WASHINGTON POST: Mr. President, it’s time to go big on the economic solutions. It’s time to propose a massive second stimulus, offset by some serious tax hikes and budget cuts once the economy regains a semblance of good health. Republicans won’t go for it, but they don’t go for small economic solutions either, be they extensions of unemployment insurance or a miniaturized infrastructure bank. (The current level of GOP commitment to infrastructure would about cover the purchase of a Lego set.)
Economically, the case for a massive stimulus is a good deal stronger than the case for the rather minimal one that you’re calling for — extending unemployment insurance and the payroll tax cut, and establishing an infrastructure bank. A major stimulus is the only conceivable source of substantially increased economic activity and jobs for at least several years. Even before the 2008 crisis, our multinational corporations were shedding jobs at home and creating them abroad. The crisis only intensified their flight to the low-wage and faster-growing nations of the developing world. They’re probably not coming back. Our non-luxury retailers and small businesses won’t expand so long as American consumers can’t purchase more, and American consumers will need years, and luck, to diminish their debt and start buying again. State and local governments are shrinking sharply, too. As blogger Matt Yglesias noted last month, public-sector employment rolls have declined by 500,000 jobs since you took office… (more)
