December 4, 2008 - 14:26 | 
ePluribus Media
Carol White reviews Robert Kuttner’s Obama’s Challenge: American’s Economic Crisis and the Power of a Transformative Presidency
In his new book, Robert Kuttner has provided a context for the current discussion on Barack Obama’s economic team, men like Timothy Geithner who will be leaving his post as head of the NY Federal Reserve to become Treasury Secretary. What will be their influence in determining the direction of the new Administration? Events have moved rapidly since he wrote the book (released this past labor day), but it is still timely and prescient.
Challenges President Obama will be facing on January 19th
:
- A deepening recession caused by both a traumatized financial system and weakened consumer purchasing power.
- A banking system that will lose between $1 and $2 trillion of capital.
- The worst collapse in housing values since the Depression.
- A simultaneous outbreak of worldwide inflation.
- Global constrains—a weak dollar and high foreign debt—on a recovery program reliant mainly on low interest rates (our key policy to date).
- recession budget deficits already at fairly high levels.
- Widening income insecurity and inequality.
- States and local governments that are short of revenues because tax receipts fall in a recession—at just the moment when demand for public services rises.
- An energy and environmental crisis that demands a dramatically different course.
- A health system that is becoming less reliable and more expensive. (18)
Carol White says that even though the book was published before the November election, in her opinion this is the coffee-table book to give progressive friends for Christmas; the book she hopes the president-elect will be putting on his bookshelf to join Doris Kearn’s study of Lincoln’s cabinet, Team of Rivals, Jean Edward Smith’s biography, FDR and Alter Jonathan’s, The Defining Moment: FDR’s Hundred Days and the Triumph of Hope (all of which he is said to have read recently.)
The economy is one of the most important challenges facing the Obama presidency. Read the review and then join us here for discussion.
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The Big Three Bailout
This is what Robert Reich had to say on the subject today. (He has given ePm permission to post from his blog commentary with proper attribution.)
The Bailout Paradox
As a condition of getting a federal bailout, the Big Three are promising, among other things, to cut costs. Among the costs to be cut will be jobs. This is paradoxical, since the reason Congress is considering bailing them out in the first place is to preserve jobs and avoid the social costs of large-scale job loss (unemployment insurance, lost tax revenues, pension payments that have to be picked up by the Pension Benefit Guarantee Corporation, and so forth) .
We should take a lesson from the Chrysler bailout of the early 1980s. The ostensible reason Congress voted for it was to preserve Chrysler jobs. Yet once the bailout was underway, in order to generate the money it needed to restructure itself, Chrysler laid off more than a third of its workforce. Most of these jobs never came back.
And it's much the same with the mammoth bailout of Wall Street. Absent an explicit understanding of why public money is needed and what it's to be used for, taxpayer dollars end up bolstering executives, creditors, and shareholders rather than the workers and communities that need the most help.
In his new book, Robert Kuttner speaks strongly about the need for a union organizing drive (with appropriate legislation to support the right to organize) as a prerequisite for a transformation. The present "negotiations" on a Big Three bailout underscore the point. Who is intended to benefit from the bailout, and will it contribute to a general economic recovery. As Standingup pointed out in her recent commentary, the UAW is a major target of conservatives who are prioritizing in union busting and robbing pensioned workers of their benefits. Standingup hit it right in her comentary, The Myth of the $70 an Hour Auto Workers.
I didn't find any new posts on the bailout by Kuttner ;and Krugman has a generic Op Ed in the New York Times. Worries About Next Year \which addresses the problem that major investment in a majpr new infrastructure package will take time have an effect on the economy, but does not specifically address the Big Three Bailout.
I’ve been ruminating over economic prospects for next year, and I’m getting scared
... snip ...
So here’s what I’m wondering: will it, in fact, even be possible to pull the economy out of its nosedive before unemployment goes into double digits? I’m starting to wonder.
carol
Big thanks to Roxy
I am afraid that editing this piece was a "Challenge to Roxy."
These days I frequently find myself checking in with the blogs of Robert Reich, Paul Krugman and Robert Kuttner. IMO they have a balance in the way they are covering the incoming Administration that is too often lacking in progressive coverage. I plan toreview of Daschle's recent book on Health Care. It is interesting to me that Kuttner and Daschle are taking somewhat different approaches to the subject. I think the policy questions facing the Obama and his advisors are anything but simple. IMO, It's easy to criticize but a helluva lot different to be in their shoes right now.
carol
Looking forward to hearing more re: Daschle's
book.
As for being in their shoes -- I'm glad they're the ones wearing the shoes. They've got a heckuva job ahead of them, beating back the weeds and finding a path back toward a nation of laws and sanity.
Maybe they should
be wearing boots.