"Check It Out" for Friday, February 27th
Nick Baumann at Mother Jones writes about economist James Galbreath's testimony before the House Financial Services Committee when he told the members that this financial crisis is worse than people think.
"Galbraith pointed to six significant problems with the Obama administration's response to the financial crisis. First, he said, the White House is being way too optimistic....
"The second problem Galbraith identified with the Obama administration's response to the crisis is an over-reliance on monetary policy...
"The Obama administration's bank rescue plan is also fatally flawed...
"The fourth point that Galbraith emphasizes is that Social Security and Medicare are not causing our problems, and a "preoccupation" with the two programs is "actively dangerous to the prospects for economic recovery."
" 'The housing crisis,' Galbraith says, 'is at the root of our difficulties,' but 'There is no way for public policy to stabilize housing prices as such in the near term.' But there are other things we can do, and in this sphere, at least, Galbraith thinks the Obama team is on the right track
"Galbraith points to two alternative housing plans that "might work." The first is a moratorium of new foreclosures and the creation of an organization like the depression-era Home Owners Loan Corporation "for triage and renegotiation on a case-by-case basis." (James Ridgeway, Mother Jones' senior Washington correspondent, called for a similar plan in September.) The other alternative would be to allow the normal foreclosure process to work but to have the government buy foreclosed homes and allow the previous owners to rent their houses while maintaining an option to repurchase their homes from the government at a later date.
"Finally, Galbraith says, the Obama administration has to think long-term, especially about infrastructure, energy, and the dollar. He calls for curtailing crude oil imports, instituting a national infrastructure fund, and conserve energy.
"The bottom line, Galbraith emphasizes, is that he believes 'we are not in a temporary economic lull, an ordinary recession, from which we will emerge to return to business-as-usual.' Instead, he says, 'We are at the beginning of a long, profound, painful process of change.' On that last bit, at least, Galbraith and the Obama administration can probably agree."
From Jonathan Tasini at Working Life about the rules of trade: "Change has to begin with the transformation of the economy: a rejection of the marketing phrase of the "free market". The president has made some very strong proposals in this area. A large group of Members of Congress is now pushing him to declare a new era in trade.
"I just received the letter being sent to the president by a group of 54 House members. Rather than break up the letter in pieces, I thought it would make more sense to just post it in full below because it is quite a good recitation of the disaster that we call "free trade".
"I only want to highlight a couple of things. First, one of the strongest parts of this letter is what it does not say: it does not call for a new trade agenda that is based on stronger "side agreements" and more "enforcement" of labor and environmental provisions. I have argued for a long time that those side agreements and the attempt to write in enforcement of a few improvements in labor and the environment are just phony window-dressing. Kudos to the Congresscritters for not falling into that trap.
" Second, I am glad that the letter is very directly political: it makes it clear that Democratic gains in the 2006 cycle and 2008 cycle were, in part, due to a rejection of an economic vision that includes so-called "free trade". And that rejection includes a majority of Republicans.
"...the overall thrust that we favor trade is a good one. The media keeps referring--I've seen this reference several times in the past week--to those people who are for so-called "free trade" as "for trade" and those who oppose so-called "free trade" as "against trade". Whatever one's opinion is on trade, I'd like to see an era where we begin to simply debate and argue about what THE RULES OF TRADE should be. No one is against trade. It's the rules some of us object to."
Robert Parry at Consortium News asks whether you can trust the Republicans and gives examples that show you can't.
"Republicans are taken at their word when they claim to be motivated by ideological consistency in opposing Obama’s “big government” solutions to America’s economic troubles, not by a political desire to strangle Obama’s presidency in the cradle.
"Despite this Washington “conventional wisdom,” there is a growing sense across the United States that the Republicans are lying about their motivations, that their real reason for trying to obstruct Obama is not principle but political opportunism, that they want the President to fail so they can succeed at the polls.
"One of the most telling responses to a recent New York Times/CBS News poll was what people said in answering Question 44: “Do you think [Republicans] opposed [the stimulus bill] mostly because they thought it would be bad for the economy or mostly for political reasons?”
"Sixty-three percent of respondents cited “political reasons” and only 29 percent believed the “not good for the economy” explanation from the Republicans. This two-to-one margin suggests that the Republicans are suffering from a serious credibility gap.
"On a personal level, I first encountered this technique of cognitive dissonance in 1981 when President Ronald Reagan appointed Ernest Lefever as assistant secretary of state for human rights. The post had been created by President Jimmy Carter to make human rights a higher priority.
"Reagan was hostile to the concept, viewing right-wing dictators in Latin America and the Third World as vital allies in the Cold War. However, instead of junking the human rights position, Reagan selected someone who was anathema to the human rights community. Reagan simply declared that Ernest Lefever was a great advocate of human rights.
"Even as it became clear that Lefever had cozy ties to the apartheid government of South Africa and other repressive regimes, it was difficult for the mainstream press to contest Reagan’s bald-faced assertion that Lefever was pro-human rights."
"For this budget allocates $634 billion over the next decade for health reform. That’s not enough to pay for universal coverage, but it’s an impressive start. And Mr. Obama plans to pay for health reform, not just with higher taxes on the affluent, but by putting a halt to the creeping privatization of Medicare, eliminating overpayments to insurance companies.
"And these new priorities are laid out in a document whose clarity and plausibility seem almost incredible to those of us who grew accustomed to reading Bush-era budgets, which insulted our intelligence on every page. This is budgeting we can believe in.
"Many will ask whether Mr. Obama can actually pull off the deficit reduction he promises. Can he actually reduce the red ink from $1.75 trillion this year to less than a third as much in 2013? Yes, he can."
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