What’s in it from us?

There was a healthy rumble today from some of the media covering Obama, legitimate questions arising about what is missing from the proposed stimulus. Now you may wonder, given all you have heard about this rich stew of a stimulus package, chock-a-block as it is with tax cuts and cold hard cash for a vast array of worthy projects, what could possibly be missing?

In Politico, New York Times correspondant Peter Baker observed at a forum the other day that Obama had failed in any meaningful way to take one of the most critical steps required of leaders in times of real crisis. According to Politico: "He hasn’t asked anybody for sacrifice," Baker said. "His whole economic package is about giving things to people." NBC’s new White House correspondent Chuck Todd echoed a similar sentiment. As far as the President-elect has gone recently was to note that patience would be required, that the fix would not happen overnight. But that is hardly asking the American people to play the role that they must ultimately play to turn the economy around. And as a consequence, a great resource is not being tapped, the greatest resource we have at our disposal.

Of course, knowing what to ask for is the first step. At the moment, there is very little effort being made to frame the problem we face…or more accurately to note that it is several problems. One of them is a liquidity crisis that has got American business hunkered down in a way that none of us have ever seen before. One board member of multiple companies with whom I spoke today said that each of the companies with which he served had one goal: conserve cash. Sadly, this conservation was not to primarily to provide reserves for the future. Rather, public companies are concerned that if they are not seen to have sufficient reserves, their credit ratings will suffer, their stock will tumble and they will be unable to borrow if things get worse. The friend with whom I was speaking found this situation extraordinarily frustrating, "the credit agencies created much of this problem, they deserve to be investigated and sued," he said. But, for now, the situation is that what cash comes in is not invested, not used to create jobs or enhanced growth. A similar mentality is at work in the financial community and yet here we are, even as Bush and Obama are working together to get more TARP funds released, without new policies that will require that recipients of that money actually lend it, use it for the purpose for which it was provided. An important lesson here: pumping money into a situation without changing the behavior that created the problem will achieve nothing. (As noted previously, to the extent that offering a tax rebate to individuals is part of the plan to battle the liquidity crunch, it is a misbegotten idea, doomed to failure. Didn’t work before. Not big enough to work. Won’t work unless the market mood changes…and it is clear all of what is being done is not sufficient to produce that mood shift.)

That lesson echoes hollowly when it comes to the other side of the government’s interventions, the efforts concerned with creating and preserving jobs. Money is earmarked for infrastructure and schools and green initiatives. But what good is money say, pumped into green projects, without fundamental steps being taken to change our behavior, when it comes to energy consumption, efficiency or protecting the climate? Stimulus without setting a price for carbon therefore is…well, what is the word for it when you stimulate yourself but are unable to consummate your intention?

Obama has told those close to him that he just doesn’t believe that he can launch a cap and trade approach now (and he and his advisors are even more hesitant at the moment about the better solution: a carbon tax). He is afraid that it will be a drag on the economy. But, there are several good arguments to the contrary. First, the economy was actually doing better a year ago when gas prices were higher…higher gas prices are not necessarily a drag on activity if good, more efficient options are readily available. Second, it would take two years to implement a cap and trade plan, so you could announce it now, send a signal to the markets, and then have it start to go into effect as the recession ebbed. Third, much of the rest of the world has such plans in place already and frankly many multinationals will have to factor them into their planning in any event. Finally, such plans actually produce new revenue which could arguably be used to a more stimulative effect than where the money might otherwise go (toward wasting money on less efficient energy options, for example, that create other forms of waste or diversions of resources from their most productive uses.) It would be a form of sacrifice but frankly, with memories of higher prices fresh, it is likely to have a less burdensome impact on consumer habits than if we wait until there are several years of comfort with lower energy prices. Now is the best possible time to act, in fact, but it would require a tough sell and political courage.

So too will going to Americans and suggesting that in this time of challenges they need to focus on re-energizing the economy by working harder, being more innovative, creating products that are more competitive, working hard to meet their obligations, wasting less. (The average homeowner could generate twice the promised $500 rebate per year just by making a few basic shifts to more energy efficient habits and products around the house — curly light bulbs, better insulation, setting temperatures lower, etc. That is a way to double or even triple the individual stimulus being offered…if you count the $500 currently planned…and it doesn’t deepen our debt, in fact, reducing our dependence on foreign energy resources, it could well help on that front.)

But why not ask for this behavior? Why not ask each American to work five hours a week more, to invest in projects in their own communities (good ones, ones they believe in), to volunteer in ways that strengthen schools or help provide essential services that cash strapped governments can’t offer? You can offer other such ideas of sacrifice here. But it is time that we started asking of America’s response to this crisis: What’s in it from us?