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September 2011, Week 2

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Fri, 9 Sep 2011 23:33:47 -0400
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Jobs: Action Now

By Robert Borosage
September 9, 2011
http://www.ourfuture.org/blog-entry/2011093609/jobs-action-now

Drawing the Line

Last night, President Obama powerfully called on the
Congress to end the "political circus" and act on jobs.
His agenda featured proposals that have traditionally
gained bipartisan support. He indicted the failed
conservative notion "that the only thing we can do to
restore prosperity is just dismantle government, refund
everybody's money, and let everyone write their own
rules, and tell everyone they're on their own -- that's
not who we are. That's not the story of America."

Republican presidential front-runner Texas Governor Rick
Perry immediately scorned the need for action, calling
for "smaller government, less spending and a president
with the courage to offer more than yet another speech."
Republicans seem intent on championing more job-killing
cuts in government, more tax breaks to companies already
sitting on a trillion in profits, more deregulation of
banks and corporations even as we struggle to get out of
the mess caused by Wall Street excess.

The president has drawn the line. If he fulfills his
promise to take this agenda across the country,
Americans will begin to understand the choice that only
they can make.

A Modest Proposal

The president's American Jobs Act is bold enough to draw
a stark contrast with conservatives. But it is worth
noting just how modest it is, how cautious in conception
and conservative in substance.

Size Matters: The White House cleverly surprised
observers with the size of the program - $450 billion
over one year, a faster spending rate than the original
Recovery Act. But no one should be confused; this is a
modest plan, a first step at best. It is too small to
have much effect on unemployment, and too limited to
help put the economy on track.

More than half of the money follows the wisdom of the
Hippocratic Oath: first do no harm. $175 billion goes to
extend - and somewhat deepen - the payroll tax cut that
would otherwise expire in December. $49 billion extends
unemployment insurance. $35 billion is provided to save
the jobs of teachers and cops who are targeted for
layoffs in the coming year.

These are good things to do, and will reduce the drag
that government cuts and austerity would otherwise have
on the economy. But they keep things from getting worse,
and do little to make them better.

A significant part of the agenda consists of measures
designed to appeal to conservatives but that will have
little effect. Over $70 billion goes to a range of tax
breaks for employers that hire workers - the employer
payroll tax reductions, a tax break for hiring veterans,
subsidies for hiring the long-term unemployed, etc. The
overwhelming bulk of these tax breaks will reward
companies for jobs that they would have created without
them. Few companies will decide to add new employees in
a lousy market because of a one-year tax break.

The jobs plan includes over $100 billion for investment
in infrastructure - in repairing schools, rebuilding
roads, seeking an infrastructure bank. This will put
people to work.

But we will never have a better opportunity to launch a
major multi-year initiative to rebuild America, to equip
our country with a modern infrastructure for the next
century. We can borrow money for virtually nothing. The
construction industry is flat on its back, with workers
and machines idled. The needs are staggering, as the
president suggested. Our decrepit infrastructure is
increasingly not just a burden on our competitiveness;
it is a danger to health and lives. The president's plan
is likely to be rejected by the Republican Congress as
"big spending." But in fact, it is too small to be a
down payment on the initiative that we should be
launching.

The White House suggests that the plan may add 1% to 2%
to GDP growth next year - but that's in contrast with
the hit the economy would take if the payroll tax cut
and unemployment insurance aren't extended. In an
economy that has stalled, this is but a first step.

Cribbed Conception

Obama does better than any political leader in
challenging the know-nothing conservatism of our time,
and contrasting it with the public investments and
public policies that have been essential to America's
prosperity and to building a broad middle class.
But it is striking how cribbed his agenda is. This is a
moderate, corporate Democrat struggling to address the
economic meltdown. In the face of a right-wing majority
in the House and public concern about deficits, the
president embraces a conservative framework.

For example, the President returned to his most powerful
theme - that we must build a new foundation for growth;
we can't simply recover to the old economy that was
built on debt and bubbles - and didn't work for working
people in any case. This requires a serious focus on
reviving America's manufacturing prowess, a new strategy
for the global economy, a concerted effort to capture a
lead role in the green industrial revolution that will
sweep the world.

The president referred to this challenge last night. But
his call for passing traditional bilateral trade deals,
too small to be anything but symbolic of the old failed
corporate trade strategy, reveals his establishment
caution.

Keynes is dead; long live Keynes

At the Republican debate, Texas Governor Rick Perry
goofily announced that the crisis - caused by a
financial wilding and bipartisan conservative disarming
of the cops on the beat - proved that "Keynes was dead."

The president's call for action indicts Perry's belief
that you are on your own. But, he too abandons Keynes by
announcing that his program will be paid for in fiscal
cuts and tax hikes beginning in 2013. As Martin Walker
of the Financial Times has written, the financial
markets are telling policy makers to borrow and spend -
with interest rates near record lows. Yet policymakers,
abandoning Keynes, remain fixated on deficits and debt.

Worse, the president went out of his way once more to
put Medicare and Medicaid on the table for a grand
bargain with Republicans for dramatic deficit reduction
over the next decade. He promised to detail this in
another presentation next week, threatening to once more
deflate the debate we need over jobs with a return to a
debate that is utterly divisive over deficit reduction.

Progressives are demanding action on jobs. An inspired
president on the stump is vital to making that case. His
agenda is a first step, designed to attract bipartisan
support. If Republicans oppose this, they will be
turning their backs on working people either out of
misguided ideological extremism or for partisan
political advantage. The president is right. It is time
to act.

___________________________________________

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