained both security and freedom, because they now have a guarantee of coverage if they lose or change jobs.

tomTomorrow-20090804What about the costs?  Here, too, the news is better than anyone expected. In 2014, premiums on the insurance policies offered through the Obamacare exchanges were well below those originally projected by the Congressional Budget Office, and the available data indicates a mix of modest increases and actual reductions for 2015 – which is very good in a sector where premiums normally increase five percent or more each year.  More broadly, overall health spending has slowed substantially, with the cost-control features of the ACA probably deserving some of the credit.  [snip]


Obama’s stimulus: a new New Deal?

September 24, 2012

While I’m critical of President Obama’s overall record, and do not intend to vote for him, I do think he deserves credit for the economic stimulus program he pushed through Congress in the early days of his administration.

While the economic recovery is strong in the stock market and weak in the jobs market, the United States averted the complete economic collapse which seemed to be imminent in early 2009.  I think the Obama stimulus program helped stop the downward spiral, and also put in place some things that will be important for the economic future.

I don’t think a President Hillary Clinton would have done better, and I think a President George W. Bush, John McCain or Mitt Romney would have done a whole lot worse.

I just got finished reading The New New Deal: The Hidden History of Change in the Obama Era. by Time reporter Michael Grunwald.  He told me things about Barack Obama’s stimulus program that I hadn’t known and that hadn’t fully registered.  He left me with a better opinion of the President and the stimulus program than I’d had.

Grunwald argued that the stimulus prevented the Great Recession from becoming much worse that it was, and that it put in place efforts, especially the DARPA-E program for green energy, that are important to the long-term economic growth of the United States.  He also argued that, given the political realities, what President Obama did was probably as much as could reasonably be expected.

He said the the Obama stimulus program in itself pumped more money into the U.S. economy, in inflation-adjusted dollars, than President Franklin Roosevelt’s entire New Deal.  It is true that the United States is a much richer country, in inflation-adjusted dollars, than in the 1930s, but Grunwald also said that Obama’s stimulus program absorbed a greater fraction of the U.S. gross domestic product than the New Deal in any one year.  This is astonishing.  I hadn’t known this.

Given that fact, I agree that it is not reasonable to complain that the stimulus was not even bigger than it was.  My criticisms of President Obama’s economic policies are on other grounds—his administration’s failure to address the causes of the financial crash, his shielding of Wall Street speculators from prosecution for financial fraud, his willingness to use Social Security and Medicare as bargaining chips.

Obama has in some ways a tougher challenge than FDR.  The New Deal of the 1930s was intended to restart a stalled economy.  With the hollowing out of U.S. manufacturing during the past few decades, it is necessary not only to restart but to repair.

The American renewable energy industry was on the verge of collapse when Obama took office, Grunwald wrote.  The Obama administration has revived it by investing in innovative companies, by creating a market for renewable energy by starting to convert the government to green energy and by grants for energy research through the new Advanced Research Projects Agency for energy.

Not all the investments turned out well.  The Solyndra solar panel company is an example of a failed investment (not of corruption), but other initiatives are turning out well, according to Grunwald.  The use of renewable energy in government buildings and vehicles creates a market for green energy, in which the same way that military purchases of semiconductors or granting of air mail contracts in past eras helped the U.S. develop a semiconductor and aviation industry.

ARPA-E is modeled on the successful Defense Advanced Research Projects Agency which promoted innovation with military applications.  It actually was formed during the George W. Bush administration, but greatly expanded after Obama took office.   Gov. Mitt Romney supports ARPA-E, so this is one innovation not likely to be rescinded.

Grunwald wrote a good bit about the struggle to create high-speed passenger trains in the United States.  As a matter of national pride, this would be nice to have, but as a matter of economic benefit, I think we should recognize that, in the United States, the rail system is mainly for moving freight and people travel mainly by highway and by air.  As part of the stimulus program, the Obama administration started a program for replacing track, straightening out curves and eliminating bottlenecks on the rail system.  I think that was the right priority.  For highway transportation, the administration gave priority to maintenance and repair over new construction, and I think that was the right priority, too.

Grunwald pointed out other nuggets in the program—use of information technology for medical records, for example, and extension of broad-band Internet to under-served rural areas, in the spirit of the New Deal’s rural electrification program.

I don’t agree with the Obama administration’s Race to the Top education program, which was part of the stimulus bill.  Grunwald thinks Race to the Top is a program to encourage educational innovation.  Until somebody can show me an example of successful innovation that has come out of the program, I will continue to think that it is a plan to scapegoat school teachers and impose on them a dysfunctional corporate management philosophy.

