Next Monday, we celebrate Dr. Martin Luther King's birthday and then, on Tuesday, Barack Obama will be sworn in as president of the United States. His first – and overwhelming – task will be to pass a bold economic recovery plan that can turn this economy around. The catastrophic legacy of the Bush years is the worst economic crisis since the Great Depression.
As Obama takes the oath of office, he will no doubt pay tribute to Dr. King, who helped make his victory possible. He would do well to pay tribute to Dr. King in his program as well as his words.
Dr. King's dream never stopped expanding. He saw ending segregation as only the first step. Voting Rights was the second and critical stage. And the third, the movement he was building when he was taken from us, was for economic justice, providing all with equal opportunity in fact, not simply in name.
Dr. King's last mission was to organize a Poor People's Campaign to demand economic justice. He argued that no democracy – indeed no prosperity – could long survive if the bulk of the rewards go to the few, and the many struggle simply to get by.
Dr King's teachings are particularly relevant now. We need to get the economy going. The best way to do that is to put people who need jobs to work in areas vital to our future. We don't need a stimulus to kick-start a return to the old economy. We need to invest in ways that transform our economy to make it work for the many and not just the few.
Most economists agree that the most effective programs to get the economy going are public investment programs that put people to work, as well as programs targeted on the "least of these." Poor people will spend the money that they earn on necessities. In contrast, providing tax cuts for the affluent or tax breaks for businesses have dramatically less effect. More of the money is saved or sent abroad. Businesses will pocket the tax breaks to strengthen their balance sheet, but they won't hire new people or invest in new capacity until they see a potential market for their products.
That's why Obama's plan should focus first on the poorest Americans – extending unemployment insurance to part-time workers who are the first to be laid off, increasing food stamps, relieving states of the soaring costs of Medicaid, investing in rebuilding America – in retrofitting schools and homes, in building new infrastructure – that can put people directly to work. He'd do well to target investment to areas with the most needs – rural and urban poverty areas where jobs will be snapped up.
Second, Obama should ensure that states and localities aren't forced to make drastic layoffs of teachers and police, or cutbacks in college budgets and increases in tuitions. Transferring money to the states and localities now will insure that they do not add directly to the downturn.
Third, the recovery plan should make investments in the next generation. Universal pre-Kindergarten would provide dramatic benefits in healthier children, lower drop outs, and better school performance. Children's health care should be the first down payment on health care reform. A wholesale increase in training programs tied to the new construction and industrial jobs, in retrofitting buildings and moving to new energy will provide opportunity for those now locked out of hope.
Since the crisis is out of the ordinary, the new thinking should be outside of the box. For example, the Federal Reserve is now lowering short term interest rates to the banks to 1% or lower. Why not lower the interest rates on student loans to 1%? Students are a better investment than banks that have squandered billions on bad loans and toxic paper. Lowering interest rates on student loans would enable hundreds of thousands to go to college who otherwise cannot afford it. It would not only lower unemployment directly, it would help prepare the best educated generation for the challenges ahead.
We need a new economy, not a return to the old one. We need immediate investments that will help meet long term objectives – moving to energy independence, building a more efficient infrastructure, putting the poor to work, making college affordable, guaranteeing every child a healthy and fair start. Dr. King understood that crisis forces dramatic change, and that change could make us better. That surely is a good definition of Barack Obama's mandate and of his mission.