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Borrow and build

Robert Reich

TESS VIGELAND: Three years ago this month, we were in the deepest depths of the financial crisis. Banks teetered on the edge of insolvency. Pink slips littered corporate parking lots all over the country.

You'd be forgiven if you're getting a sense of deja vu these days. Commentator Robert Reich says there is a way to make the economy strong again. But it requires the folks in charge to actually do something.


ROBERT REICH: Seems like only yesterday conservative nabobs of negativity predicted America's ballooning budget deficit would generate soaring inflation and crippling costs of additional federal borrowing.

Remember Standard & Poor's downgrade of the United States? Recall the intense worry about investors' confidence in government bonds -- America's IOUs?

For the last several weeks, the yield on the benchmark 10-year Treasury has been below 2 percent.

In other words, the cassandras were all wrong. Treasury bonds are buoyant, more popular with global investors than just about ever. That means it's cheaper than just about ever for the United States to borrow money from the rest of the world.

The reason is global investors desperately want the safety of dollars.

Almost everywhere else on the globe is a riskier bet. Europe is in a debt crisis. Investors worry the contagion may spread to many developing nations. Japan remains in critical condition. And China's growth is slowing, which means commodity prices around the world are slipping.

Put this flight to dollars together with two other pertinent facts: First, unemployment in America remains sky-high. Fourteen million Americans are out of work and 25 million are looking for full-time jobs.

Meanwhile, our nation's infrastructure is crumbling. Our roads, bridges, water and sewer systems, public transit systems, ports, airports, and school buildings are desperately in need of repair. Years of deferred maintenance are taking a huge toll.

Now connect the dots. America's borrowing costs lower than they've been in anyone's memory. Unemployment higher and more stubborn than at any time since the Great Depression. And our infrastructure in desperate need of repair.

What does it add up to? Anyone with half a brain will see this is the ideal time to borrow money from the rest of the world to put Americans to work rebuilding the nation's infrastructure.

So why isn't it happening? The apparent problem is too many in Washington seem to have less than half a brain.


VIGELAND: Robert Reich was secretary of labor for President Clinton. His most recent book is called "Aftershock: The Next Economy and America's Future." Next week, David Frum. 'Til then send us your comments -- click on contact.

About the author

Robert Reich is chancellor's professor of public policy at the University of California, Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton.

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