investment

Collapsing Bridges, Sinking Levees. It’s (Past) Time to Invest

Eric Lotke — Thu, 31 Jul 2008 07:47:02 -0700

Last year on August 1, the I-35W bridge in Minneapolis collapsed during rush hour. Thirteen people died and more than 100 were wounded. A school bus carrying 52 children teetered on the brink but did not fall.

This bridge is not alone. Our nation’s infrastructure is deteriorating, dying of old age and neglect.

Making Sense Alert:
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Bridges and roads. The U.S. Department of Transportation reports that nearly 25 percent of bridges in the U.S.—over 152,000 bridges—are “structurally deficient or functionally obsolete.” Heavier vehicles, like school buses and delivery trucks, are forced to take lengthy detours for safer bridges. Nearly one in four miles of urban interstate is in “poor” or “mediocre” condition.

Levees and waterways. Earlier this year, thousands of homes and millions of acres of crops were destroyed after heavy rains overwhelmed obsolete levees along the Mississippi River. In 2007, the American Society of Civil Engineers found more than 150 levees to be at high risk of failing due to poor maintenance. Over a quarter of the dams overseen by the Corps of Engineers have exceeded the lifespan for which they were designed and need major repairs to ensure their safety.

Water and steam. A steam pipe explosion in Manhattan last year launched a tow truck 12 feet in the air, killing one person and injuring dozens more. The blast opened a 40-foot-diameter crater and spread toxic asbestos, closing off 40 square blocks for five days. Almost every state—from California, Hawaii, and New York to Alaska and North Carolina—has reported record breakdowns in water infrastructure. In the words of one expert, “an epidemic of breaking pipes is causing unprecedented havoc.”

These are just illustrations of the deadly danger of letting our infrastructure go unmaintained. America’s electric power grid, dams, water treatment plants, airports, and railways are all in dire need of repairs and improvements.

The solution is obvious. Repair and rebuild. Rebuilding our infrastructure provides jobs—good jobs that can never be outsourced—and an economic shot in the arm that we desperately need. The U.S. Department of Transportation estimates that every $1 billion in federal highway investment creates 47,500 new jobs and generates more than $2 billion in economic activity.

The “greatest generation” built the Interstate Highway System and laid the groundwork for decades of economic expansion. Now it’s our turn to rebuild the highways and add high-speed rail to boot. We’ll be faster, safer and more efficient. Yes, it will cost money, and yes, we’re running deficits. But this is no time to run scared. These are long-term investments and they will pay off over time.

Don’t fall for the “pay as you go” trap or fear the “tax and spend” label. Real people are smarter than that. A new poll by Time Magazine and the Rockefeller Foundation finds 83 percent of the public supports “increasing government spending on things like public works projects to help create jobs.” Support is at 83 percent among the baby-boom generation who built the interstates, and a surprising 90 percent among the young generation Y who are watching them fall apart.

Let’s invest now to turn the economy around.

New Unemployment, Old Solutions

Eric Lotke — Fri, 06 Nov 2009 09:09:34 -0800

Today’s unemployment data contain gloomy news. Gloomy, but expected. The interpretation of the data is even worse.

First, the data. Unemployment rose to 10.2 percent last month, breaking the double digit barrier. Most people expected it to happen, though the job loss (190,000) was a bit worse than most economic forecasts (175,000). We can maybe be happy that the October job loss wasn’t as high as September (263,000), but this modest deceleration doesn’t mean much to the 15.7 million people without work, the 9.3 million people working part-time but looking for full-time, or the 3.2 million people who are discouraged or marginally attached to the work force and barely even looking anymore. Nearly 20 percent of the workforce isn’t where it wants to be.

In other words, it’s bad. You don’t need me or the Bureau of Labor Statistics to tell you that.

The interesting part is where it’s bad and what to do about it.

