Will this historic election alter the American physical landscape as well as the electoral one? Much will depend on whether the Obama Administration will focus on trying to revive the economy or move to reshape it.
Bold leadership sounds great in the abstract, but embarking on profound changes in the economy is both politically risky and economically daunting. Government, especially the one the new president will inherit, is severely limited in its competence and capacity to reshape the American share of the global economy.
The easier option is to minimize the “change we need,” and aim for a “kinder, gentler, greener and more regulated” version of the Enron economy bequeathed by President Bush. We may be facing the most profound economic crisis since Franklin Roosevelt took office, but so far, instead of investing in a more sustainable economy, the Democrats seem to be focused on a “stimulus” response to boost spending.
This is essentially the path followed over the past two decades without success by Japan’s ruling Liberal Democrats. In reaction to the Japanese real estate and financial meltdown in 1989, the party essentially opted to “bail-out” the status quo. The cost has been nearly twenty years of economic anemia and political gridlock.
As Japan found, a broken economy can’t be successfully “stimulated.” A patchwork of single-issue nostrums (alternative energy, public works spending, health care reform) will not put Americans back to work and America back on track.
Why not? Why isn’t it possible to revive the Clinton formula for a soaring stock market, nearly full employment and low interest rates? The answer, of course, is that neither the global economic crisis nor America’s vulnerability are sudden or surprising. The problems are deep-seated and structural, and both Clinton and Bush steered around them by postponing difficult, but necessary sacrifices.
The Republicans, of course, are most immediately and egregiously culpable. Their foreign wars, their reckless deficit spending, their unconscionable tax cuts, their laissez faire dismantling of so much of the middle class safety net, their disastrous energy policies, and their injection of cheap money into a housing/consumer spending bubble are all proximate causes of the stunning decline of American economic prowess. But the long-term, Democratic failure to chart a different course leaves the next president unprepared to offer a comprehensive alternative that makes sense in the global economy in which we now find ourselves.
The inescapable mathematics of our situation is that America runs on $2 billion a day of money borrowed from abroad. That long-running profligacy has made us into the world’s largest debtor nation by far. For the first time in our history, we are in a position where we cannot reflate our way back to prosperity.
The retooling of America we face will require a president with an approach as bold and flexible as the New Deal, and a re-investment in real places , instead of the exotic and deracinated instruments that Warren Buffett has derided as “financial weapons of mass destruction.”
The magnitude of the unfolding crisis offers glaring dangers and remarkable opportunities for embarking on a long-term rebuilding of our economy on a far more solid and sustainable foundation.
One quickly forgotten episode in the campaign gives particular “hope” that Obama may ultimately choose the more difficult, but more promising, path. At a crucial juncture during his primary battle with Hillary Clinton, he bucked both her and John McCain and their blatant pander of a “gas tax holiday” to offset skyrocketing prices at the pump.
"This is what passes for leadership in Washington,” he responded right before the important Indiana primary. “Phony ideas, calculated to win elections instead of actually solving problems."
He went on to acknowledge, "I wish I could stand up here and tell you that we could fix our energy problems with a holiday. I wish I could tell you that we can take a time-out from trade and bring back the jobs that have gone overseas. I wish I could promise that on day one of my presidency, I could pass every plan and proposal I've outlined in this campaign. But my guess is that you've heard those promises before. You hear them every year, in every election."
Such courageous “straight talk” must also acknowledge that we can’t work our way out of unprecedented levels of consumer and public debt by borrowing money. That way lies Argentina. President Obama is going to have to deliver big time on the somewhat hazy promise of rebuilding our economy with green jobs, but at a scale and scope that few have dared even suggest so far. He is going to have to do that in the face of almost irresistible political clamor to go the other direction: to somehow keep the casino economy going by cutting taxes, propping up banks, stimulating consumer spending, and keeping the American people on the job doing things that make our problems worse, from building freeways to financing more suburban subdivisions so we can continue to export a trillion dollars a year to oil exporting nations.
Building a sustainable economy is such a huge, complicated, politically challenging endeavor, that it will take every bit of Obama’s personal charisma, and leadership abilities, and the backing of an unprecedented movement of support.
Fortunately, however, there is a vast untapped source of innovative and promising ideas and practitioners working off the radar screen of the national political class in Washington and its small-minded media annex. They have laid out a framework for restoring American competitiveness that is based on investment rather than consumption – on sustainability rather than short-term fixes.
Rick Cole is the City Manager in Ventura, California, where he has championed smart growth strategies and revitalization of the historic downtown. He previously spent six years as the City Manager of Azusa, where he was credited by the San Gabriel Valley Tribune with helping make it “the most improved city in the San Gabriel Valley.” He earlier served as mayor of Pasadena and has been called “one of Southern California’s most visionary planning thinkers by the LA Times.” He was honored by Governing Magazine as one of their “2006 Public Officials of the Year.”