Economist tells Belfast audience: Stimulus plan should be doubled

Posted May 03, 2009, at 11:23 p.m.

BELFAST, Maine — A noted economist told a labor conference this weekend that the Obama administration’s recovery plan does not go far enough to overcome the growing recession.

Speaking at the Frances Perkins Center’s “The New New Deal: Building an Economy That Works For All of Us” conference on Saturday at the University of Maine Hutchinson Center, Teresa Ghilarducci said she and others believe that twice as much money was needed to defuse the crisis. She recommended that the government pay heed to what President Franklin D. Roosevelt did to fend off the Great Depression of the 1930s and try to mimic his policies.

Ghilarducci commended President Obama and the architects of the recovery policy for moving quickly to shore up the economy but chided them for not doing enough. She said that while plans to shore up the banking sector and increase government spending were a step in the right direction, more needed to be done to deal with worker insecurity and job creation.

“There is some unfinished business in the recovery plan,” Ghilarducci told the gathering.

Ghilarducci is a professor of economic policy and analysis at the New School for Social Research and a fellow at the Labor and Worklife Program at Harvard Law School. She was an economics professor at Notre Dame University from 1983 through 2007. Her latest book, “When I’m Sixty-four: The Plot Against Pensions and the Plan to Save Them,” investigates how to restore the promise of a financially secure retirement for all Americans.

The Frances Perkins Center, founded this year, is located in Newcastle at the family’s homestead on the Damariscotta River. The center is dedicated to the study and continuation of the policies advocated by Perkins, who was an FDR confidant and served in his Cabinet as secretary of labor. She advocated for public works programs, minimum wage and maximum hour laws, a ban on child labor, and unemployment and old-age insurance.

Saturday’s conference in Belfast, which included Maine Commissioner of Labor Laura Fortman, featured workshops on “New Kinds of Work for a New Workforce,” “The Changing Shape of Retirement,” “What Women Workers Want (and Need),” “Health Care for All,” “Unions in the 21st Century” and “Self-Employed, Part-Time, Under-Employed — Where’s My Safety Net?”

Ghilarducci said the only major difference between the Great Depression and the current economic downturn was the unemployment rate. In the 1930s, more than a quarter of the working population was out of work compared with 8.5 percent today. She attributed that difference to safeguards that were put in place during the New Deal.

“What was built in the New Deal was meant to be permanent so that it would never happen again,” she said.

Ghilarducci said state government also should boost its deficit spending during times of economic difficulty. She said she was “really shocked” that Gov. John Baldacci was not advocating for more spending instead of trying to balance the budget by cutting services. She said Maine is hobbled by the constitutional requirement to balance the budget.

Ghilarducci described the federal stimulus package as “just spending” and suggested that the government should create jobs programs like those enacted by FDR to get the economy rolling. She said the $1.2 trillion in deficit spending promoted by the Obama administration needs to be doubled to $2.5 trillion to be successful. She said it is time once again for the government to be “the employer of last resort” because the private sector is not creating enough jobs to expand the economy.

“We are not seeing income maintenance programs directed at working families. We are not seeing an effort to deal with worker insecurity,” she said. “Pensions and health care are not part of this recovery plan. … Our road to recovery should not be to cut social services.”

wgriffin@bangordailynews.net

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