Economic calamity begets radical politics. America’s worst financial panic and recession since the 1930s gave birth to the Tea Party and Occupy Wall Street movements. Now Occupy seems to be fizzling out, but in Week 2 of a government shutdown, it is looking more likely that Tea Party Republicans could plunge the nation gratuitously into a new economic emergency.
The GOP’s surrender to fiscal anarchism is bad for the country. But it does give President Obama and his party an opportunity to seize the high ground on jobs and economic growth — the issue uppermost in Americans’ minds. For that to happen, however, Democrats will need to abandon their ritual business-bashing, embrace the productive forces in U.S. society and honor companies that are investing in America’s future.
Why? Because the nation’s job drought is really an investment drought. With gridlock in Washington and financial troubles at the state and local level, real government spending on productive assets from highways and bridges to computer equipment is down by half compared with the average level of the 2000s.
Private sector investment is doing better but still falls well short of what the country needs to generate “breadwinner” jobs and raise middle-class wages. Although corporate profits have rebounded lustily, many companies are still hoarding cash — about $2 trillion worth — or spending it on stock buy-backs. U.S. business investment, outside of housing, is still 20% below its long-term trend.
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