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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How to talk about the need
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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.

Create Real Jobs That Pay Off: Update Our 1970's Infrastructure

Dave Johnson — Sun, 21 Feb 2010 11:33:47 -0800

One legacy of the Reagan tax cuts is that we stopped maintaining - and never mind modernizing - our infrastructure. As a result there is a LOT of work that needs doing. And there are a very, very large number of unemployed people. Hmmm...

There are so many more ways our economy suffers as the consequences of Reagan-era choices come home to roost. The current economic doldrums are in great part the result of Reagan-era choices:

* The deferred infrastructure maintenance and modernization that resulted from the tax cuts mean that our economy is no longer world-class. Bob Herbert has been writing about this problem for a while. From his most recent,

Schools, highways, the electric grid, water systems, ports, dams, levees — the list can seem endless — have to be maintained, upgraded, rebuilt or replaced if the U.S. is to remain a first-class nation with a first-class economy over the next several decades. And some entirely new infrastructure systems will have to be developed.

So here we are with a massive infrastructure deficit that is harming our ability to compete economically in the world. Just one example: China has 42 high-speed rail lines coming into operation connecting their major cities, and we are just starting our first one connecting ... Tampa to Orlando?

* The education cutbacks then are really hurting now.

* Energy. Cancelling all of Carter's efforts to solve our energy problems has left the economy dependent on last century's expensive and polluting energy sources and the monopolistic giants that control them.

* Debt. Tax cuts creating "structural deficits" have built up tremendous debt and the accompanying burden of paying interest on that debt and dependence on those who fund our borrowing habit.

* Militarization. We spend more on military than every other country on earth combined. The big defense corporations keep us from doing anything about it. Historically this kind of military spending and the resulting debt has ruined empires and kingdoms, and here we are.

* Government. Outsourcing/cutting/destroying/hating government and the commons has left us ill-equipped to catch up with China and others, and deal with monopolistic multinational corporate giants.

Schools, highways, power grid, ... everything. And all this work needs to be done on top of the need to retrofit all of our country's buildings to be energy efficient. Or we will just continue to fall forther behind. There is so much work that needs to be done. I wonder how the cost compares to the amounts that have been transferred to the very rich since the tax cuts started.

Hmmm... Let's see ... high unemployment ... lots of work that needs doing ... massive wealth accumulated at the very top ... hmmm... dot. dot. dot. And on top of that, there is all that evidence that past investment in infrastructure leads to great prosperity in the years following the investment ... dot. dot. dot. hmmm... Ideas are forming... connections are being made...

I can hear the shrieking from the "free market" conservative bunch now, just for thinking such thoughts: "But ... but .. that would be just WRONG to just ... give people jobs doing what needs to be done!!! and taxing the RICH -- the very beneficiaries of past infrastructure investment -- to pay for it? How can you even dare suggest such a thing???!!!"

Public works projects -- infrastructure. Example: In the 1950s, with top tax rates at 90%, we started the massive public works project that is the Interstate Highway System. How did that investment work out for our economy? How many companies benefitted from the ability to deliver trucked goods across the country in a short time? How did those top taxpayers do economically as a result of such investments?

Hmmm...

Job Creation? Not Without Worker Training

Armand Biroonak — Thu, 28 Jan 2010 04:38:30 -0800

President Obama’s State of the Union outlined a renewed commitment to job creation and focused on investing in the American people once more. For his initiatives to be successful however, the Administration and Congress must greatly invest in worker training if Americans are going to gain the skills needed to take advantage of emerging job opportunities. The Institute for America’s Future, in partnership with the National Skills Coalition, will release later today, “The Bridge to a New Economy: Worker Training Fills the Gap” a state-by state report highlighting the importance of worker training investments, and why community colleges, business and labor must also come to the table.

Looking forward, job creation initiatives that the President proposed will provide solid growth for middle-skill jobs. The middle-skill sector requires occupations with an associate’s degree or some form of post-secondary certification. They span various fields from nursing and construction to information technology. Much of the employment provided by the Recovery Act or ‘stimulus’ for instance, were in this category. And looking out through the next decade, as the economy begins to pick up speed and grow again, middle-skill jobs will be a significant portion of the job market according to the latest projections by the Department of Labor.

However, the current employment situation in America tells of a different story –we have a major skills gap. As shown in the graphic below, the U.S. has few low-skill jobs for too many low-skill workers. But on the flip side, middle-skill jobs outpace the supply of qualified middle-skill workers. This was just prior to the recession too, so the gap surely persists in light of current economic woes.

This is why, as President Obama emphasized, greater investments in Americans are needed to both revive the American economy and compete globally –worker training is a crucial part to this. Workforce development will allow workers to both gain or retool their skills for the new economy, especially as Congress and the Administration put forth initiatives in the health care, infrastructure and green energy sectors that will spur extensive demand. How else will we fill vacancies for a medical technician or solar panel installer, without providing a strategy for Americans to more easily attain the skills required?

And it is not just for workers to succeed, if businesses are going to grow, especially those in emerging, cutting-edge industries, they need qualified workers with reoriented skills to do the job.

A comprehensive worker training program will require our nation’s 1,000 community colleges to take a lead role, but partnerships with business, labor and community organizations are also important for skills development and career pathways. President Obama will begin to craft the 2011 budget the coming months, I call on him to make worker training an asset in his efforts to bring economic recovery.

For more details about worker training, how it works, and who is involved, please return to ourfuture.org later today.

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