While I largely agree with Grunwald’s favorable view of the stimulus program, I don’t think the Obama administration overall record reflects the spirit of the New Deal.  President Obama, like President Franklin Roosevelt, is an inspirational leader who can touch the idealism of the American people.  But his record does not match FDR’s.

A real new New Deal would (1) defend Social Security and Medicare instead of making them bargaining chips in a tax deal, (2) break up the too-big-to-fail banks and restore the Glass-Steagal act, (3) prosecute financial fraud and (4) enact the Employee Free Choice Act (aka “card check”) to protect the right of workers to join unions.

Grunwald wrote that Obama achieved as much as can be expected, given the requirement of 60 votes to get a bill through the Senate.  Someone like me who wants more is a “whiner.”  But the 60-vote requirement is simply a procedural rule which can be changed.

The important difference between Obama’s situation and FDR’s is that there is no aroused public opinion forcing the President to do more, as there was in the 1930s.  Until that changes, President Obama’s policies will be the limits of the possible.

Click on The New New Deal for an interview with Grunwald about his book by David Plotz of Slate.

Click on “Everything People Think They Know About the Stimulus Is Wrong” for an interview of Grunwald by Ezra Klein of the Washington Post.

Click on The ‘Silent Green Revolution’ Underway at the Department of Energy for an interview of Grunwald by Ross Anderson of The Atlantic.

Click on Don’t Tell Anyone, But the Stimulus worked for a New York Times report.

Click on Obama’s Green Revolution for an article by Grunwald on President Obama’s energy program.

Click on Michael Grunwald | for an archive of his recent articles.

Hat tip to Bill Elwell for suggesting Grunwald’s book.

Obama’s jobs plan: is it enough?

September 12, 2011

President Obama surprised his progressive critics by proposing a $450 billion stimulus plan—about $150 billion larger than what most had predicted.  And he surprised and pleased them once again today by announcing that he proposes to pay for the plan by raising taxes on people with incomes over $200,000 a year.

The proposed American Jobs Act appears to have something for everybody.  Kevin Drum of Mother Jones gave this useful breakdown of what’s in the President’s proposal.

  • $250 billion in tax breaks.  Most of this is a payroll tax cut, but the plan also includes 100% expensing of business investment, tax credits for hiring unemployed workers, and a few other things.
  • $100 billion in infrastructure spending.  About half of this is for new projects, and the other half goes to an infrastructure bank, a program to fix up vacant and foreclosed homes and businesses, and a program to fix schools.
  • $100 billion in other stuff, including extension of unemployment benefits, direct state assistance to hire cops and firefighters, a mortgage refinancing program, and a few other smaller items.

via Mother Jones.

The consensus of economists is that President Obama’s jobs plan, if enacted as proposed, would lower the unemployment rate would fall by a percentage point or so, and increase the economic growth rate by a percentage point or so.

We don’t know what would happen after the stimulus runs out.  Would employment and economic activity start to rise on their own?  Or would they stop growing, as happened after the original stimulus program was enacted?  In a normal economic cycle, a stimulus of this size would be enough to boost the economy into growth.  I think the current economic crisis is much more than that.

Devoting more than half the stimulus to tax cuts is not good policy, and may not even be good politics.  Most Americans are so deep in debt that, if they get a little extra money, they will pay their current bills rather than increase their spending.  Tax credits aren’t going to spark business activity unless there is demand for the goods and services that businesses provide.

Much of the original stimulus consisted of tax cuts, but many Americans don’t check their withholding taxes, and don’t believe that President Obama reduced taxes.  It is doubtful that he would get any more political benefit from a second round of tax cuts.

Cutting payroll taxes for Social Security is a bad idea, even though the difference would be made up out of general revenue, because it breaks down the barrier between the Social Security trust fund and the general government budget and weakens the taboo against tampering with Social Security.

I’m glad to see provision in the plan for repair of bridges, dams and other infrastructure, but any meaningful project will take years.  There are very few meaningful “shovel ready” infrastructure products except repaving roads.  Unfortunately I think the economy still will be in the doldrums when the bigger infrastructure projects are underway.

One thing that would help the economy would be to give Americans debt relief.  Some have proposed a “cramdown” plan, to give federal bankruptcy judges the authority to restructure mortgage debt so that the property-owner could pay.  I would favor something similar with student loans.