Saul Loeb/AFP/Getty Images
A YouTube video of President-elect Barack Obama's weekly radio address.
A YouTube video of President-elect Barack Obama's weekly radio address. Saul Loeb/AFP/Getty Images
President-elect Barack Obama set out plans for an ambitious economic stimulus package Saturday. In a radio and Web address, he said things are likely to get worse before they get better and that he has directed his economic team to come up with a plan to create 2.5 million jobs by January 2011.
"We'll be working out the details in the weeks ahead, but it will be a two-year nationwide effort to jump-start job creation in America and lay the foundation for a strong and growing economy," he said.
Up until now, most talk of an economic stimulus package has had a one-year time frame. Obama describes his longer, two-year approach as a plan big enough to meet the challenges the nation faces. Those challenges, he noted, include 1.2 million jobs lost this year and the risk of millions more next year.
"We'll put people back to work rebuilding our crumbling roads and bridges, modernizing schools that are failing our children, and building wind farms and solar panels, fuel-efficient cars and the alternative energy technologies that can free us from our dependence on foreign oil and keep our economy competitive in the years ahead," he said.
Business and economics historian John Steele Gordon says the discussion of infrastructure investments and government programs rings familiar.
"That's the standard remedy for this illness," he said. "Now whether it's the best remedy or not is another question."
Gordon argues it isn't. He says the New Deal didn't end the Great Depression, World War II did. He says building bridges and painting schools won't provide a quick fix.
"That's all very good, but you can't start that on Jan. 21 even if Congress agreed," he said. "It's going to take a long while to plan it and decide who gets what and where and how and when."
Economist Lakshman Achuthan agrees that government-funded job creation alone won't solve the problem. Atchuthan is director of the Economic Cycle Research Institute and as he sees it, there are two other elements needed: extending jobless benefits, which Congress just did, and some sort of direct economic stimulus.
"Rebate checks or food stamps or payroll tax holidays or tax breaks for specific businesses — whatever," he said. "The content is less important than the timing."
Case in point: the economic stimulus package passed by Congress last February.
"$150 billion was spent earlier this year and what we ended up with was a rapidly deteriorating economy and financial market, Atchuthan said. "It didn't help at all."
Achuthan says since the economy was already going down, the money got lost in the economic storm. Instead of buying stuff, most people put their stimulus checks in savings for a rainy day or paid off credit card debt. Congress and Obama should agree on an economic stimulus package, but he says the money shouldn't go out until the economy takes an upward turn.
"It's just like when you're pushing a swing," he said. "You don't push a swing at anytime when it's going back and forth. You push a swing at one time and it's a very smooth ride and a strong swing upwards. And that is ultimately what we will need if we want to create jobs."
Atchuthan says the recoveries from recessions in 1991 and 2001 were soft, so-called "jobless" recoveries. This time, he says, a rapid bounce back is needed and a properly applied push from an economic stimulus could make that happen. The timing can be tricky and, as Atchuthan says, there's a big chance it won't work, but then neither did the last economic stimulus.