The biggest job losses in October were in construction (62,000) and manufacturing (61,000). In the last year, these sectors have lost over 2.5 million jobs between them. Job losses in these sectors hurt worse than most other sectors. Manufacturing jobs have a bigger economic “multiplier” than other sectors, creating more jobs and more economic activity around them. Manufacturing creates jobs “downstream,” as production workers buy sandwiches from restaurants; and “upstream,” as steelworkers and coal miners work to provide raw material. The benefits of construction obviously count for more and last longer than just the construction itself. Anybody who doesn't live in a cave knows that.

But manufacturing and construction are losing more jobs than any other sector. Health care and temporary jobs are the only positive — if we can cheer sickness or a temp job.

Source: Bureau of Labor Statistics

This isn’t just a temporary blip. Construction is sinking from the burst of the housing bubble and general economic doldrums. Manufacturing is suffering from long term structural declines and a trade policy that favors imports over domestic production.

The solution leaps out from the data. These two sectors respond most clearly to public sector investment. During this downturn, we can build roads, rail lines and bridges. During this downturn, we can fix school roofs and turn temporary trailers for overcrowded schools into permanent classrooms for eager students. During this downturn, we can build the windmills and install the solar cells to move us towards energy independence. During this downturn we can rebuild a productive economy for the future.

Source: Bureau of Labor Statistics

Maybe a quarter of the 800 billion stimulus package pushed in this direction. We need more. First, we need more stimulus. Good old-fashioned Keynesian stimulus during the downturn. Put people to work laying those rail lines and fixing those school roofs.

Second, we need to make sure the money stays in our own economy. We can’t ask American taxpayers to foot the bill or expect American workers to cheer when the windmills of the new energy economy are imported from Spain. It’s no gift to our economy to fix the water main with pipes imported from China that were dumped in US markets at below market costs, driving our own domestic pipe industry out of business. We can do better. We need to do better.

I’ll close with the thing we don’t need, the interpretation I warned against in the beginning. The Associated Press story about today’s unemployment data put it this way: “A robust economic recovery won't be sustainable if consumers don't pick up their spending.”

Wrong wrong wrong. The debt-driven consumption economy was the problem. The solution is not for consumers without jobs to start spending again. The solution is to rebuild our economy. From the ground up. The old fashioned way.

The American People: Smarter Than They Look On TV

Eric Lotke — Tue, 13 Oct 2009 08:51:21 -0700

New public opinion research by the Economic Policy Institute contains reassuring findings. The American people are smarter than they sometimes look on TV.

The survey of 802 registered voters in September 2009, revealed a clear sense of who’s winning and who’s losing in the economy and politics. People were asked who “the government's policies to deal with the economic recession have helped.” The frontrunner was “large banks” (62 percent) followed by “Wall Street investment companies” (54 percent). Trailing way behind were “people who have lost their jobs or had their hours cut back” (15 percent) and the “average working person” (13 percent). “Me and my family” came in last place at ten percent.

Joe the teabagger might be getting hoodwinked about who he should march against -- but he knows who (still) calls the shots in Washington. He’s right to be angry.

Source: Economic Policy Institute

The EPI survey contains findings ratified elsewhere about economic pessimism. 85 percent of registered voters think the country is “still in recession” and 73 percent rate economic conditions as “not so good” or “poor.” 83 percent consider unemployment a “big problem.” Lack of jobs is the biggest problem in the economy, followed closely by the federal deficit and the cost of health care.

But EPI probes deeper than most surveys, and reveals profound insights about American long range thinking. Specifically focusing on the deficit, EPI asks whether it is better resolved by investing in “job creation, education and energy” or by “cutting government spending.” More than three times as many Americans preferred investment to cuts (73 v. 24 percent).

Source: Economic Policy Institute

This mirrors findings from our own poll, taken at this time last year, just before the election. We asked, “Which should be a higher priority for Congress: Expanding public investments that create jobs, even if that means increasing the budget deficit, OR reducing the budget deficit, even if that means not making new investments to create jobs.”

Source: Campaign for America's Future

Expanding public investments solidly outscored reducing the deficit (48 percent vs. 37 percent). The finding was consistent in both red states (by a 12-point margin) and blue states (by a 10-point margin).

