Big Job Creation Plans Fit the Crisis, But Not the Agenda

Everyone who’s in touch with the world knows we’ve got a jobs crisis and that it’s likely to continue for some considerable time.

Just about everyone thinks the federal government should do something about it. Needless to say, there are wide differences of opinion on what. The Republican leadership says that the answer is to cut back on taxes, spending and regulations.

Progressives say, on the contrary, that the government needs to plow more money into the economy–that if it doesn’t invest in job creation, the economy will leave lasting scars on the economic prospects for individuals and our economy as a whole.

They also recognize that the recession has exposed long-standing systemic problems that have depressed real income growth among a large sector of workers and left others on the sidelines, relegated to low-wage, no-benefit, often part-time jobs or out of the labor market altogether.

Some major organizations have come out with job creation plans that will put people back to work quickly and, at the same time, help the jobless keep the wolf from the door.

The Coalition on Human Needs has a set of job creation principles. The National Council of La Raza has recommendations reflecting Latino principles for job creation. The Economic Policy Institute has a detailed five-point plan. The AFL-CIO has one also.

These are all very similar in spirit and the last two in substance. They are reflected in yet another job creation plan issued by Jobs for America Now–a coalition the organizations helped launch.

The coalition, now more than 150 organizations strong, calls on the administration and Congress to:

  • Provide relief through continued and expanded unemployment benefits, COBRA and SNAP (the food stamps program).
  • Extend substantial fiscal relief to state and local governments.
  • Create jobs that put people to work helping communities meet pressing needs, including distressed communities that face severe unemployment.
  • Invest in infrastructure improvements in schools, transportation and energy efficiency, thus providing jobs in the short run and productivity enhancements in the longer run.
  • Spur private-sector job growth through innovative incentives and providing credit to small and medium-sized businesses.

There’s no price tag on all this. However, EPI estimated that its plan would entail roughly $400 billion in investments during the first year. About $160 billion of this would be recouped in higher tax revenues and lower safety net costs.

To pay for the rest, EPI recommends a financial transactions tax, i.e., a small tax that would be imposed whenever stocks and possibly other financial assets changed hands.  The tax would kick in two years from now, when presumably the economy will have fully recovered.

But first the deficit would grow. Does President Obama have the stomach for this?

Much appears to depend on how his strategists read the mood of the public–and more particularly, the upset in Massachusetts. Thus far, the prospects don’t look good.

We hear the President talking about doing a better job of explaining his agenda to the people. He mentions health care, energy, education, financial regulatory reform and the deficit.

Not a hint that “the anger and frustration that people are feeling” stems from our justified dismay about the jobs crisis–and the fact that it’s still nowhere on that must-do agenda.

4 Responses to Big Job Creation Plans Fit the Crisis, But Not the Agenda

  1. Matt McKillop says:

    I just don’t know what to think about President Obama’s and Congress’ responsibility to bring down unemployment. To me, the biggest problem with the discussion is that the federal government has limited influence over unemployment, but is held almost entirely responsible by voters for it being too high.

    Clearly, some type of jobs bill has to be passed. But there’s a very real danger that whatever passes will be too small to make a dramatic difference—because everyone seems to be convinced that spending is out of control—and will be considered yet another failure because it doesn’t result in a precipitous drop in unemployment. This isn’t a reason to do nothing. But it does speak to how difficult it is to communicate the benefits of these jobs plans. As we’ve learned from ARRA and other measures to prevent a second Great Depression, “it would have been worse if not for…” is simply not a powerful message.

    Whatever is passed, it must create jobs that people can clearly see and attribute to the legislation. This will help to burnish people’s optimism about the economy, which can have a powerful multiplier effect.

    Paul Krugman presciently noted back in February 2009 that the administration needed to ensure that ARRA was big enough (I believe he and, according to the New Yorker, Christina Romer) advocated something on the order of $1.2 trillion. Otherwise, it would be too small, limited in its impact, and easy to mischaracterize. Alas, the votes were simply not there for something even remotely that large. So here we are now. Sigh.

  2. kathrynbaer says:

    You’re certainly right about the politics of a jobs bill. It’s doubtful that anything adequate to the task could get through Congress—even if a Democrat had won in Massachusetts.

    However, I think there might have been an opportunity to explain to the public how a large, deficit-increasing jobs bill would ultimately more than pay for itself. That, of course, is what Paul Krugman and a number of other economists have been arguing. But Obama wouldn’t go there, and it seems the window of opportunity has shut. So, as you say, here we are now. Sigh.

  3. mattmckillop says:

    You raise a good point, Kathryn. However, I must point out something that I read recently. In advance of President Obama’s SOTU, I read his speech from last February. And in it, I found the following passage:

    “As soon as I took office, I asked this Congress to send me a recovery plan by Presidents Day that would put people back to work and put money in their pockets, not because I believe in bigger government–I don’t–not because I’m not mindful of the massive debt we’ve inherited–I am.

    I called for action because the failure to do so would have cost more jobs and caused more hardships. In fact, a failure to act would have worsened our long-term deficits by assuring weak economic growth for years. And that’s why I pushed for quick action.”

    So it’s clear that this argument was one of his key messages at one point. But you’re right that, for whatever reason, it didn’t sick.

    By the way, for anyone who’s interested in viewing a very good discussion about whether another stimulus plan is called for, the Urban Institute hosted one this morning. It can be viewed here: http://www.c-span.org/Watch/Media/2010/01/29/HP/R/28996/Economists+Debate+Benefits+of+Stimulus+Package.aspx

  4. […] Is Ticking For Unemployed Workers As I wrote last week, a large coalition of national organizations has coalesced around a five-point job […]

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