President’s Budget Falls Short On Job Creation

I’ve spent the past two weeks combing through President Obama’s proposed Fiscal Year 2011 budget and analyses from various sources. A fine occupation for a snowed-in wonk. Of course, I’ve been highly selective, focusing on the relatively few issues I’ve been blogging about.

Even for these, there’s still more to learn. But this much I’m pretty sure of. It could have been a whole lot worse, especially with the President committed to a freeze on discretionary spending. But it could have been better too.

Consider what’s supposed to be his top priority–job creation.

The President proposes $100 billion for a new jobs initiative. This is much more than we understand the Senate leadership plans to invest, but $54 billion less than the jobs bill the House passed in December.

It’s hard to know just what the President has in mind since the figure is characterized as a placeholder. We do know it would include tax credits for small businesses that increase their payrolls, other small business benefits, new investments in clean energy and infrastructure, plus some extensions of provisions in the economic recovery act, e.g. expanded unemployment insurance benefits.

What we don’t see is a focus on people who were struggling to make it even before the recession began. Where are the investments to create jobs in and for disadvantaged communities? We look in vain for a budget theme that focuses on them.

Ben Jealous, President and CEO of the NAACP frames the issue well. “You cannot … rebuild the middle class without rescuing those who strive to be in the middle class. Many Americans live on Main Street, but many more live on Back Street.”

It’s all very well and good to create new, good-paying “green jobs.” But what assurance do we have that people with the highest unemployment rates will get them?

In January, the unemployment rate for adults without a high school diploma was 6.7% higher than for those with some postsecondary education and 10.3% higher than for those with at least a bachelors degree. How will the dropouts and the numerous teenagers who graduate from high school without basic skills compete for the jobs that will give them a pathway out of poverty?

And how much will $100 billion do when we need to create more than 400,000 jobs a month for the next three years to get the unemployment rate back to its pre-recession level?

I understand that the President feels pressed to control the deficit. He’s also undoubtedly gauging what can pass in the Congress and hoping to avoid another donnybrook like health care reform. But I’d like to see some leadership here–and greater concern for people whose boats won’t necessarily be lifted by the rising economic tide.

3 Responses to President’s Budget Falls Short On Job Creation

  1. Matt McKillop says:

    Good to see you were using your snowed-in time productively, Kathryn. And you’re certainly to be commended for taking on the daunting practice of “combing through” the budget.

    I have a couple responses that I think accurately put the proposal in a somewhat better light.

    First, as CBPP has noted, President Obama’s budget request actually contains $266 billion for measures to support economic recovery. You’re right that he inserted a $100 billion placeholder for a new “jobs initiative.” But that’s only part of the story. The proposal also includes $166 billion in temporary extensions of some ARRA provisions. Included in this total, among other things, are an extension of the Making Work Pay Tax Credit for workers making less than $250,000 per year, COBRA premium assistance, low-income housing tax credits, an unemployment benefit extension, extended Medicaid (FMAP) assistance for states, increased food stamp assistance, support for the TANF emergency fund, and a $250 payment for elderly or disabled people who receive social security, SSI, or veterans’ benefits.

    The $266 billion comports well with what economists such as Mark Zandi have called for. And many of these measures have been found to have a good bang for the buck.

    Regarding steps to help people who were struggling before the recession, I would point to three actions. And these are not meant to be exhaustive.

    First, his budget would expand the Pell Grant program to nearly $35 billion in aid next year, an increase of more than 92% for the college funding program since he took office.

    Second is his “American Graduation Initiative.” This would pump $12 billion into community colleges. The administration thinks this would add 5 million new graduates by 2020.

    Finally, the “Race to the Top” initiative has also initiated long-sought steps in states across the country and could ultimately result in an unprecedented improvement in public education.

    Of course, these are by no means silver bullets. But they’re positive steps in the right direction.

  2. Kathryn Baer says:

    Thank you, as always, for helpful comments, Matt. I struggled with the price tag on Obama’s job creation initiative. I decided to take the figure that OMB cited. But you’re right. Many other items in the budget could be characterized as job creating. I suspect there are even more than those you’ve listed. Why not, for example, include the increase for the Child Care and Development Block Grant? Wouldn’t it create (or save) jobs too?

    The education initiatives are a different matter. Expanding Pell grants and community college programs will help people who have the basic skills and the time to gain the credentials they need for good paying jobs, with career ladders. They won’t create new jobs any time soon—except maybe some teaching positions.

    The same, of course, is true for Race to the Top. It may improve elementary and secondary education. To the extent it does, it would help the populations I’m most concerned about in the long term. But I wouldn’t hold my breath for “unprecedented improvement.” That, I think, will take considerably more than some one-time competitive grants—and probably something that extends beyond the schools.

    Finally, I’m sticking with my view about the need for leadership. I have yet to hear the President clearly and specifically articulate what he wants (and doesn’t want) in a jobs creation bill—or express dismay, impatience or anything similar at recent developments in the Senate. Of course, we don’t know what he or his surrogates are saying to Harry Reid behind closed doors. But we, the American public, need to know that he wants certain things and he wants them now.

  3. […] More Job Creation In Obama’s Budget Than I Said I recently criticized President Obama’s job creation initiative, in part because $1 billion seemed to me too little […]

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