The preference held even when we asked the question in political terms: "Democrats in Congress favor passing new economic recovery legislation designed to boost the economy and create jobs by increasing investments in areas such as transportation, energy, health care, and education, and by helping families struggling with high food and energy prices. President Bush and Republicans in Congress oppose the legislation, which they say is just more wasteful, pork-barrel spending and earmarks that will not help our economy and will lead to tax increases in the future.”

Again, people favored long-term investments: 52 percent of likely voters sided with investing Democrats. Only 36 percent sided with tax-cutting Republicans.

What does this mean? It means the noisy teabaggers and the mainstream media worried about high deficits and government spending are the start but not the end of the story. There’s much more. We need to look beyond the urgency and the noise.

If we ask the right questions or push in the right direction, the American people might come with us. Long range investments. Spending on infrastructure or education. A whole raft of progressive goals that cost money in the short term but will grow the economy and reduce the deficit in the long run.

It’s work but we can get there. The American people are smarter than they sometimes look on TV. They're capable of understanding long range investments, and they're willing to look ahead.

The Deficit: More Perspective, Less Hysteria, Please.

Eric Lotke — Wed, 26 Aug 2009 13:30:23 -0700

The Congressional Budget Office published revised estimates about the deficit, and people are hyperventilating. “[B]urying our children and grandchildren under a mountain of unsustainable debt,” declared House minority leader John Boehner (R-Ohio).

Leave aside for a moment the cause of the deficit. The Economic Policy Institute shows that the biggest cause was the Bush tax cuts, followed by the war in Iraq. Even the stimulus bill and the bank bailout shrink by comparison. And the CBO’s revision upwards is more about the shrinking economy (and declining tax revenue) than new government spending.

What’s most important is perspective. Our deficit is high, but it is not extraordinary by historical or international norms. Seen as dollars, the deficit is frighteningly large (trillions, yikes!). But America has a gigantic economy. To gain perspective, economists usually measure deficits as a percent of GDP. Viewed that way, the deficit seems more manageable.

The CBO estimates a deficit this year of $1.6 trillion. It measures our economy as $14.1 trillion, making the deficit 11.2% of our GDP. It’s a lot. But it can be managed. It is like a person who earns $30,000 and ends the year with a $3,400 deficit. Irresponsible if it bought a plasma TV. A strategic investment if it bought education or a new set of tools. America ran a budget deficit for most of our stunning post-war boom.

Source: OMB history, 1930-2008; CBO projections, 2009-11

Even if we look at the accumulated debt, not the annual deficit, the U.S. level of debt is lower than most advanced industrial countries’ – and during the current crisis, many other countries are, like the U.S., raising their deficits to meet current needs. In 2008, France’s public debt was 64 percent of its GDP; Germany’s was 63 percent. Japan sets the scale at 170 percent.

Source: CIA

This perspective may help us to calm down. It may help us to see why former Labor Secretary Robert Reich wants the deficit to be even bigger. “With unemployment and underemployment still rising, consumers still pulling away from the malls, business investment still in the basement, and exports still dead, the federal government has to spend more -- and the deficit has to be larger -- in order to get people back to work.”

Build the roads. Build the bridges. Borrow the money. Put people to work. The best way to shrink the deficit as a percent of GDP is to grow the economy.

Shifting from Defense to Green Jobs is Easy

Armand Biroonak — Thu, 20 Aug 2009 09:01:51 -0700

As progressives call for cuts to defense spending, a big challenge in doing so is addressing job losses that come with eliminating weapons programs. The number of jobs at stake can often be a powerful argument for defense supporters that cannot be ignored. The recent fight over the F-22 and its production in over 40 states is a clear example. But there is a remedy. By shifting defense jobs to the green energy sector, we can both save jobs and address climate change –and it is easier than we think.

To be sure, a sizeable number of jobs are at stake with a cut to defense programs. Case in point is the F-22. Although the numbers may be disputed, the jet’s production involves anywhere between 35,000 and 90,000 total jobs.

