The banks “are healing,” says Treasury Secretary Tim Geithner. And the soaring profits reported by Goldman Sachs and JPMorgan suggest that at least some of the big banks are planning a return to the days of million-dollar bonuses.
Main Street isn’t faring as well. One in six workers is unemployed or underemployed. Wages are down. Families are still losing their homes. Credit card defaults are rising. Malls are hurting big time. The auto industry is still reeling. States and localities are laying off workers and raising taxes to bridge forbidding budget deficits. And manufacturing jobs are collapsing, many moving abroad not to return.
As the president pointed out in his speech to the NAACP, minorities take the biggest hit. Low-wage urban workers have been particularly affected by the collapse of construction. Unemployment is higher among blacks and Latinos, reaching 50 percent of young black men in cities.
This shouldn’t be surprising. Led by the Federal Reserve and the Treasury Department, the government devoted literally trillions to backstopping the banks. The banks are basically able to borrow money at zero percent interest and make money investing in safe securities. They may be “healing,” but they haven’t been required to begin lending again — and see little reason to do so.
Main Street hasn’t received as much help. The president’s recovery plan was a down payment, but it was weakened by conservatives in the Senate. They added tax cuts and slashed infrastructure investments. A decent portion of the recovery plan helped those most in distress — with extended unemployment benefits, higher food stamps and refundable tax credits. States and localities got billions — but not enough to bridge the gap between revenues and expenses.
Treasury’s mortgage plan — designed to encourage brokers to renegotiate mortgages — is a bust. Thousands have been helped while millions are losing their homes. We need a much bigger program with greater authority to require mortgages be re-negotiated so people can stay in their homes. And Congress should give bankruptcy courts the power to rewrite mortgages. Every homeowner has a stake in stemming the tide of foreclosures.
The administration watered the leaves and a few show a little green. But the roots have been left largely dry, particularly in urban and rural areas. Moreover, the banks won’t get healthy until the citizens do. Credit card defaults are rising. Bankruptcies and commercial property defaults are still going up.
We need to start watering the roots. A targeted jobs program designed to put people to work is vital. We need to enlist workers in everything from planting trees to training to weatherize schools. We need paid citizen corps that can do everything from clean up public parks to work in seniors centers.
Obama’s plan, before it was weakened, was designed to create 3.5 million jobs. But the U.S. has already lost 6.5 million jobs, and the number is rising at nearly 500,000 a month.
The Obama plan hasn’t failed — it just wasn’t big enough. We need a targeted jobs plan right now.
Conservatives in both parties are railing about record deficits. The public increasingly is wary about more spending. But taking on debt to put people to work is vital in this economy. Consumers are paying down debts and tightening their belts. With demand down, business won’t invest. Interest rates can’t go lower.
The only hope is that the federal government does the lifting. The deficits mean we must get the best bang for the buck. That means focusing on putting people to work in areas with the highest unemployment on work that needs to be done.
Legislators — particularly Republicans in opposition — still seem wedded to politics as usual rather than rising to meet the crisis. But high unemployment isn’t a statistic; it is a grim reaper, destroying families, hopes, talent, and growth. We need action to put people to work.