Voice

Stimulate This

Three big ways to jump-start the U.S. economy.

What, if anything, can jumpstart the American economy? Most recessions are followed by big rebounds in growth, but the Great Recession hasn't led to a Great Comeback. Three years after the recession ended, unemployment is still sitting above 8 percent. But there is a way out.

It's not more monetary stimulus. The Fed has already taken extraordinary measures to juice the economy. Short-term interest rates near zero and "credit easing" have sent plenty of money sloshing through the markets. The problem now isn't the supply of financing for consumption and investment -- it's demand. As William Dudley, president of the Federal Reserve Bank of New York, said in a recent speech, the rate of return in the private sector may simply be too low to encourage companies to spend and hire.

The rate of return is likely to be much higher in the public sector, however. Academic research has repeatedly shown that investments in infrastructure, higher education, and basic scientific research pay back handsomely in long-term economic activity -- from 25 to 67 cents in today's money for every dollar spent. And like many investments, they pay off most when they've been neglected for a long time. These investments are the supply-side foundation for future growth; they increase the economy's productivity and its potential output of goods and services. They also have demand-side benefits in the short term, by putting people to work.

But how can the United States spend more money when its deficits are already so enormous? Actually, borrowing more to invest in these areas will not necessarily lead to higher interest rates or greater fears about the nation's debt. Because this kind of spending helps the economy to grow year after year, it helps to ensure that the Treasury's creditors will get their money back.

Moreover, it's a great time to borrow and spend. The 30-year Treasury bond is currently yielding about 2.5 percent, and the 10-year note is at historic lows of around 1.5 percent. If 10 cents of the 50-cent return on these investments comes back to the Treasury as tax revenue, these investments will practically pay for themselves. The logic is simple: It's just like taking out a big mortgage while investing in a rising stock market -- borrow at low rates, invest at high rates.

Here are three ways that the U.S. federal government could invest in the economy's future:

1. A New New Deal

Infrastructure for transportation, energy distribution, and other critical functions of the U.S. economy has been neglected for decades. The World Economic Forum's most recent Global Competitiveness Report ranked the nation 24th in infrastructure, behind such economic titans as ... Barbados, Oman, and Portugal. The World Bank's Logistics Performance Index puts the United States in 7th place, behind major competitors Japan, Singapore, and Germany. To understand why, look no further than those tire-bursting potholes on the interstate, two-hour delays at overscheduled airports, 40-mph train journeys, and data-threatening summer brownouts.

Regaining leadership in this area could invigorate commerce both internally and with the rest of the world. In the long term, better infrastructure lowers the cost of doing business and increases the capacity for industries to grow. And as in the 1930s, new infrastructure projects can still employ thousands of people.

2. A New G.I. Bill

Over the past decade, millions of Americans have lost jobs as a result of globalization. Because of competition from abroad, their skills no longer command a living wage. They still can and want to work but are ill prepared for the labor market. In other words, they are a huge untapped and underdeveloped resource.

The United States faced this situation once before, in 1945. In the 12 years of the original G.I. Bill, about half of the nation's 16 million veterans used it for college or training, leading to substantial gains in educational attainment. Today, the United States has a much bigger higher education system that is ready to receive globalization's veterans, who are in just as much need of reintegration into the labor force. Call it the Globalization and Integration Bill.

3. A New Sputnik Moment

The launch of Sputnik by the Soviet Union in 1957 led the federal government to double funding for science as a share of the economy within only six years. There may be no satellite to prove American inferiority in science today, but there is a particle accelerator: the Large Hadron Collider in Europe, which might have been surpassed by the Superconducting Super Collider in Texas had Congress not canceled it in 1993.

Putting such iconic projects aside, the American lag in science is visible in other important ways. Korea's National Research Foundation spends $55 per person, compared with $22 for the U.S. National Science Foundation, even after recent budget increases. The U.S. economy produces fewer patents per dollar of GDP than Korea, Japan, and China. The unfortunate fact that millions of Americans -- and even some top politicians -- reject scientific evidence for evolution and global warming doesn't help, either. Right now, federal funding for science as a share of the economy is back where it was in the 1950s. Another big boost would be a powerful signal of the economy's potential for future growth.

President Obama named all three of these investment priorities in his 2011 State of the Union address, and even Republican leaders have admitted in private that this kind of government spending can create jobs. Yet in their actions, they haven't shown the level of ambition needed to push the U.S. economy onto a higher growth path.  It's time to stop messing around and start thinking big. The time for a true supply-side stimulus is now.

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Argument

A Failure to Communicate

Why is the Obama administration using its radio station to attack the Cuban Catholic Church?        

For more images of Catholicsm in Cuba, click here. 

Pope Benedict XVI's trip to Cuba in March was, by most accounts, a successful pastoral visit -- a show of support for the Cuban Catholic Church as the Vatican wanted. But it did little to assuage the White House's discomfort with the church's approach to change on the island.

The next month, in Colombia, U.S. President Barack Obama spoke of his hope for improved human rights, democracy, and economic reform in Cuba. "I assure you that I and the American people will welcome the time when the Cuban people have the freedom to live their lives, choose their leaders, and fully participate in this global economy and international institutions," he declared.

