The second great crisis is in state and local government. Just Tuesday,
New York Mayor Michael Bloomberg announced $1.5 billion in public
spending cuts. The scenario is playing out everywhere: Schools, fire
departments, police stations, parks, libraries and water projects are
getting the ax, while essential maintenance gets deferred and important
capital projects don't get built. This is pernicious when unemployment
is rising and when we have all the real resources we need to preserve
services and expand public investment. It's also unnecessary.
What to do? Reenact Richard Nixon's great idea: federal revenue
sharing. States and localities should get the funds to plug their
revenue gaps and maintain real public spending, per capita, for the
next three to five years. Also, enact the National Infrastructure Bank,
making bond revenue available in a revolving fund for capital
improvements. There is work to do. There are people to do it. Bring
them together. What could be easier or more sensible?
Here's another problem: the wealth loss to near-retirees and the
elderly from a declining stock market as things shake out. How about
taking care of this, with rough justice, through a supplement to Social
Security? If you need a revenue source, impose a turnover tax on
stocks.
Next, let's think about what the next upswing should try to achieve and
how it should be powered. If the 1960s were about raising baby boomers
and the '90s about technology, what should the '10s and '20s be about?
It's obvious: energy and climate change. That's where the present great
unmet needs are.
So, let's use the next few years to plan, mapping out a program of
energy conservation, reconstruction and renewable power. Let's get the
public sector and the universities working on it. And let's prepare the
private sector so that when the credit crunch finally ends, we'll have
the firms, the labs, the standards and the talent in place, ready to
go.
Some will ask if we can afford it. To see the answer, don't look at
budget projections. Just look at interest rates. Last week, in the
panic, the federal government could fund itself, short term, for free.
It could have raised money for 30 years and paid less than 4 percent.
That's far less than it cost back in 2000.
No country in this situation is broke, or insolvent, or even in much
trouble. For once, Wall Street's own markets speak the truth. The
financially challenged customer isn't Uncle Sam. He's up on Wall
Street, where deregulation, greed and fraud ran wild.
James K. Galbraith is the author of "The Predator State: How
Conservatives Abandoned the Free Market and Why Liberals Should Too."
(finish)
New York Mayor Michael Bloomberg announced $1.5 billion in public
spending cuts. The scenario is playing out everywhere: Schools, fire
departments, police stations, parks, libraries and water projects are
getting the ax, while essential maintenance gets deferred and important
capital projects don't get built. This is pernicious when unemployment
is rising and when we have all the real resources we need to preserve
services and expand public investment. It's also unnecessary.
What to do? Reenact Richard Nixon's great idea: federal revenue
sharing. States and localities should get the funds to plug their
revenue gaps and maintain real public spending, per capita, for the
next three to five years. Also, enact the National Infrastructure Bank,
making bond revenue available in a revolving fund for capital
improvements. There is work to do. There are people to do it. Bring
them together. What could be easier or more sensible?
Here's another problem: the wealth loss to near-retirees and the
elderly from a declining stock market as things shake out. How about
taking care of this, with rough justice, through a supplement to Social
Security? If you need a revenue source, impose a turnover tax on
stocks.
Next, let's think about what the next upswing should try to achieve and
how it should be powered. If the 1960s were about raising baby boomers
and the '90s about technology, what should the '10s and '20s be about?
It's obvious: energy and climate change. That's where the present great
unmet needs are.
So, let's use the next few years to plan, mapping out a program of
energy conservation, reconstruction and renewable power. Let's get the
public sector and the universities working on it. And let's prepare the
private sector so that when the credit crunch finally ends, we'll have
the firms, the labs, the standards and the talent in place, ready to
go.
budget projections. Just look at interest rates. Last week, in the
panic, the federal government could fund itself, short term, for free.
It could have raised money for 30 years and paid less than 4 percent.
That's far less than it cost back in 2000.
No country in this situation is broke, or insolvent, or even in much
trouble. For once, Wall Street's own markets speak the truth. The
financially challenged customer isn't Uncle Sam. He's up on Wall
Street, where deregulation, greed and fraud ran wild.
James K. Galbraith is the author of "The Predator State: How
Conservatives Abandoned the Free Market and Why Liberals Should Too."
(finish)
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