President Obama’s victory last night was due in large part to the American people’s confidence that the country is headed in the right direction economically, coupled with a repudiation of the totally calamitous economic plan of Mitt Romney. But with his victory, the president continues to lead a country battered and scarred by economic crisis. On his desk remain immediate, short term, and longterm economic issues that he must begin to deal with straight away. Left unresolved, the promise of his first four years will remain unfulfilled in the next four.
The most looming issue facing the president is the fiscal cliff.
Last year, as part of the disastrous debt deal he made with the Republican Congress, President Obama agreed to $1.2 trillion in automatic spending cuts beginning on Jan. 2, 2013. If implemented, these cuts would remove $100 billion from our economy each year over nine years. Fifty percent of the reductions would come from defense and 50 percent from the domestic programs that people of color use to climb the economic ladder, such as Medicaid, education and housing support. Should it take place, the fiscal cliff will be a self-inflicted catastrophe for the economy.
The Bi-Partisan Policy Center says the cuts would roll back economic growth, cost the country 2 millions jobs, and almost surely push the nation back into recession. Without action, a new doomsday for the American economy is only seven weeks away.
The good news is that—with leadership from president and action from the Congress—the fiscal cliff can be avoided. That’s because they never wanted it come to this.
The fiscal cliff was a gun that the president and Congress pointed at their own heads, in order to force themselves to deal with the country’s longterm debt. That debt, accumulated mostly through defense spending and irresponsible tax cuts for the wealthy, has to be resolved in a responsible manner if the U.S. is to prosper as the economy recovers. Both that debt and the fiscal cliff that we now face are products of an absence of leadership in Washington. As the nation’s chief executive, the president has to spearhead the unwinding of the trap that he helped to create. Doing so in a way that preserve’s progressive values will be his charge. However difficult, it’s the only way to avoid a calamity.
His next task is to attack joblessness. One out of six people working is underemployed, either without work or in jobs below their skill level. Black, brown and youth unemployment remain at Depression-like levels. Asians are more likely to stay unemployed longer than any other group. Though broader employment indicators are looking up, overall job growth is unsustainable without a real plan to put America back to work
Luckily, Obama has a plan to to do just that. It would largely end the jobs crisis. However, the president hasn’t championed it in over a year and he barely mentioned it during the campaign. That needs to change if we are to turn things around.
That said, a longterm recovery is not possible without standing up the housing market. According to detailed analysis by the National Employment Housing Project, 2 million construction jobs in housing and commercial property were lost during the recession. We needs those jobs back.
The problem is that real estate remains in the doldrums. According to the Washington Post, 1 out of 4 Americans owe more on their mortgage than their home is actually worth. By the end of the end of the year, 700,000 homes will have been foreclosed in the last 12 months. 187,000 foreclosures were initiated in September alone. Our economy can’t come back until the president and Congress get the housing market sorted and moving again.
Obama’s victory tonight was real and meaningful. It will have a dramatic impact on our ability to keep the economic conversation moving in the right direction. Essential to that conversation is a reorientation of economic policy away from the super rich and towards the rest of us. Concentration of wealth in the hands of the few is the background radiation of our economy and contaminates our ability to make progress on the nation’s debt, job creation and housing. Until the president and our entire political system can detox itself from an obsession with how to make the rich richer, our economy will continue to remain stuck.