WASHINGTON -- The U.S. economy is shrinking, unemployment is at its highest level since 1994, manufacturing is at its lowest point in 26 years -- and Barack Obama is pushing a stimulus bill to rebuild bridges and roads.
Whatever the long-term infrastructure needs of the nation may be, we are not going to pull this economy out of its hole with a bunch of government public-works projects. The question is, did Obama's economic advisers tell him that?
If they did, that wasn't what he told the American people last Saturday after meeting with his 20-member advisory team. Instead, he went before the TV cameras and called on Congress to move ahead on a so-called "stimulus" package hatched by House Democrats that has very little, if any, economic stimulus in it. A better name for it would be a "status quo" plan.
Here's some of what this plan contains: a 13-week extension of unemployment benefits, more money for food stamps and billions in federal infrastructure projects and funding for state Medicaid costs to help poor-to-low-income people. There was also maybe $50 billion for cash-strapped automakers to encourage them to build more fuel-efficient vehicles.
Let's say all of these things need to be done. They will not, in and of themselves, create a single job, expand production or boost U.S. exports in the global economy.
Infrastructure spending has failed just about everywhere it's been tried. Ask the Japanese who poured billions into public works to pull itself out of its last long recession, without much success.
Ask Obama's chief economic adviser, Jason Furman, who told Congress in January that infrastructure spending was a very inefficient and ineffective economic-stimulus tool. Why? Because by the time the money that is appropriated makes its way through the government's bureaucracy, through state channels to contractors and toward implementation, the recession is usually over or ending.
And who will decide which infrastructure spending will get funded? You can bet the farm lawmakers will have a long laundry list of local pork-barrel projects of dubious value will get added under the guise of "stimulus."
If any of Obama's advisers told him the stimulus plan, along the lines of the one the House approved Sept. 26, wouldn't produce any short-term stimulus, no one would say. But then, his advisers are the last people on Earth you would seek out for financial advice.
There is Michigan Gov. Jennifer Granholm standing to Obama's right. She is not a doctor but practices the economic equivalent of bleeding the patient -- like when she raised taxes on her state's anemic economy (where unemployment is 8 percent) as it was sinking into recession.
Nearby was former House Democratic Whip David Bonior, a fierce foe of any trade agreement, especially NAFTA, who could become Obama's secretary of Labor, handing the AFL-CIO just about everything it wants.
Still, in the pantheon of anti-trade desperadoes, Obama is second to none. He opposed trade agreements with South Korea and Colombia, voted "no" on the Dominican Republic-Central America Trade Agreement and sought to impose tariffs on goods from China if it didn't readjust its currency exchange rate.
But others on Obama's "team of economists can explain why these positions were wrong-headed. Economic nationalism is not in the national interest," writes Harvard economist N. Gregory Mankiw, an adviser to Mitt Romney in the GOP primary campaign.
Indeed it isn't. Economic recovery will require having all our oars in the water, pulling in the same direction at once. It won't be fixed with a stimulus package that does not create any new jobs in the months to come, or that raising taxes on the engines of job growth: businesses, investors, venture capital and entrepreneurial risk-takers -- and certainly not by slamming the brakes on opening new trading markets for America's manufacturers.
But this is what Obama ran on doing and what he intends to do once he takes office. Back-peddling on NAFTA with our two best trading partners and killing additional trade agreements is not a recipe for growth.
The pivotal question in the president-elect's economic strategy is simply this: how can you stimulate a $14 trillion economy that is plunging into a recession when you've taken so many proven fast-growth initiatives off the table? You can't.
The White House has signaled that President Bush will not sign an infrastructure spending package with projects that are at best "very limited and very ... long range," taking years to complete, his spokesman says.
So this is where matters stand as financial markets here and abroad turn increasingly bearish about the future -- a sign of declining confidence that Obama understands what is needed to put the nation on a long-term growth path.
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