However, the majority of jobs in defense production are not actually defense specific. According to the U.S. Department of Labor, “Of all aerospace workers, 40 percent are employed in production; installation, maintenance, and repair; and transportation and material-moving occupations. Many of these jobs are not specific to aerospace and can be found in other manufacturing industries.” Also, other related production occupations include: rigging, systems assemblers, machinists, tool and die makers, inspectors, and sorters.

Compare defense manufacturing jobs to employment at a typical wind turbine company – they match up closely:

Source: Management Information Services, Inc., 2009.

Thus, the value of defense workers is not what they produce, but their skills in production.

Evidence of defense companies making the switch to green technology is occurring. For example, defense powerhouse Lockheed Martin has been moving forward with the research and production of solar and wave energy. In fact, by 2013 Lockheed will open the world’s largest solar energy plant in Arizona. And giant BAE Systems announced this year they will begin development of offshore deepwater wind technology.

So how can this transition occur?

Firstly, the federal government has the ability to redirect and prioritize investments. In 2008 alone, the top 100 defense contractors were paid over $315 billion for their products. With a shift in some of that funding to greater subsidies for green energy companies, boosting public investment and purchasing of green technology, we can speed up the transition to renewable energy.

Secondly, cooperation between government and the private sector can ensure that workers are not left out in the shift. From worker retraining programs both in-house and the Department of Labor’s Employment and Training Administration, reorientation of skills can be smooth. Moreover, federal programs to assist affected companies in the switch –similar to those after World War II –should be in place as well.

Overall, this is a win-win strategy. No longer investing in failed, unnecessary weaponry, retaining jobs and making critical investments in green energy, the U.S. again can be on the right track. And considering how military experts agree that climate change is the biggest national security threat, this shift can become a key component to a new 21st century defense policy.

F-22 Fight Unveils a Broken Policy

Armand Biroonak — Wed, 05 Aug 2009 12:32:26 -0700

As I’ve written prior, the very expensive F-22 fighter jet program will likely end when Congress passes the defense authorization later this year. Its demise though came only after a hard fight between the Obama administration and Congress. Despite all of the F-22’s faults, many members of Congress still saved the jet in order to preserve jobs – a reason they cannot be completely faulted for. That is why the F-22 saga is a prime example of our broken system; we lack a government strategy to make sound investments and create jobs. Instead, Congress is often forced to fight for programs that nobody wants.

Just to kill the F-22 was difficult. With production in 44 states, 200 members in Congress pleaded with the Obama administration in a letter earlier this year, stating the jet was invaluable to the economy. And when the defense funding bill moved through Congress, Republicans and Democrats, voted against killing the F-22, including more liberal senators like Barbara Boxer (CA), Diane Feinstein (CA) and Chris Dodd (CT). Even Sen. Kerry (MA) questioned ending the F-22 until the administration assured him that Massachusetts’ job losses would be mitigated with production of the alternative F-35 jet.

And although the end of the F-22 is a victory for defense reform advocates, Congress has funded other programs that Secretary Gates called to cut. To preserve thousands of jobs, programs such as the F-35 alternative engine and the VH-71 presidential helicopter will continue at a cost of nearly $1 billion next year alone.

But despite advocates’ claims that weapons generate jobs, defense spending is actually among the least productive investments. According to a study by the Political Economic Research Institute at UMass Amherst, per $1 billion, defense only produces 8,600 jobs, compared to infrastructure’s 12,800, education’s 17,700, or mass transit’s 19,800.

And over the long term, economist Dean Baker found, “military spending drains resources from the productive economy. For this reason, it will typically lead to slower economic growth, less investment, higher trade deficits, and fewer jobs.”
Not to forget, defense products yield little utility, serving military purposes, as opposed to broader benefits that come with a bridge built or solar panel installed.

