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Can New AFL-CIO Plan Save Two Million Jobs – and the Dems in 2010?

Democratic leaders yesterday sent their strongest signals yet that they were eager to pass a jobs-creation and benefits-extension package to help stop the economic and political bleeding caused by a 10 percent official unemployment rate

Democratic leaders yesterday sent their strongest signals yet that they were eager to pass a jobs-creation and benefits-extension package to help stop the economic and political bleeding caused by a 10 percent official unemployment rate, the worst in a generation.
They have to promote job growth, in part, to stem looming anti-incumbent rage. That anger is also being fed by the faux populism of the “tea baggers” and GOP-driven attacks, no matter how distorted, on the credibility and impact of President Obama’s original $787 billion stimulus bill.
As The New York Times captured the atmosphere on Capitol Hill:

With Congressional Democrats in near-panic amid forecasts that unemployment will remain high through next November’s midterm elections, a party leader said that the House will pass a new “jobs bill” before Dec. 18.

Senate Democrats are also weighing options. And the signals from Congress follow by a day the White House’s announcement that President Obama will follow his “Forum on Jobs and Economic Growth” on Dec. 3 with a “Main Street Tour” starting the next day in Allentown, Pennsylvania, and continuing to other hard-hit places in coming months.

With more than half of last winter’s $787 billion package of tax cuts and stimulus spending still in the pipeline, Rep. Steny H. Hoyer, the Democratic majority leader from Maryland, said the new measure should not be referred to as another stimulus bill.

“I don’t want it to be as broad as that,” he said. “I want it to be very targeted on jobs.”

And that’s what a bold new recovery proposal from AFL-CIO President Richard Trumka aims to accomplish. It was announced Tuesday at an Economic Policy Institute panel, where Trumka was joined by civil rights leaders and other reformers. Wade Henderson, the president of the Leadership Conference on Civil Rights, declared at the panel, “Make no mistake, for us this is the civil rights issue of the moment. Unless we resolve the national job crisis, it will make it hard to address all of our other priorities.”
To save or create two million jobs in a year, the pricetag for new direct spending on jobs creation could be in the $150 billion to $200 billion range over one year, one liberal economics expert privately told me.
Trumka hasn’t yet spelled out the cost details in arguing for urgent action, but already conservative-leaning media is spreading misinformation about his plan. Bloomberg News reported that Trumka was asking to spend up to $3 trillion immediately, while he was actually just citing research data that the nation’s infrastructure needs $2 to $3 trillion in upgrading and repairs. Anyone reading the Bloomberg News piece would likely conclude that Trumka was asking for $3 trillion right away to create 2 million jobs in a year. That’s an absurdity, but fiscal reality also seems to have eluded the hard-core leftists at the Democratic Underground blog, who eagerly welcomed the extravagant, if fabricated, proposed yearly spending.
The AFL-CIO plan actually includes five key elements, as the AFL-CIO outlined them:

