Thursday, August 18, 2011

Help Wanted: A Jobs Bill That Can "Do The Job"

A major jobs bill is promised to be forthcoming from President Obama in September. Many Democrats are concerned that insider advisers are watering down the proposals, still hoping for some sort of compromises with Congress as "the art of the possible" or "good optics for independent voters."

In my view, the "compromise with the GOP" train never even got out of the station except as a signal of Democratic weakness in the current toxic Beltway environment. What was done with Bush tax cuts and deficit ceiling extension may have been preferable to the alternatives, but neither was  forged as meaningful compromise.

Moving forward, the President must draw the clearest of lines between the Democratic agenda and the GOP's nihilistic, obstructionist assault on government . Former Labor Secretary Robert Reich offers a jobs bill strategy that would give the President a strong foundation for his 2012 campaign message -  a bold and coherent alternative to address the economic concerns of anxious voters. We hope the White House is listening:
The President is sounding like a fighter these days. He even says he’ll be proposing a jobs bill in September – and if Republicans don’t go along he’ll fight for it through Election Day (or beyond)...
Some of the President’s political advisors have been pushing for small-bore initiatives that they believe might have a chance of getting through the Republican just-say-no House. They also figure policy miniatures won’t give aspiring GOP candidates more ammunition to tar Obama as a big-government liberal.

But the President is sounding as if he’s rejected their advice.

That’s good policy and good politics.

Good policy because any jobs bill has to be big enough to give the economy the boost it needs to get out of the gravitational pull of the Great Recession.

Right now all the old booster rockets are gone. The original stimulus is over. The Fed’s “quantitative easing” is over.

Combine the budget cuts state and local governments continue to make with the slowdown in consumer spending, the reluctance of businesses to expand or hire, and the magnitude of unemployment and under-employment, and you need a big new booster rocket. I’d estimate the shortfall in aggregate demand to be $300 billion to $500 billion this year alone.

A bold jobs plan is also good politics. With more than 25 million Americans looking for full-time jobs, the wages of people with jobs falling, and an economy on the verge of a double dip, the President has to come out fighting on the side of average people...

If Republicans reject it, Obama can build his 2012 campaign around that fight. Maybe he’ll even call Republicans on their big lie that smaller government leads to more jobs.

What would a bold jobs bill look like? Here are the ten components I’d recommend…

1. Exempt first $20K of income from payroll taxes for two years. Make up shortfall by raising ceiling on income subject to payroll taxes.

2. Recreate the WPA and Civilian Conservation Corps to put long-term unemployed directly to work.

3. Create an infrastructure bank authorized to borrow $300 billion a year to repair and upgrade the nation’s roads, bridges, ports, airports, school buildings, and water and sewer systems.

4. Amend bankruptcy laws to allow distressed homeowners to declare bankruptcy on their primary residence, so they can reorganize their mortgage loans.

5. Allow distressed homeowners to sell a portion of their mortgages to the FHA, which would take a proportionate share of any upside gains when the homes are sold.

6. Provide tax incentive to employers who create net new jobs ($2,500 deduction for every net new job created).

7. Make low-interest loans to cash-starved states and cities, so they don’t have to lay off teachers, fire fighters, police officers, and reduce other critical public services.

8. Provide partial unemployment benefits to people who have lost part-time jobs.

9. Enlarge and expand the Earned Income Tax Credit – a wage subsidy for low-wage work.
10. Impose a “severance fee” on any large business that lays off an American worker and outsources the job abroad.

Some of these won’t cost the federal government money. Others will be costly in the short term but lead to faster growth.

Remember: Faster growth means a more manageable debt in the long term. Which means the President could tie this (or any other jobs bill of similar magnitude) to an even more ambitious long-term debt-reduction plan than he’s already proposed.

A bold jobs bill is good politics and good policy...

2 comments:

  1. Finding a "middle ground" with the GOP is like playing tug-a-war with someone who has fallen off a cliff, which in a way is kind of liberating. Obama and Reid should come up with the most hair-brained, ridiculously leftist plan they can think of regardless of it's popularity or actual merits, then let the GOP push back on 90% of it, and call that the "center". That is essentially what the GOP did with Ryan's "Path to Prosperity".

    In that spirit, The White House should unveil a plan to nationallize all banks with assets larger than 10 million dollars, raise the top tax rate to 80%, cut the Pentagon budget by 90%, make everyone spend two years after high school either in the army or Americore and extend unemployment benefits indefinitely contingent on participation in a WPA-like work program. Then be ready to give on everything except a 3% increase on the marginal tax rate and a 5% increase in physical infrastructure spending.

    Probably the worst thing that will happen is Fox News will call Obmaa a communist, some GOP politicians may openly call for violence and the economic elite will give a bunch of money to the GOP.

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  2. Yeah - run with The Crazy. Certainly a contextually defensible strategy for dealing with the Bizarro World that's been visited upon us. But it won't happen because Democrats are addicted to acting like adults. As it stands, the biggest actual deficit-reduction proposal "on the table" is from the Progressive Caucus. Of course, it involves stuff like taxes on the economic elite, but it's the most "fiscally conservative" plan out there, in terms of bringing the country's books into balance.

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