Though of course there are many, many other programs that present a clear choice between logic and lunacy, which Congress must bankroll solely for jobs. This is why it is important for the Obama administration to get serious about an industrial plan to redirect defense investment to underserved areas such as clean energy and infrastructure. Such a plan not only gets more bang for the buck, but also can serve as a foundation for sustained job creation, particularly to revive our manufacturing sector.

Look for my upcoming posts on how a transition from defense to alternative investments is easier than we might think.

HUGE Boost For Students On the Way?

Armand Biroonak — Thu, 16 Jul 2009 21:21:21 -0700

Debt saddled students may finally get the help they need to pay for college. The Student Aid and Fiscal Responsibility Act – if passed by Congress – provides the largest post-secondary reinvestment in decades. Following the commitment outlined by Obama earlier this year, Congress is now taking the lead, showing that quality, affordable college education is critical to move the country forward.

Below is the boost to student aid outlined by the legislation:

• Investing $40 billion to increase the maximum annual Pell Grant scholarship to $5,550 in 2010 and to $6,900 by 2019. Starting in 2010, the scholarship will be linked to match rising costs-of-living by indexing it to the Consumer Price Index plus 1 percent;

• Investing $3 billion to bolster college access and completion support programs for students;

• Strengthening the Perkins Loan program, a campus-based program that provides low-cost federal loans to students;

• Keeping interest rates low on need-based – or subsidized – federal student loans by making the interest rates on these loans variable beginning in 2012. These interest rates are currently set to jump from 3.4 percent to 6.8 percent in 2012;

• Making it easier for families to apply for financial aid by simplifying the FAFSA form;

Additionally, the bill invests $10 billion in community colleges, off the heels of Obama’s recently announced American Graduation Initiative that looks to add 5 million more graduates over the next decade.
This is a significant step, recognizing community colleges as an integral part to post-secondary education.

But the most transformational provision is an end to the billions in subsidies received by private lenders under the Federal Family Education Loan Program. By redirecting these loans to the government’s Direct Loan Program, the move will save nearly $90 billion over ten years, while freeing resources to reinvest in the student aid initiatives mentioned above.

Why This Bill is Needed Now

College affordability and completion rates have become absolutely abysmal in America. Just take a look at these disturbing trends:

Historically Pell Grants covered 77 percent of total college costs. Now it’s down to a third.
49 states receive a grade of F (failing) on college affordability.
1.7 million to 3.2 million students over the next decade will NOT choose college because of costs.
Nearly half of all students attending a two-year institution drop out; one-in-five students pursuing a bachelor’s degree never finish.
The U.S. once ranked first in college attainment, today we rank nearly last among OECD countries.

Let’s Get This Passed

Of course the bill has its opponents, with some members of Congress siding with banks to kill the move to Direct Lending (read: preserve bank subsidies). Sen. Lamar Alexander (R-TN) explained his opposition to the bill, “What [Obama’s] doing is taking over the student loan program and depriving individuals — 15 million students — of their choices of many different kinds of student loans.”

BUT ,we know the current system is broken and has failed us. Too many students either avoid college due to costs or graduate with mountains of debt. That is why the passage of this bill is so important. By ending bank subsidies, greatly expanding student aid, and investing in our community colleges, we can ensure that the doors to college remain open to all for years to come.

Tell Congress to put Students before Banks, and pass this legislation HERE.

The Defining Moment: The Great Depression and the American Economy in the Twentieth Century

Susan Ozawa — Mon, 23 Feb 2009 12:06:32 -0800

The Promise of Public Investment

Susan Ozawa — Mon, 23 Feb 2009 11:54:01 -0800

For decades now, we have been improvident, shortchanging our own future by putting too little money with too little
forethought into our essential infrastructure. To give a few salient examples, we need to reinvigorate our air, rail, and
highway transportation systems; repair and strengthen our electrical grid and develop renewable sources of clean energy; preserve our water resources; and subsidize research and development in order to stay at the forefront of science and technology. These are necessities that only government can deliver. It is time to invest our money wisely, in projects that will pay off in many ways, for many years.

