Reich: Nation must stimulate economy, address wealth inequity

In his planned speech to the nation Thursday night about the economy, President Obama must be bold and ambitious, and relay the message of "priming the pump" with robust government stimulus and spending, former Secretary of Labor Robert Reich said Wednesday night at the University of Iowa.

Government stimulus to boost consumer spending, loans to the states to perk up their flagging budgets and stop job cuts and the re-creation of such programs as the WPA to add jobs are what's needed to revive the economy -- steps far beyond just extending unemployment and the tax cuts, Reich said.

"It is more important now than deficit reduction," he told a standing-room only crowd at the Iowa Memorial Union. "The debt, the deficit issue, although real, is manageable. What needs to be addressed now is jobs and growth."

About 500 people turned out Wednesday to see Reich speak, the UI's 2011-12 Distinguished Lecture event. Reich served in three presidential administrations, most recently as the Secretary of Labor for President Bill Clinton. Reich has authored 13 books; his most recent is "Aftershock: The Next Economy and America's Future."

Reich said he's not suggesting the way out of our economic morass is to consume more things and fill our homes. Rather than blind consumerism, he advocates a broader notion of consumption -- consuming better health care, a better environment, better arts and all the benefits of living a better life.

Government can only get so far priming the pump with stimulus when there's not enough water in the well to begin with, Reich said. The issue of wealth inequality in the United States has to be addressed to produce long-term economic solutions, he said.

The wealthiest people control so much of the income that the vast middle class doesn't have enough purchasing power to keep the economy going without going into debt, he said. Without reversing this trend of inequality, the country will come up against this issue again and again, Reich said.

"My fear is there is not much of a dialogue going on about any of this," he said.