A Time to Build
Jesse Jackson

President Obama begins his second term with millions of Americans struggling to stay afloat. Some 46 million Americans live in poverty, about 15 percent of the population, levels not seen since before Lyndon Johnson's Great Society. Can the president, swept back into office by a new, growing diverse progressive coalition made up significantly of single women, minorities and the young, succeed in reviving the prospects of the poor?

The most persistent high rates of poverty are found in rural America. But the highest rates are in large cities. More whites are poor than African-Americans or Latinos, but the latter groups suffer the highest rates of poverty. More than one-fifth of children are raised in poverty, a higher rate than any European country except Romania. These children live on mean streets. They are more likely to experience food insecurity, less likely to be ready for school and less likely to graduate from high school. America, once the land of opportunity, now ranks near the bottom on upward mobility among industrial nations.

The president's recovery program featured the largest increase in support for the poor since the Great Society, but that support has largely expired and the poverty and unemployment remains. City and state budgets were cut in the recession and remain tight. With the collapse of the housing bubble, financial institutions dramatically reduced lending.

The president is hamstrung by a divided government with congressional Republicans intent on slashing government spending, hostile particularly to programs for the vulnerable that they consider "takers." The president has a battle even to defend core programs like food stamps, child nutrition and Medicaid from debilitating cuts.

So this is a time for creative invention. When Wall Street's excesses blew up the housing bubble and the big banks were threatened with bankruptcy, the Federal Reserve came to the rescue. The Fed flooded the system with trillions of dollars, bought $1.25 trillion worth of mortgage backed securities held by the banks for its own account (about one-fourth of the market), and rescued the wounded banks.

This rescue worked for the banks, but not for working Americans or for America's poor. The Fed brought interest rates below 4 percent, but underwater homeowners couldn't refinance. Owners of small businesses and apartments in poor neighborhoods found financing hard to come by.

So why not a new initiative that provides government guarantees to public pension funds that invest in municipal development banks? The development banks could fund vital investments in roads and trams and buses to enable the poor to travel to where the jobs are, while at the same time creating new jobs. These banks could invest in local groceries devoted to providing fresh food from nearby farmers. They could lend to retrofit apartment buildings with more energy-efficient heating, cooling and insultation, with repayment from the savings.

The Federal Reserve might even buy the bonds issued by banks for such projects, just as it has purchased mortgage backed securities from the Wall Street giants. This could help create jobs and growth that might directly lift the poorest neighborhoods in America. And this could be done without being forced to argue for more spending from the austerity hawks in the Congress.

This week, the Wall Street Project of Rainbow Push (which I head) will hold a conference in New York to explore these and other ideas.

We cannot accept mass unemployment and deepening poverty as a "new normal." Now we need, as Franklin Roosevelt declared about his New Deal, "persistent experimentation" to get people back to work, to lift up the least of us and to make America work for working people once more. The tea party austerity hawks in Congress might be able to block appropriations, but they can't block imagination.

 

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A Time to Build | Politics

 

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