1. Extend the lifeline for jobless workers.

2. Rebuild America’s schools, roads and energy systems.

3. Increase aid to state and local governments to maintain vital services.

4. Fund jobs in our communities.

5. Put TARP funds to work for Main Street.

The cost would be paid for in part by a populist-oriented tax on Wall Street’s financial transactions, which is gaining momentum on Capitol Hill and opposition from the powerful financial industry that’s already spent over $200 million in lobbying in the first half of this year.
Meanwhile, more than half of the Democrats in the Senate also want to use a portion of the TARP funds to help small businesses get credit, The Hill reports, while some members of the House also seek to use it to help struggling homeowners with their mortgages and pay for infrastructure programs. The president, in turn, is considering putting some of the remaining TARP funds toward reducing the deficit.
Amid this mélange of ideas, Trumka has forecefully outlined the scope of the crisis, and how the nation’s growing working-age population can’t keep up with the jobs losses – creating a stark jobs gap. As Trumka noted, “Over a period when we needed to create 2 million jobs just to keep up with population growth, we have lost more than 8 million jobs. That’s more than 10 million jobs in the hole since the recession began in 2007. And we have not yet hit bottom.”
Trumka and most independent economists, such as Moody’s respected Mark Zandi, have credited the Obama administration’s Economic Recovery and Reinvestment Act with creating or saving about a million jobs . Yet, as Heather Boushey, a senior economist at The Center for American Progress, observes, only about a third of the watered-down stimulus package contained direct job-creation spending, with the rest spent on much-needed emergency help for the jobless that’s about to expire and tax cuts to mollify centrists and conservatives. Progressive critics, such as Paul Krugman, and even White House economics adviser Christina Roemer, had supported a far more ambitious plan of more than a trillion dollars.
But federally backed hiring has to be dramatically ramped up, Boushey and other experts say, and she contends that the AFL-CIO plan provides a “good vehicle” for overdue reforms. Still, Congressional Democrats are only just now waking up to the once-taboo notion of another stimulus package, even as they remain reluctant to call it that these days.
Borrowing a page from Elizabeth Kubler-Ross’s stages of dealing with grief, Boushey wryly observes, “We have to name the stages of recession. The first stage is ‘Monetary policy: Awesome, that will solve our problems!’ And then it’s, ‘Oh, phooey, we’ve had zero interest rates for over a year. What do we do now? Fiscal policy – yeah, yeah – economic growth, that will solve our problems!'” She adds, “Then the third stage of grief in a recession is: ‘Oh my God, we’re just going to have to go out there and hire people.’ That’s where we are today.”
She also points out, in anticipation of criticism from self-styled deficit hawks over expanded jobs programs, “Doing nothing adds significantly to the deficit. First off, unemployed people don’t pay taxes and they need more services. If you’ve been following budget issues, the biggest problem right now is massive decreases in tax revenues: corporate taxes, income taxes, property taxes. If you really care about the deficit, an honest assessment of that has to be included in the conversation.”
Of course, there’s little hope that these issues will be addressed honestly by GOP opponents, who are still offering their usual supply-side nostrums of more tax cuts to spur job creation – and opposing every Democratic reform, from health care to climate change to financial regulation, as a “job-killer.” Undeterred, the White House is actively considering another jobs program. One option is adapting the popular “cash-for-clunkers” program to the housing market: giving households money to pay for weatherization, or “cash for caulkers.”
Perhaps the most effective, directly useful element of the original stimulus bill was one of the least hyped: extending unemployment benefits. Zandi told a Congressional committee in October, “The part of the stimulus providing the biggest bang for the buck – the most economic activity for federal dollars spent – is extending unemployment insurance benefits.” The original stimulus plan also provided food stamps and aid to help workers pay for their COBRA health plans. (A new law extending those benefits to the long-term jobless won’t be available beyond the end of the year unless Congress passes a new measure.)
As Trumka declared, “First, we have to extend unemployment benefits, food assistance and health care for the unemployed. Without congressional action, the federal supplemental program will expire at the end of this year. And without these benefits, the downward spiral will accelerate as families fall into bankruptcy, lose their homes and lose their health care. These benefits are critical not only to the unemployed, but to maintain personal spending that will save and create jobs throughout the economy. “

Trumka went on to explain the three key parts of direct job creation, in addition to extending vital benefits for the jobless and using TARP funds to provide direct lending via community banks to small businesses:

Second, we need to put America to work on our broken infrastructure. We have a backlog of at least $3 trillion of pressing needs in transportation, crumbling schools and other infrastructure. Ten billion dollars in funding for overdue repairs to schools was cut at the last minute from this year’s recovery package — that’s just a crime and it needs to be restored. Every dollar spent on infrastructure employs workers all down the supply chain in construction, manufacturing, design and engineering – and we need to be sure these dollars create U.S. jobs and develop badly needed U.S. industrial capacity. And we need to invest in good green jobs …

Third, we have to boost aid to state and local governments to maintain vital services and prevent more layoffs. State and local governments and school districts are experiencing the worst fiscal crisis in decades – we have state budget shortfalls this year alone of $178 billion. Next year will be worse and the four-year estimate is nearly $600 billion. This is happening right as we need these vital services more than ever…. The right thing and the smart thing is to take action to save services, save jobs and stop the hemorrhaging from choking off economic recovery.

