"Winning the Future" - A slogan or an agenda?

Noting the dismal jobs picture that just came out - a 54,000 net jobs gain  in May when we need at least five times that each month just to keep the hole from getting deeper - Robert Kuttner at American Prospect sounds the alarm and offers a strategy. According to Kuttner, with the economy still sputtering and no end in sight, a massive infrastructure investment program is the surest path out of the Great Recession:

Winning the Future!  Are we?

(W)hat the economy needs to fully recover is a massive -- and I mean massive -- infrastructure and jobs program financed by surtaxes on wealthy individuals and on windfall financial-sector profits, including taxes on profits from short-term financial trades. We could also get upwards of $200 billion a year from tax enforcement, mainly on trans-national evasion used by America's wealthiest. Some of the funds for this program could also come from winding down the gratuitous wars we're currently engaged in. And some could even come from a modest increase in short-term deficits.

The order of magnitude of the public investment program should be at least half a trillion dollars a year, for at least five years, and more if that doesn't solve the problem. We would not hesitate to spend this kind of money and levy surtaxes if America found itself in a serious war. It was the economic side-effects of the massive WWII program of tax, borrow, and invest that finally pulled America out of the Great Depression -- and powered the postwar boom.

But what we're getting from Washington - driven by phony GOP hysterics over budget shortfalls they largely created with a doctrine of "Tax Cuts Uber Alles" - is not a focus on growth via public investment funded by taxing runaway wealth accumulating at the top, but an agenda of spending cuts -  supposedly to "lower deficits."  (Curiously this concern with deficits is quite new among Republicans, who came into office in 2000 attacking the surplus and Dick Cheney famously claiming "Reagan taught us deficits don't matter.")

This demagogic strategy is - not to put too fine a point on it - completely insane in an economy that is lagging because it is low on consumer demand, the key factor that drives private investment in job creation. Taxes as % of GDP are at their lowest point in over half a century.  The reality is we need more taxes on non-productive wealth that can be turned to public investment, not spending cuts or tax cuts.

Of course, a robust public investment program isn't politically feasible with a GOP Congress and much of the political punditry in thrall of that strange brew, "Tea Party" politics.

So what should Democrats - or anyone who cares about the country's future - propose to do in the face of GOP obstruction of any adequate program to revitalize the nation's economy?  Kuttner advocates putting the essential policy - public investment - on the table,  to show seriousness about the unemployment crisis and a clear alternative to the GOP's framing the debate with counter-productive budget cuts:

In his important April 13 speech at George Washington University, President Obama devoted part of his remarks to brave words about the importance of fairness and social investment -- but the other half was the conventional plea for fiscal responsibility. Obama's budget proposal, at least, is a lot less draconian than that of the Republicans, but it will not be enough either to fix the economy.

This apparent policy paralysis is mainly a reflection of how much damage was done by the financial collapse.

What we face is not an ordinary macro-economic challenge of recovering from an ordinary recession. There is huge structural damage - everything from the loss of trillions of dollars of household net worth due to the housing collapse to weakened bank balance sheets to an epidemic of outsourcing as corporations try to cut their own costs. It all adds up to a massive deflationary drag. The proof is that neither zero interest rates nor double digit deficits -- which ordinarily would provide very rapid growth -- are curing the problem. But the government still has the remedy of large-scale, job-intensive public investment. Economic history shows that when the private sector is too traumatized to revive economic activity and employment, public investment is the only way to jump start a full recovery.

Obviously, the Republicans will never to agree to a program of large public investment. But Obama ought to propose one. It would be far better, both for Obama and for the country, to have the 2012 election as a referendum on jobs rather than an arcane and counterproductive debate about two brands of budget cutting.

The Democratic campaign slogan - "Winning the Future" - should be reflected in a clear agenda. What our body politic needs - in the midst of obstruction, obfuscation and economic fear-mongering - is for the President and the Democratic Party to put forward a bold choice, not an echo of GOP hysteria about deficits or proposals for cutting spending in the midst of deep recession.