If that's Obama's goal, he doesn't appear to have a lot of faith in the Catholic Church in Cuba helping to achieve it. In fact, the administration has supported repeated attacks on the church and its leader, Cardinal Jaime Ortega -- the man who has done more to promote human rights and democracy in Cuba than anyone, anywhere. The cardinal has created political space for millions of Cubans to live their faith, personally negotiated the release of more than 100 political prisoners in the past two years, and directly carried to Cuban President Raúl Castro the appeals -- subsequently granted -- of human rights groups, including the female relatives of political prisoners known as the Ladies in White.

Nevertheless, administration-supported harangues against the church and cardinal have become routine. The most recent was an editorial by Radio/TV Martí, the U.S. government's radio and television service to Cuba. The station's director, Carlos García-Pérez, personally penned a commentary accusing the cardinal of "political collusion" with the Castro regime and having a "lackey attitude" toward it. This senior Obama political appointee offered patronizing advice: "Cardinal Ortega, please be faithful to the Gospel you preach."

At issue was the cardinal's criticism of a group of dissidents with no established record of political activity who took over a Havana church in March, demanding that Pope Benedict meet with them when he visited Cuba several days later. The Obama administration provides $20 million a year to groups that profess to promote democracy in Cuba -- including many small, unknown groups like the one that occupied the church -- through USAID and the State Department. Although neither agency is authorized to run covert operations, these are conducted with such extraordinary secrecy that the U.S. Congress and the American people will never know how much taxpayer money is spent on activities like this and through which groups.

When the U.S. Senate Foreign Relations Committee (SFRC) investigated the Martí broadcast services in 2009-2010, a pattern of news items and commentaries challenging the cardinal and church emerged. The station has chronically dismal ratings in Cuba and therefore little direct impact, but the broadcasts are significant in that they are indicators of U.S. policy or, at the very least, the U.S. government's willingness to hand its megaphone over to the Miami conservatives who have long dominated Martí. Rather than flagging this antagonism toward the church in the report, however, committee staff privately asked for reassurances that the attacks would stop, and García-Pérez, then the station's new director, promised they would.

Martí isn't the only U.S. government program undermining the church and cardinal. When the SFRC discovered that USAID and State Department contractors and government-sponsored NGOs were running operations, including websites, against church leaders in 2010-2011, USAID said that the groups were merely "exercising their First Amendment rights." Like Martí, these organizations accused the cardinal of being a regime collaborator. The attacks never stopped.

The primary reason for this campaign is that the church supports evolutionary change in Cuba rather than the regime-collapse scenarios preferred by certain sectors of the Cuban-American community.

Cardinal Ortega lives in three realities that his detractors do not grasp. Despite his clear record in support of democracy and human rights (including his own time in a work camp in the early 1960s), he knows his church is weak and can ill afford more direct confrontation with the Castro regime. He also knows that the Cuban people, fatigued by years of communism and U.S.-Cuba bickering, don't want civil strife, government collapse, and all the pain that such events would cause. Most observers of Cuban affairs -- and all of the leading Cuban rights activists themselves -- firmly believe that the Cuban people want peaceful, evolutionary change. The cardinal knows that growing a stable democracy takes time, and that, however well-intentioned some exiles may be, the loudest rhetoric coming from the north casts them as authoritarian carpetbaggers, not democratic saviors.

The church has embraced a number of initiatives to promote peaceful change in Cuba. It advocates that humans have a spiritual need for freedom and rights just as they have a physical need for food, medicine, and economic well-being. Over the years, the cardinal has led an expansion of services to the elderly and poor, filling needs previously met by the government. As a result, the church's voice is far stronger than the number of regularly practicing Catholics in Cuba, often estimated at 5 to 7 percent of the population. Although weak compared with its counterparts in countries such as Poland, where the church was a frontline player in promoting democratic change, the Cuban church is the country's single most powerful NGO and voice for change.

The U.S. policy adopted by the Bush and Obama Administrations toward Cuba has at its center a series of programs under the Helms-Burton Act of 1996 that are aimed explicitly at effecting regime change in Cuba. It's a 50-year-old U.S. dream, and the State Department and USAID have spent about $200 million on these programs over the past 10 years. The programs have achieved next to nothing on the island, but they have been a boon to a wide array of "democracy promotion" groups and the contractors who work with them.

The Catholic Church's approach to change in Cuba is anathema to these U.S. government-directed operations. The church embraced the people-to-people contacts initiated by the Clinton administration in 1998 -- which are not secret operations directed or funded by the U.S. government. Through a broad range of contacts with the U.S. Catholic Church at the national, diocesan, and parish levels, the Cuban church has benefited tremendously from American citizens' donations of money, technology, food, medicine, and other support. That aid goes to the Cuban people without political litmus tests.

But U.S.-sponsored NGOs and contractors do not support this kind of people-to-people contact because, frankly, they do not make hundreds of thousands or even millions of dollars from these encounters. (Alan Gross, a USAID contractor serving a 15-year sentence in Cuba for his secret operations, was operating on a one-year contract worth more than $500,000.) The Obama administration has continued to fund democracy-promotion activities even after the Cuban government publicly demonstrated how easily its counterintelligence units penetrate the groups that the United States supports on the island.

It's the Obama administration's prerogative to ally itself with whomever it wishes in Cuba -- with the church and its noble cardinal, or with the dissidents it often organizes and subsidizes with taxpayer funds. But, in the final analysis, the United States will have to accept that Cuba's future will be written on the island, and not in Washington or Miami. Our choice today is whether to support a peaceful, democratic future in Cuba, or continue to be irrelevant.

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