Boztopia.com

In this week’s video/radio address, President-elect Obama unveiled his plans to create 2.5 million jobs by 2011 through combining energy independence efforts with infrastructure rebuilding:

This is exactly the right tack to take–as it’s really the only tack we have. Rather than injecting capital into markets, what we need is to create new jobs, get people paid decent wages, and get them spending and saving again. The only way to do that is open the floodgates to a new New Deal–a new Works Progress Administration-esque initiative that goes full-throttle at the root causes of our financial, economic, political, and physical decay.

Dean Baker, who was pretty much right about everything that led up to the housing bubble, its collapse, and the resultant aftermath, makes the argument for how much this could jolt our economy out of its doldrums:

Now while I don’t necessarily agree that solely rebuilding roads and bridges is a very forward thinking strategy, I do think that “Apollo type” projects in developing a more powerful car battery, developing more efficient solar panels, or developing environmentally friendly wind farms (while finding a way to deal with the bird population) should take place. Installing solar parks and wind farms, among other things, as well as repairing our roads and bridges, which in many cases haven’t been upgraded since the 50s, would put a lot of money in the economy from the bottom up, not the top down.

That’s absolutely right. We can’t rely solely on any one investment option as the magical panacea. We need them all. We need ambitious programs for clean energy such as Google’s. We need national broadband investment. And we need a massive, end-to-end of our national health care system which recognizes the costs of letting people go uninsured as a drain on the economy. We need all of these things to make our country strong and prosperous again.

Paul Krugman, who’s also pretty much been right about every economic development in the last decade, warns us that the next two months could wreak tremendous havoc, simply because Obama doesn’t take office until the 20th, leaving plenty of time for Bush and his cronies to cause more damage:

Is economic policy completely paralyzed between now and Jan. 20? No, not completely. Some useful actions are being taken. For example, Fannie Mae and Freddie Mac, the lending agencies, have taken the helpful step of declaring a temporary halt to foreclosures, while Congress has passed a badly needed extension of unemployment benefits now that the White House has dropped its opposition. But nothing is happening on the policy front that is remotely commensurate with the scale of the economic crisis. And it’s scary to think how much more can go wrong before Inauguration Day.

A while back, I argued that Obama should start small and pass a couple of easy targets to make sure people know he can get things done. Things like S-CHIP, the Lily Ledbetter Fair Pay Act, the Employee Free Choice Act, and repealing or undoing a lot of Bush’s executive orders can all be accomplished fairly easily in the first 100 days. But I’ve come to accept that I was thinking too small about not only the scope of the problems we face, but the need for–and ability of–Obama and his team to confront them. When everyone from Hale “Bonddad” Stewart to Business Week is clamoring for big moves to fix problems, it’s clear that the momentum for real change is on our side, and lowballing ourselves will serve no purpose in the end.

During the peak of the housing bubble, the conventional orthodox wisdom was that housing prices would go up forever and stay up, that you could pull equity from your home like it was an ATM, and that you were a fool to not get into the market. People who questioned the fundamentals of the economy at that time–Baker, Krugman, Bonddad, Sara Robinson, Nouriel “Dr. Doom” Roubini, as well as folks like Joe and myself–were criticized as bitter pessimists who didn’t believe in the strength of the economy. Now those same orthodox thinkers are hiding their cash under the mattresses, stockpiling guns and butter, and screaming about the end of civilization as we know it, while Obama is advancing policy solutions that sound a hell of a lot like what we’ve been saying.

It may not work. We may face a million new problems we haven’t foreseen. Obama may simply not have the resources or political will to tackle all this. Maybe his advisors will talk him into smaller, more politically palatable solutions. We don’t know. But so far, it sounds like he’s on the right track, and that’s good–because we literally can’t afford anything less.