Fourth, we should directly create jobs that put people to work in our communities meeting pressing needs. These are not replacements for existing public jobs. They must pay competitive wages and should target distressed communities.

While all these needs are pressing, in Boushey’s view, the most politically viable, fastest-acting approaches won’t involve infrastructure projects. These major initiatives, such as building schools, can provide value to the jobless and to their communities – and will certainly be a likely part of any new Democratic package. Yet she also points to the immediate, tangible benefits of aiding state and local governments to preserve essential services such as teaching and home health aides, and directly hiring people to do such work as restoring the environment, cleaning up abandoned houses and providing child care and tutoring.
As Boushey notes, “Giving vital services to families also helps those families keep their jobs.”
Indeed The Center for American Progress itself proposed yesterday a relatively modest $1.5 billion increase in spending on federal national service programs such as Youth Corps and AmeriCorps that could save or create 150,000 jobs for one year for those ages 16 to 24.
“It’s an easy way to get these kids working and off of their Moms’ couches,” Boushey observes.
But that alone wouldn’t address the crisis of unemployment among younger workers, which is why a broader jobs-creation program is needed. By some measures, nearly 2 million to as many as 5 million young people between 16 and 24 are both unemployed and not attending school. And a striking one third of workers under 35 live at home with their parents.
Such hard times – and the prospect of a possible election disaster next year – have powerfully concentrated the attention of Congressional leaders. On Monday evening, Trumka and American Prospect editor-in-chief Bob Kuttner, among others, made their case for an aggressive and quick response to the jobs crisis to the House Democratic Caucus, receiving a warm response, a knowledgeable source says.
The exact shape of Congressional jobs legislation still isn’t clear, as Roll Call reported, but everything from more infrastructure spending to increasing aid to the states is being considered. One potential vehicle for jobs spending, a $500 billion transportation bill (hat tip to Elana Schor), has been stuck in a dispute over how to pay for it. As one House staffer admits, since it’s paid for by increasing fuel taxes, “no one wants to raise taxes during a recession.” So the AFL-CIO’s clear, five-step plan, paid for by taxing Wall Street brokers and using deficit spending, takes on added influence, while the political obstacles still remain steep.
Democratic job proponents have to overcome some of the political damage and fodder for anti-government GOP rhetoric over the stimulus because of continuing high joblessness in the wake of the $787 billion plan. On top of that, some local newspapers and some investigative reporters are catching errors in the Obama administration’s job-saving estimates and disappointing results in some programs.
Yet, as Boushey and others note, the problems are nowhere near the “magnitude” you’d expect in a program that is spending so much money so quickly. And, from Social Security through Medicare and Medicaid, right-wingers have always seized on allegations of fraud and waste to discredit any social program that aims to help millions of Americans.
But the political fallout remains a problem, especially since GOP leaders and right-wing talk show hosts love to conflate the wasteful Wall Street bailout with the generally useful economic stimulus that helped prevent the country from falling into the economic abyss that Obama inherited. But it is now “Obama’s economy.”
As McClatchy reported:

Democrats also are enduring relentless Republican criticism that they’ve failed to stem the job losses.

“I say you gotta be kidding me,” Minority Whip Eric Cantor, R-Virginia, said when he heard about the jobs push. “They have for months now been about more spending, leaving a wake of deficits in their trail, and now they want to focus on what’s important?”

In addition, some Republicans in the “Party of No” are hinting that they may thwart the usually routine Congressional action during an economic crisis of raising the debt ceiling to allow government operations to function and federal borrowing to continue.
So what if millions are denied the unemployment benefits or job opportunities in a new jobs package because Republicans are blocking it? There are political points to be scored in the increasingly bitter partisan atmosphere in Washington, but facing an election year, even Republicans may think twice about blocking targeted efforts to help the unemployed get help and start working.
And there is a bottom-line question Democrats will be asking to cut through the right-wing noise machine: “Are we going to put people to work or are we not?” as one progressive advocate says.
“Doing nothing is not an option. If we don’t act, everything will be worse – including our federal budget deficit,” as Trumka said yesterday. “We need jobs – now.”
See for yourself what he had to say: