Robert B. Reich, a co-founder of The American Prospect, is a Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. His website can be found here and his blog can be found here.
Federal Reserve Chairman Alan Greenspan has told Congress to wait and see what happens before enacting a stimulus package. Congress is heeding his advice. It shouldn't. A stimulus is needed right away.
Even before the September 11th terrorist attack, American consumers were in a deep funk. Personal savings rates were nearing a 70-year low, and debt was at record heights. Jobs were already disappearing. No wonder that, according to the Conference Board survey released this week, September marked the largest one-month drop in consumer confidence since October 1990, and almost all that survey was done before the terrorist attack.
To listen to the White House and Republicans, you'd think the biggest
choice facing the nation is whether to use projected budget surpluses to
"save Social Security," as the White House proposes, or to cut taxes
across the board, as Congressional Republicans propose.
Because the polls show most Americans want both, you can bet that
whatever emerges will be a mushy combination.
Is this really the Great Debate we ought to be having?
Alan Greenspan is pushing on a wet noodle. The Fed has repeatedly cut interest rates since January and nothing's happened which means that we shouldn't expect this week's half percent rate cut to have much impact either. Even figuring in the normal time lag between a rate cut and response, the fact is this economy just isn't responding.
Luckily the car has two accelerators. If the Fed's monetary policy isn't enough, there's fiscal policy. This week, the president lent his support to a stimulus package of between $60 billion and $75 billion in the form of additional tax cuts and spending.
Senate Democrats have managed to whittle George W 's tax cut from $1.6 trillion to $1.2 trillion. Big deal. Last year, Bill Clinton vetoed a $700 billion tax cut. And once the Senate tax bill goes to conference with the House, it's sure to be back up there where Bush wants it.
Democrats can't fight Bush's tax cut with nothing but an admonition that it's "too large." They need to put something else on the table that's important to working Americans -- and which won't be possible if the surplus is used for Bush's tax cut. That something is universal health care.