Robert Reich: America’s Future in the Global Economy: This Week’s Words and Deeds

On Monday, the same day the White House was finalizing its $900 billion tax deal with Republicans, the President gave an important address at a vocational technical school in North Carolina.

By Robert Reich

It was his clearest statement yet about the challenges America faces in the global economy. The United States has gone from 1st to 9th place among nations in the percentage of its population that graduates from college, he noted. We now rank 24th in the portion of our children who have a high school degree. Our infrastructure is crumbling.

“The most competitive race is between America and our competitors around the world,” he said. “In the race for the future, America is in danger of falling behind.”

But the President’s tax deal makes it harder for the United States to get back on top. By extending the Bush tax cuts to the wealthy, shrinking the estate tax, and freezing discretionary spending (on everything except defense), he’s leaving almost nothing for education and infrastructure.

And by embracing deficit reduction while agreeing to $900 billion in tax breaks — the lion’s share for the rich — he’s making education and infrastructure spending sitting ducks for a Republican congress intent on shrinking the size of government.

The states — many of them broke — are still firing teachers, doing away with pre-school programs, and raising tuitions and fees at public universities. And now that the stimulus is about over, there won’t be any more money to rehabilitate the roads, bridges, sewers, and energy systems that are still falling apart all over America.

“We can win the competition,” the President said, Monday. His words were inspiring. But his deed that day, approving a tax deal that continues George W. Bush’s fiscal policies, makes that goal harder to achieve.

All over America right now, public education is in crisis. Teachers are being fired as next year’s school budgets shrink. Next fall’s classrooms will be far more crowded. Some districts are going to four-day weeks. And the nation’s public universities are in deep trouble.

The answer is for the federal government to bail out public education until state and local revenues return as the economy strengthens.

After all, the government bailed out Wall Street. What our kids learn — America’s human capital — is more important to our economy than Wall Street’s financial capital.

In addition, we should rebalance the economy away from finance and toward people. Congress should enact a small one-half of one percent transfer tax on all financial deals. This might slow down Wall Street a bit but generate $200 billion a year for our public schools and universities.

Last year, America’s top 25 hedge fund managers earned an average of $1 billion each — enough to pay for 20,000 teachers.