[P2P-F] Fw: [Arthakranti] Obama's Economic Challenge

[robert searle]

----- Forwarded Message -----
From: Narendra Khot <nvkhot at gmail.com>
To: Artha Kranti <Arthakranti at yahoogroups.co.in> 
Sent: Wednesday, 12 September 2012, 7:01
Subject: [Arthakranti] Obama's Economic Challenge
  

 
   
 





The Biggest Economic Challenge of Obama’s Second Term 
By Robert Reich 
 
The question at the core of America’s upcoming election  
isn’t merely whose story most voting Americans believe to be true  
– Mitt Romney’s claim that the economy is in a stall and  
Obama’s policies haven’t worked, or Barack Obama’s that  
it’s slowly mending and his approach is working.
If that were all  
there was to it, last Friday’s report from the Bureau of Labor  
Statistics showing the economy added only 96,000 jobs in August – below  
what’s needed merely to keep up with the growth in the number of  
eligible workers — would seem to bolster Romney’s  
claim.
But, of course, congressional Republicans have never even given  
Obama a chance to try his approach. They’ve blocked everything  
he’s tried to do – including his proposed Jobs Act that would  
help state and local governments replace many of the teachers, police  
officers, social workers, and fire fighters they’ve had to let go over  
the last several years.
The deeper question is what should be done  
starting in January to boost a recovery that by anyone’s measure is  
still anemic. In truth, not even the Jobs Act will be enough.
At the  
Republican convention in Tampa, Florida, Romney produced the predictable set  
of Republican bromides: cut taxes on corporations and the already rich, cut  
government spending (mainly on the lower-middle class and the poor), and gut  
business regulations.
It’s the same supply-side nonsense that got  
the economy into trouble in the first place.
Corporations won’t  
hire more workers just because their tax bill is lower and they spend less on  
regulations. In case you hadn’t noticed, corporate profits are up. Most  
companies don’t even know what to do with the profits they’re  
already making. Not incidentally, much of those profits have come from  
replacing jobs with computer software or outsourcing them  
abroad.
Meanwhile, the wealthy don’t create jobs, and giving them  
additional tax cuts won’t bring unemployment down. America’s rich  
are already garnering a bigger share of American income than they have in  
eighty years. They’re using much of it to speculate in the stock  
market. All this has done is drive stock prices higher.
The way to get  
jobs back is to get American consumers to spend again. Consumer spending is  
70 percent of the nation’s economic activity. Most of it comes from the  
middle class and those aspiring to join the middle class. They’re the  
real job creators.
But here’s the problem. Middle-class consumers  
won’t and can’t spend because their savings are depleted, their  
homes are worth a fraction of what they were five years ago, their wages are  
dropping, and they’re worried about keeping their jobs.
And  
they’re no longer able borrow against the rising values of their homes  
because the housing bubble burst — which means they can no longer  
pretend they’re in better financial shape than they really  
are.
This is the heart of our economic dilemma.
Last Thursday  
night at the Democratic convention in Charlotte, North Carolina, President  
Obama suggested a way to correct this, or at least not make things worse:  
Raise taxes on the wealthy rather than cut programs the middle class and poor  
depend on (such as Medicare and Medicaid), give tax incentives to companies  
that create jobs in the United States, and invest in  
education.
It’s start but America’s middle class and poor  
need far more. They need to be able to refinance their mortgages at  
today’s low interest rates. They need a larger Earned Income Tax Credit  
– a wage subsidy for lower-paying jobs. And a higher minimum wage  
that’s automatically adjusted for inflation.
They could use a new  
Works Projects Administration and Civilian Conservation Corps designed to put  
the long-term unemployed back to work.
They need stronger unions to  
bargain for a larger share of the gains from economic growth. And a Social  
Security payroll tax that exempts the first $25,000 of income and eliminates  
the ceiling (now $110,100) on income subject to it.
And they need an  
industrial policy designed to create high-wage jobs in America.
In  
accepting his party’s nomination for president, Obama said the  
“basic bargain” that once rewarded hard work and gave everyone a  
fair shot had come undone.
He’s right. And the U.S. economy  
won’t return to normal until that basic bargain is remade.
If  
Obama gets a second term, recreating that bargain — and getting enough  
votes from Congress to do so — will be his central challenge, and  
America’s.
This article was published at NationofChange at: http://www.nationofchange.org/biggest-economic-challenge-obama-s-second-term-1347371321.  
All rights are reserved.    
  
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