Six Ways to Heal the Economy

The AFL-CIO has come up with an ambitious six-point plan for healing our very sick economy – one of the best plans that have yet been suggested by anyone.

Point one calls for rebuilding the school, transportation and energy systems by spending at least $2.2 trillion to restore crumbling 20th century infrastructure. As the AFL-CIO says, it would be an investment that would put millions of people to work while laying the foundation for the nation's long-term growth and competitiveness with other nations.

Point two is as direct: “Revive U.S. manufacturing and stop exporting good jobs overseas.” That would involve, among many other steps, reforming and enforcing tax policies that are currently encouraging U.S. companies to have manufacturing done in other countries. And enhance Buy America standards, increase investment in job training and oppose free trade deals.

Point three: Provide federal help for hiring people to do at least part of the work that needs to be done nationwide. That could create millions of jobs in distressed communities, especially communities of color, where much of the work is badly needed. In doing so, pay competitive wages and do not replace existing jobs.

Point four: Help federal, state and local governments avoid more of the layoffs and cutbacks of public services that have been a major drag on the economy. Congress should make a commitment to not lay off any more federal employees. It should prevent more state and local layoffs by providing increased federal funding of Medicaid when unemployment is high and providing additional federal funds directly to communities “to save and create jobs and protect and restore public services.”

Point five: Extend unemployment benefits for at least a year to those whose benefit payout time has expired. “Our economy continues to suffer from a massive shortfall of consumer demand . . . the primary reason why businesses are not hiring.”

The AFL-CIO calls for combining the extension of benefits with providing relief to homeowners facing foreclosure. If banks lowered the principal balance on mortgages to current market value, the AFL-CIO calculates that “over $70 billion a year would be pumped back into the economy, millions of families would be able to stay in their homes and over one million jobs would be created.”

Point six: “Reform Wall Street so that it helps Main Street create jobs.” That would mean channeling capital into productive sectors of the economy – more lending to small businesses, for instance – and enacting a federal financial speculation tax to discourage harmful speculation and “make Wall Street pay to rebuild the economy it helped destroy.” The government should “enforce tough safeguards to stop the kind of cheating and massive fraud on Wall Street that precipitated the crisis of 2008.”

Many of those who did indeed cause the crisis are still in control, many still doing just what brought on the economic ailments that so deeply affect the country. It will take a lot to loosen their tight grip on the economy. But it can be done if we are wise enough to adopt reforms such as the AFL-CIO advocates.

Copyright © 2011 Dick Meister