Number One Priority - Jobs Creation: Testimony Before the
National Commission on Fiscal Responsibility and Reform

1. Deficit reduction should take a back seat to job creation
    (John S. Irons, Economic Policy Institute) 
2. Job One For America: Putting Americans Back On The Job 
    (Mary Kay Henry, SEIU)

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Deficit reduction should take a back seat to job creation

by John S. Irons

Economic Policy Institute

June 30, 2010

http://www.epi.org/analysis_and_opinion/entry/deficit_reduction_should_take_a_back_seat_to_job_creation/

"The economy remains fragile and is performing well below
its potential," EPI Research and Policy Director John Irons
said during a June 30, 2010 testimony before the National
Commission on Fiscal Responsibility and Reform. "Major
deficit reduction should not be on the table until the
recovery is firmly on track, that is, until unemployment has
dropped significantly and is on a downward trajectory. To be
concrete, unemployment should reach 6 percent or lower, and
be trending downward, before any fiscal contraction should
be seriously considered. In fact, with unemployment hovering
near 10 percent and with projections putting unemployment at
elevated levels for at least the next couple of years,
further job creation is indeed necessary."

Irons stressed that "Deficit reduction and job creation are
not competing priorities. Job creation is needed today to
ensure a strong economy and a solid tax base tomorrow: you
can't reach reasonable budget targets without a strong and
rapid recovery, and you won't get a strong recovery if you
pursue austerity too early."

Read Irons' full testimony:
http://www.epi.org/page/-/pdf/063010-ironstestimony.pdf

[ John Irons is Research and Policy Director of the Economic
Policy Institute. His areas of research include the U.S.
economy and economic policy, with an emphasis on federal tax
and budget policy. He previously worked as the Director of
Tax and Budget Policy at the Center for American Progress
(2004-2007) and as a tenure-track Assistant Professor of
Economics at Amherst College (1999-2003). He has also worked
for the Brookings Institution (1995) and at the Federal
Reserve Board of Governors (1992-1994).]

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Job One For America: Putting Americans Back On The Job

by Mary Kay Henry

Campaign for America's Future

July 1st, 2010

http://www.ourfuture.org/progressive-opinion/2010072601/job-one-america-putting-americans-back-job

I have spent a lot of time crossing the country recently,
and one fact is striking. No matter what city or town I find
myself in, each and every day I meet more people who are
struggling, more people who are ready to give up. Right now
as we meet, more and more American families are giving up on
owning a home. They are giving up hope that they can land a
decent job with affordable health care and retirement
security. They are giving up the dream that their children
will have a better life.

We all know the facts. The United States is struggling to
recover from the worst economic downturn in 70 years. 15
million people are officially unemployed; nearly half - 44%
- are out of work for more than six months, the highest
level ever recorded. A staggering 26 million workers are
either unemployed or underemployed. That's as if every
single person in 18 states - every man, woman and child in
everyone of these states- got up tomorrow and realized they
had no place to go and no way to pay their bills.

This is not a short-term problem that we are going to easily
bounce back from. What we are talking about are 26 million
workers. And these unacceptably high unemployment and
underemployment rates are devastating entire communities.
There are some blocks where you cannot find a house without
a foreclosure notice tacked to the door. There is no
comfortable ending for years of hard work; over half of all
workers have no retirement plan. People are working longer
and for less, and it's not enough to keep families afloat.
Poverty rates are skyrocketing, and more than half of all
African-American children are at risk of falling into
poverty because of this recession.

We pulled out all the stops to rescue the banks, but we seem
ready to cut workers loose and leave them to fend for
themselves. We're investing an additional $33 billion in
emergency spending for a questionable war in Afghanistan,
yet somehow spending to shore up the benefits needed by the
unemployed has become "controversial" and we seem ready to
stand by and watch 900,000 jobs get cut across the country.
And exactly how do we build a better future for our children
if we fire their teachers?

We are a country in crisis, and more than ever, this should
be viewed as a crisis for workers. And this crisis is
hitting us in the workplace, in our communities, and in our
homes. All of us have stories about family and friends who
through no fault of their own have fallen through the
cracks. And the cracks are getting wider and deeper than
we've ever seen before.

I'd like to tell you about just one of those folks. A few
weeks ago, I marched with Al Marshall, who works as a
construction inspector for the city of Oakland. Twelve years
ago, Al bought a fixer-upper for his family and set to work
renovating it and making it home. And for the last 12 years,
Al paid his mortgage on time. But a few months ago, the bank
took Al's home. Why? Because when the economy crashed - or
rather, when Wall Street and the big banks recklessly
crashed the economy - Al's wife lost her job, and because
the City of Oakland had a budget shortfall, Al's hours were
cut. For six months, before he ever missed a payment, Al
reached out but the bank wouldn't return his calls. Then
that same bank came for Al's home.

Something has gone terribly wrong in this country when
people like Al take a backseat to unscrupulous banks. And
the very taxpayers who bailed them out feel like Washington
is no longer looking out for their interests. And yet,
despite our enormous problems, politicians seem exclusively
focused on deficits and debt. I want to state this loud and
clear: SEIU shares the belief of the President and the
Members of this Commission that the deficit is a serious
long-term problem, and that we need to develop a plan to
address it. Working families understand the deficits and are
concerned because they struggle every night at the dinner
table to balance their own budgets.

However, at the same time, we are asking that you recognize
that our first priority as a nation must be putting
Americans back to work. Working families want to join the
chorus of Americans - led by President Obama this week at
the G-20 meetings in Toronto, and by several Commissioners -
that in the short term we must focus more on growing our
economy, and must continue aggressive stimulus spending to
put people back to work. We can't fix our long term fiscal
problem as a nation without at the same time tackling the
loss of jobs and the erosion of wages and wealth of
America's working people. Our economic future depends on a
strong foundation, a foundation that starts with restoring
American families.

