Three rules for Obama's stimulus plan
Congress and the Obama administration are preparing a new stimulus plan likely to be signed as soon as the new president is sworn in. Commentator Robert Reich has a few suggestions for keeping the money out of corporate welfare.
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TEXT OF COMMENTARY
Scott Jagow: Barack Obama says he wants to stimulate the economy with government spending -- a huge public works program. It might be necessary. But as always with government projects like this, you have to be careful of special interests. Commentator Robert Reich has a few suggestions.
Robert Reich: No economy can function without enough pull from the demand side. But consumers have stopped buying, businesses won't invest in plant and equipment without buyers at the other end, and exports are dead in the water because the world is in recession.
That leaves government as buyer of last resort -- which is why Congress and the upcoming Obama administration are planning a large stimulus package, to be signed almost as soon as the new president is sworn in, a little less than six weeks from now.
Getting it enacted won't be difficult. Even deficit hawks know that when millions of people are unemployed, offices vacant, and factories shuttered, deficit spending that gets the economy growing again will make future deficits smaller.
The real political challenge will be to avoid pork-barrel projects and corporate welfare. Yet Washington lobbyists and trade associations are already salivating. What can be done to keep them at bay? Follow three simple rules.
First, the stimulus package should be transparent -- unlike the opaque Treasury bailout of Wall Street. Spending priorities should be posted on the Internet, along with reasons why they are priorities. All contracts should be subject to competitive bidding, with the final winning and losing bids also clearly posted.
Second, and also by contrast to the Wall Street bailout, lobbyists should be barred from receiving any benefits at all from the stimulus package. The rule should be that no stimulus money may go to any company that has paid a lobbyist to seek any portion of the stimulus package on its behalf.
Finally, the stimulus package may not contain earmarks or special allocations of money to any state or locale. The only valid reason for state or local governments getting stimulus funds should be to remedy their budget shortfalls and thereby restore public services. This means no amendments to the stimulus bill. Make it a straight up or down vote.
These three rules won't guarantee the stimulus package is free from pork and corporate welfare. But they'll vastly improve the odds.
Jagow: Robert Reich teaches at the University of California Berkeley. His latest book is called "Supercapitalism."
Comments
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01/23/2009
Who is John Galt?
From WA, 01/08/2009
You really want to stimulate this economy? The best idea would be to give the money to the people of this country. Yes, rules would have to be established, but we the people can use that money to pay down our credit or pay the bills off, BUY a new car, buy a house. A good amount...200k per working individual. You still end up with the same deficit numbers, but the money would be required to be put right back out with purchases. This would keep stores open, dealerships open, improve manufacturing because people are BUYING.
From Buenos Aires, 12/11/2008
I believe the first point is the most significant one. And Obama with his technologically savvy team are in a good position to make good use of their broad internet base to enhance that part.
From Chicago, IL, 12/10/2008
I like the idea of "Spending priorities should be posted on the Internet, along with reasons why they are priorities." I thought everything was published to the internet, it was just so hidden a regular person like me could never find it. Maybe nothing is being published?? Marketplace should have a watered down "every day" person version of these budgets so we can all understand where our money is going. Cause I am sure if it was published, it would be so complicated and long that most people wouldn't have the time to figure out what it meant?? I think that equal access to some of this information is very key. In that I AGREE WITH YOU COMPLETELY. Yet, I wonder still if companies who have lobbies were left out of this process, who would be left??? Doesn't every major company have a lobbyist??
From N Chelmsford, MA, 12/10/2008
Cap markets are unstable. In the past there was no way to make them stable. But today we have computer power that can be used to make them stable. By using the greater computer power of today we can have a much higher turn over of cap in the cap market. This higher turnover will make the market harder to fix or control and the market will no longer have the unstable run ups or declines. Who can change or control the market when say 20% of the capital is trading each day. So now that we have the compute power to provide for all these transactions that will smooth out the market how to we force people to turn over at a rate of 20% a day? Easy, put a cap gains tax of 0% (zero) on all gains of 7 days or less and put a cap gains tax of 90% of all gains of 7 days or more. The likes of Yahoo Micosoft and/or Sun Micro Systems will give us the systems that will provide automated software agents to support turning over one's investments every 7 days (based on the specs you give the agent). A system like this will make the financial markets work as smoothly as the local fruit market.
From Austin, TX, 12/10/2008
This is a doable thing. I think the basics that government should provide is permalinks on a paragraph basis. That way everyone can document special interest pieces on their own blogs and such. I talk about this a bit on Transparentfederalbudget.com
thank you for bringing the more attention!
Silona
From Tacoma, WA, 12/10/2008
This is exactly right. The demand side is broken, in large part because the banking sector is broken. The huge bailout of Wall Street has not got credit flowing, but only fattened the balance sheets of the companies that got the money.
The Obama stimulus plan is a rebuilding plan, and this country needs it.
From South Glens Falls, NY, 12/10/2008
Mr Reich is correct on every point. The difficulty I have with his commentary is that he doesn't even touch on the most significant shortcoming of the plan. It is a valid concept to use massive spending on public works to jump start the economy, but let's get the most bang for our collective buck and provide opportunity to as many people as possible.In this time of crisis we must suspend Davis-Bacon and other legislation that has made public works construction so costly when compared to private projects. Not only do these projects cost more than they need to they limit the number of people who can compete for the work, again driving up the cost. The reason nothing will be done is because organized labor has as many politicians in their pockets as the corporations do. So as I said, I agree with Mr. Reich with regards to keeping our eye on the corporations, and I believe the Obama administration will do it's best in this area of oversight, who is going to take on the unions. If we are truly in the midst of a crisis, and we are, we are all in it together. The greater good should not be sacraficed for any special interest group.
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