House Speaker Nancy Pelosi gets it. No wonder she drives the wingnuts batty.
With the Senate befuddled by the antics of Joe Lieberman and Max Baucus on health care and the White House Clintonistas lobbying President Obama to devote his January State of the Union address to deficit reduction, Pelosi ladled up a portion of common sense. Unemployment is over 10 percent and rising. It is time to focus on jobs. Senate Majority Leader Harry Reid added his support. The President announced a job summit for December. Democrats finally got the subject right.
The need is clear. One in six workers is unemployed, has given up looking or is forced to work part-time. For young workers aged 16 to 24, unemployment is 19 percent. For young African Americans, unemployment is at 30 percent. And as Federal Reserve Chair Ben Bernanke testified yesterday, we’re likely to see—at best—a slow recovery with no new job growth. That exacts a devastating toll in hopes crushed, families stressed, young people stalled, and poverty and hunger spreading.
And even if we avoid another downturn, the job picture will get worse. Crippling state deficits—over $260 billion over two years—will force layoffs that cost an estimated 900,000 jobs next year if nothing is done.
How do we produce jobs?
Republicans, of course, voted unanimously against Obama’s first recovery plan, and have gleefully trumpeted its failure ever since (although many don’t hesitate to take credit for local projects that are putting people to work).
What’s their plan? It can’t be found on the national party’s web page. But the perpetually tanned House Minority Leader John Boehner trumpets an October letter that House Republicans dispatched to the president as the essence of their plan.
Turns out it’s the same ideas they offered at the beginning of the year—reality has made no impression on these folks. Three of the five suggestions are ways to help small businesses afford health care for their workers—”legal reform and incentivizing wellness” (tort reform), allowing small business to purchase health care collectively (already in the president’s plan), and more health savings accounts (a bow to a leading Republican contributor). At a time when small businesses are closing, when customers are drying up, foreclosures rising, and states and localities are laying off teachers, these seem, as the lawyers say, de minimus.
And then of course, the Republicans recycle their panacea for anything that ails you—more tax cuts. One of these, letting businesses write off losses against profits over an extended period of time, has just been signed into law. The other is Bush lite: small tax cuts for everyone but low-wage workers.
Now, despite all the posturing about Obama’s red ink, these Republican ideas will create larger deficits and more debt. Is this the best way to spend money we borrow?
Well, we tried the same thing under Bush at the beginning of the Great Recession and it didn’t work very well. The reason is pretty simple. Americans have lost some $13 trillion in assets from the housing crash and the stock market decline. They no longer can spend more than they earn, and use their homes as an ATM machine. So they are tightening their belts, paying down debts and rebuilding their savings. Provide them with small tax cuts and they will sensibly save most of the money—and not provide the demand need to get reluctant companies to rehire workers.
What are the Democratic ideas? The current debate is still pretty fluid. Democrats, intimidated by deficits, initially hoped to do a stealth plan piecemeal—$250 for seniors here, extend unemployment there, pump up infrastructure spending in the transport and clean water bill over there.
But Pelosi’s call for a jobs agenda and Obama’s summit invite more coherent responses, ones that might get closer to the scale needed to deal with the challenge we face.
AFL-CIO President Rich Trumka released a program this week—joining with leaders of the NAACP, the National Council of La Raza, and the Center for Community Change and the Leadership Conference on Civil Rights—that will frame the discussion.
Trumka’s agenda features five initiatives:
1. Extend the lifeline to jobless workers, continuing unemployment benefits, food assistance and health care subsidies.
2. Rebuild schools, roads and energy systems. This is the very area that got slashed in the first recovery plan by so called Republican moderates and Blue Dog Democrats. Repairs— to schools, sewers and bridges—can begin rapidly. More ambitious projects—fast trains and a modernized electric grid—take longer, but as Bernanke says, unemployment will be with us a long time.
3. Aid to state and local governments to maintain vital services. This is the least popular but most effective program. It forestalls deep layoffs in basic services, from teachers to police.
4. Direct public service jobs in communities. Congress could dramatically expand the Youth Corps, AmericaCorps and Vista to put young people to work. New initiatives—a Green Corps to rebuild parks, an Urban Corps to build low-cost housing—could be targeted for areas with the greatest job loss.
5. Use Wall Street bailout funds for Main Street. Use the billions still in the TARP to enable community banks to lend money to small and medium sized businesses. Even Republicans might sign onto increasing low-interest-rate loans to small businesses with expansion plans. This surely is a better idea than job tax credits to businesses, almost of all which will reward companies for jobs they would have created anyway.
Obama would be well advised to go even bigger. His most compelling argument has been the simple truth that we can’t go back to the old boom-and-bust economy and should not want to. We’ve got to build a new economy on a strong foundation of basic investment in education and training, in 21st-century infrastructure, in research and development—all of which have got the short end of the stick in the era of tax cut, squander and plunder conservatism. And we’ve got to insure that the US is a leader in the new green industrial revolution that will be the growth industry of the future.
So devote the State of the Union to lay out the bold agenda on jobs. Make the commitment now to make the investments needed for the new economy, and to drive the green industrial revolution. These will involve large-scale public investments, deficit-financed in the next couple of years while the economy recovers and paid for over time, in part by growth and rising employment and in part by progressive taxes. The latter begins with a securities transactions tax that will curb the Wall Street casino while insuring that Wall Street helps pay for the cleaning up the mess that it made. And the president should be clear: These investments will be linked to procurement policies designed to insure that the plants, supply chains and jobs are built here, not shipped abroad.
Let Republicans ante up their arguments on more tax cuts and tort reform. People can choose. Do we go back to the policies that drove us over the cliff, and didn’t work for most Americans even when the economy was growing? Or do we go forward boldly to build a new economy that puts people to work through investments vital to our future? That’s an argument that would serve the nation well—and could also give Republican leader Boehner even more time to work on his tan.
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