There is no meaningful economic recovery possible that does
not include putting people back to work. To restore our
nation's financial security, we need to put more money in
people's pockets. We need jobs - and not just any kind of
jobs, but good jobs, the jobs you can raise a family on. But
beyond the economic argument, which is straightforward and
legitimate, there is another point that keeps getting lost.
There is a dignity to work. There is a dignity to putting in
a hard day's work to support one's family. And there is
dignity to working toward the prosperity of this nation. So
while we know this is a period of inquiry and discussion for
the Commission, we'd like to lay out a clear set of
recommendations that I believe should frame the
conversation.

First, we need an honest discussion about what caused the
economic crisis that led directly to our deficit. The crisis
was caused by 30 years of failed economic policies. Cutting
taxes for the rich, which deepened economic inequality to
levels not seen since before the Great Depression. Slashing
regulations that provided for 50 years of financial market
stability led directly to the collapse of our financial
markets, and in the process destroyed $17 trillion in
wealth. These outcomes were not accidents; they were the
unavoidable consequences of policy decisions.

The same holds true for the deficit. It is not the result of
out-of-control spending. In fact, the U.S. ranks 26th among
30 wealthy nations in social spending. In many areas --
early childhood education, active labor market policy,
unemployment insurance and retirement security -- we are
well behind other wealthy nations. Nor is our deficit caused
by the economic recovery policies pursued by President
Obama.

In fact, according to the Center on Budget and Policy
Priorities, the three factors, the tax cuts enacted under
President Bush, the wars in Afghanistan and Iraq, and the
economic downturn, together explain virtually the entire
deficit over the next ten years. Two of those policies, tax
cuts and the wars in Iraq and Afghanistan, account for
nearly $7 trillion dollars in deficits between 2009 and
2019. This deficit discussion cannot lay its blame at the
doorstep of entitlement spending.

Second, SEIU wants to state unambiguously that pursuing
budget balance prematurely, while the economy is weak, risks
creating another recession. If we balance the budget but
leave a fifth of our workforce sitting on the sidelines, we
have failed. There is no economic or long-term security with
unemployment in the double digits. So as unpopular as it
might be in this conversation, we need to recognize that
more spending now will create good jobs, strengthen our
economy, and put us on a path to sustainable deficit
reduction.

We know this works. After World War II, our debt, about 120
percent of GDP, was a greater burden than now. But Congress
paved the way for sustained economic growth - it passed the
GI Bill, the interstate highway program, low cost mortgages
- and what happened? Our economy boomed. The deficit shrank.
We made smart investments that boosted our economy. We
invested in America and in American workers, and everyone
benefited.

If we choose the other path and start to reduce the deficit
now, we risk a poorer and more divided society over the long
run and an even greater danger in the short run: a deep
recession that will ultimately only make our deficit
problems worse. The warning signs should be clear for all to
see: last month, while there was a large increase in
temporary jobs largely due to hiring for the census, the
number of permanent jobs actually declined. State and local
governments have already cut 220,000 jobs this year and if
we don't deliver federal aid to states and localities, they
could cut another 200,000 in the next 6 months. This is
clearly not the time to be cutting deficits.

Third, some on this commission have said that everything
should be on the table, including cuts in entitlement
programs such as Social Security. Given the fact that half
of working Americans have no retirement benefits through
their work, and that pension funds were devastated by the
financial crisis, any conversation about Social Security
must begin with the question of whether Social Security
provides an adequate level of benefits, not cuts to those
benefits. It is simply wrong to allow a home health aide,
who has taken care of our loved ones all her life, to retire
to a Social Security check that immediately places her in
poverty.

What should be on the table is adequacy and fairness. Once
we get the economy growing again, we will need to raise
additional revenue and find the right balance to a sound
fiscal policy. This means that all spending must be on the
table, including our defense budget.

America has become a much more unequal society. Between 1979
and 2007, average after tax income for the top 1 percent
rose by 281 percent after adjusting for inflation - an
increase in income of almost $1 million per household -
compared to increases of a little over $10,000 for
households in the bottom fifth of the income distribution.
We cannot continue to make policy that only benefits the top
1 percent. In raising additional revenue we should be sure
that those who benefited pay their fair share. Enacting a
Financial Transaction Tax and other tax increases on the
very wealthy could generate several hundred billion a year
in revenues.

Finally, the Commission should consider comprehensive
immigration reform because we spend huge sums of taxpayer
money on immigration enforcement and the right reforms will
strengthen our economy by boosting growth, lowering the
deficit, growing wages and enhancing worker productivity.

We should not lose sight of the fact that we live in the
wealthiest country in the world. I refuse to accept that
inadequate housing, failing retirement systems and
stagnating living standards are inevitable. Fiscal
sustainability and social decency can be achieved when we
recognize that workers are the primary drivers of economic
growth. It's pretty simple: if we don't put people back to
work and grow our economy through work, we won't reduce the
deficit. However, if we rise to the challenge before us and
allow our values as a nation to inform the choices we make
today, we will both balance our budget and once again
inspire the dreams of hardworking women and men who seek
nothing more than an opportunity to work for a better future
for their children and grandchildren.

So I call on the members of the Commission to see your
mission in its broadest terms: Judge your success in
achieving the 2015 goal of primary budget balance not just
by where we stand as a nation, but where we stand as the
collection of citizens, of working families, that make up
America. If family budgets are sound, if we have decent
jobs, homes that aren't under threat of foreclosure, and the
ability to retire with security, then you will have
succeeded in answering our call.

[Mary Kay Henry is President, Service Employees
International Union (SEIU), CTW]

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