The Stress Test: A State-by-State Assessment of America's Economic Health and a Prescription for Change

Susan Ozawa — Mon, 23 Feb 2009 11:34:16 -0800

The headlines scream bad news about the economy: Prices are high and rising; wages are not keeping up. Homes foreclose at a record pace. Gas prices are at record highs. While economists and politicians debate whether or not we’re technically in a recession, most Americans feel we’ve been in a recession for years. People know in their guts that something is wrong.

To show how the economy affects working families, The Campaign for America’s Future has designed an economic stress test. Assessing the condition of jobs, housing, health care, and household costs on a state-by-state basis over time, the CAF stress test illustrates the troubles families face and shows the way to solutions.

"The Stress Test" shows trouble across the board. It shows flat wages and rising costs. It shows more people without health insurance and the neglect of such established public responsibilities as state support for college education. It demonstrates overall economic mismanagement and it quantifies the general level of stress in this historically optimistic country.

Read the full report (PDF) | State stress test statistics

What "The Stress Test" Measures

Jobs

Unemployment rates and changes in unemployment rates (March 2000-March 2008)
Changes in the number of goods-producing and service-providing jobs (March 2000-March 2008)
Changes in available construction jobs (March 2000-2008)
Changes in available manufacturing jobs (March 2000-2008)
Changes in average weekly wage (Q3 2001-Q3 2007)

Costs and quality of life

People without health insurance, per 1,000 residents; rate and change over time; overall and employer-based (2000-2006)
Population spending 25 percent of pre-tax income on health care; rate and change (2000-2008)
Public college tuition as a percentage of income; rate and change over time (2000-2001 – 2006-2007)
Bankruptcy, per capita; rate and change over time (2006-2007)
Foreclosures, per capita (2007)
Average price of gas, change over time(January 2000-February 2008)

The Solutions

To relieve this economic stress, this report shows, we need a new economic strategy. We need to stop using tax dollars to bail out Wall Street bankers and start using public money to benefit the struggling middle class. This means the creation of new, good jobs here at home and a strategy for retaining knowledge and technology in America. We need to expand public investment in infrastructure as well as human capital in order to ensure the safety and well-being of all Americans. This includes investment in roads, bridges, education and health care. These reforms are the foundation for a new economy in which all Americans benefit.

The elements of the new direction include:

New Energy for America
We should launch a concerted drive for energy independence, and put people to work building a green economy.

A National Strategy in the Global Economy
We need a clear strategy for our nation in the global economy. The first step out of the hole we are in is to stop digging. No more NAFTAs, no more trade accords written by and for multinational corporations and banks.

Invest in People and Basics that Work
We need to ensure our children have access to the best education in the world: universal pre-kindergarten, smaller classes in earlier grades, challenging after-school programs, and affordable college or advanced training. Invest in repairing roads and bridges, sewage systems and school buildings, ensuring that the jobs created are good jobs.

Health Care for All
We need to revive the American Dream and help working families with the basics. We should start with health care reform, providing for all a guaranteed choice of health care, just as members of Congress have. Provide every business and individual with the option of either keeping their current private plan, if they like it, or the ability to buy into a high-quality public plan.

Sharing Prosperity
We need to correct the imbalance between the top floor and the shop floor to ensure that profits and productivity are widely shared. Raise the floor – increase the minimum wage, guarantee workers paid sick days and family leave. Empower workers to organize, pass the Employee Free Choice Act, turn the National Labor Relations Board back into a watchdog for workers. Pass comprehensive immigration reform, gain control of our borders and enforce fair labor standards so employers can’t exploit undocumented workers.

Americans have a right to know how we can build a sustainable economy. Presidential candidates need to address the issues that are relevant to working Americans, refocusing national attention from the wants of Wall Street to the needs of Main Street. We can begin to relieve Americans’ economic stress by challenging candidates and elected officials to support and promote real solutions to real economic problems.

Stress Test State Reports

See the level of economic stress in your state.

Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky

Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota

Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming