Diagnosing the nation

So the economy has been better.

Barack Obama recently said, “If we do not act swiftly and boldly, we could see a much deeper economic downturn that could lead to double-digit unemployment.”

And then Nobel Prize-winning economist Paul Krugman proclaimed in his New York Times column that this was an understatement and, furthermore, “This looks an awful lot like the beginning of a second Great Depression.”

The American people are wearing down and getting frustrated. Grocers have begun placing electronic tags on sirloins to prevent them from being shoplifted. In New York City, where bank robberies have increased by 54 percent this year, five banks were held up in a single day. And by now everyone has heard the abhorrently pitiful story of the death of a Wal-Mart employee at the hands of bargain-desperate Black Friday shoppers.

So now what?

Obama has proposed a $775 billion plan, which unfortunately doesn’t even come close to closing the gap that has emerged between the potential production of our economy and what we will actually be able to sell. But more importantly, only about 60 percent of Obama’s plan consists of public spending. The rest is made up of tax cuts, many for businesses.

While there is certainly a time and place for tax cuts, the current economy is not one of them. In our present dire economic situation, what we need is the most bang for the buck, and this can come from public spending. While everyone can appreciate forking over less of their hard-earned dough to the government, tax cuts during a recession can lead to saving and not spending, which is what our economy desperately needs.

Moreover, public spending has the added benefit of the “multiplier effect,” which essentially means for each dollar spent by the government, gross domestic product is raised by about $1.50 due to higher consumer spending when incomes increase, according to Krugman. Through public spending, we could even emerge from this predicament a little better off. Public investment has the power to benefit everyone.

And health care is just screaming for public investment. The Washington Post recently reported that a record share of the economy is now spent on health care: Rising costs associated with health care now consume 16 percent of the nation’s economic output.

The high costs are making companies less competitive due to the amount they now must spend on employees and retirees, and experts in the political, economic and medical fields have warned that health-care trends will gradually overwhelm the economy. Not to mention the effects of inadequate health coverage on the population and our system’s tendency to ignore preventive care, which has been shown to be much less expensive and more effective.

Obama needs to propose a bigger plan that is almost entirely made up of public spending and focus a large part of that spending on health care. We might as well take advantage of this crisis and use it to focus on one of our nation’s largest problems.