Our Moment of Truth

Joe Biden: "We're at war."

Barack Obama: "It's sick, very sick."

James Corville: "It's the economy, stupid."

Each of these men has a different way of putting it, but no matter how you slice it the economy is on the front burner for Obama when he takes office on the 20th. Despite events in Gaza, climate change, and real wars in Iraq and Afghanistan, he realizes for headway to be made in any other area, the sinking economy must be righted first.

Today, Obama will meet with his economic advisers to develop a plan to take to Congress in the near future. Yesterday, he met with congressional leaders of both parties, and no one came away feeling very good about the next few weeks. It seems that politics as usual got in the way of a quick implementation of an economic recovery plan.

The bottom line is that folks are hurting: manufacturing is down, unemployment is way up, banks aren't lending, families are cutting corners to make ends meet - and that even includes essentials such as milk.

John Maynard Keynes found that the most effective way to combat such slow economic times is for the government to infuse the economy with cash in order to stimulate businesses -- like construction. This grows employment, which then encourages more spending and lending between citizens and banks. Basically, such an infusion "greases the skids" to allow the economic wheels to move freely and smoothly.

Robert Reich reminded the government to pay careful attention to our societal safety nets -- such as unemployment insurance, which were put in place in the 1930's. Although they may appear expensive, we mustn't remove them for fear of putting even more people in jeopardy and slowing down the recovery process.

Obama, it appears, will propose tax cuts of $500 per middle and poor family. This would be helpful by putting cash into people's pockets, but a tax cut alone would not be enough, since it would encourage more saving than spending. What the economy needs now is for individuals to begin spending again, and that won't happen unless manufacturing and hiring increase.

What is needed is a large stimulus that will shift the economy in the opposite direction. Along with the tax cuts, $310 billion in all, Obama is going to propose a massive influx of cash into the economy. But, instead of just giving cash back to individuals (which Keynes also opposed), the stimulus must generate results that are specific and tangible.

The amount that Obama will propose will probably be approximately $750 billion. Much of the federal money would be alotted to the states, who in turn would pay for projects like repairing bridges and roads. Obama has also stated that one area where he would like to invest large chunks of funding is green and alternative energy projects - which would also move us toward energy independence as well as help the economy.

Paul Krugman recently stated that his nightmare scenario is that the stimulus will ultimately be too little, too slow. What he fears is exactly what is occurring right now among Republicans in Congress. They want to cut the size of the stimulus and, particularly, slow it down.

Now, you can understand why they might want this. The TARP, passed by Congress in the fall and implemented by Henry Paulsen, had little regulation or oversight written into it. So, this allowed banks and AIG to continue to run wild. These management problems are what practically stymied the entire auto industry deal.

Still, each day more industries close, more jobs are lost, and more families struggle. Yet Republicans, nonetheless, insist on a slow, deliberate process. Obama had hoped to have a bill ready by January 20th. Then, the desired date slipped to February 1st. Now, he's talking about getting something ready by the middle of the month. Republicans keep squeezing and squeezing. And Americans keep suffering and suffering.

Someone must step up to the plate and act with more urgency, and that someone is Barack Obama. As Krugman says, "This is our moment of truth."

If a bill gets dragged out over a period of weeks and maybe months, the economy could sputter far into 2010. And congressional representatives and senators are not the ones who will suffer. Instead, it'll be regular folks along the back highways and city streets streets of America.

And, to top it off, Barack Obama will come off as an ineffective, weak president. Haven't we already had enough of that for the past eight years?
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