Last September we renewed our earlier pleas to Congress to 'pick' the four low-hanging initiatives that would, if the administration and Congress together would only pick them, quickly create millions of new jobs. They were and remain:
1. Buy-Domestic Procurement Requirements. All infrastructure projects funded and guaranteed by the federal government should require purchases to be made in America rather than overseas, consistent with our international trade agreements. As well, in order to qualify as "Made in America," at least 75% of the content should have to be manufactured within our borders. Specifically, Congress should:
- Require review of domestic content calculations to insure their effectiveness and transparency;
- Require review of domestic sourcing requirements for all government procurement programs (e.g., Buy American, the Recovery Act) and programs that support U.S. exports (e.g., the Export-Import Bank) to ensure that contracting agencies are obeying and implementing the requirements; and
- Enact a successor to the 1933 Buy American Act, which is now so dated that whole federal agencies are effectively excused and massive procurement 'loopholes' exist.
2. Infrastructure Investment. After years of under-investing in public infrastructure, America faces an infrastructure deficit of $3 trillion that is impeding economic growth and undermining our economy's efficiency. We need to spend $2.2 trillion just to meet America's core infrastructure needs, according to the American Society of Civil Engineers.
The administration and Congress should commit to at least $2 trillion of infrastructure spending over the next 10 to 15 years using the resources of a new National Infrastructure Bank that would be an independent financial institution owned by the government and supported by a soft federal guarantee on the order of $200 billion. This federal guarantee, appropriately structured, would not need to be 'scored' for budget purposes given the numerous layers of investment above it. In turn, the Bank should be able to invite private investment, notably including state and local government pension plan investments, aggregating about $1.8 trillion.
Each $1 billion of infrastructure spending funded by the Bank would create around 25,000 permanent jobs. Two trillion dollars of such spending could equate, over the years, to as many as 50 million new jobs.
3. Credit for Small and Medium-Sized Business. Congress should authorize Federal Reserve-related incentives to accelerate commercial bank lending to small and medium sized enterprises, especially those in the manufacturing sector. As it is, such lending, albeit hard to determine precisely, appears to be down on the order of 20% (or more) from its 2007 level before the Recession began. Such incentives could, most easily, simply include an appropriate reduction in the amount of required Tier 1 bank capital.
4. Trade with China. We need to reform our trading with China, as follows:
- Enact the Currency Reform for Fair Trade Act (HR 639 and S. 328), which would begin to normalize China's grossly undervalued currency, which (according to the esteemed economist Peter Morici just yesterday (May 14)) remains as much 40% undervalued. The House Republican leaders especially are the naysayers on this issue, notably out of step as they are with the Senate leadership and the currency policies of their own presidential candidate, Governor Romney.
The fundamental problem back in September when we last urged Congress to take the actions set forth above and the one which persists today is simple economic arithmetic: we need to create more than 18 million jobs in order to be at full employment in real terms, and every month that we delay we need to create at least 150,000 more new jobs just to keep up with population growth. Yet traditional jobs programs -- whether training or tax breaks or credits -- are by nature 'smallish' and can create at most thousands of jobs and certainly not the millions we need.
With the largely jobless recovery continuing -- only 115,000 new jobs created in April - it's far past time for both Houses of Congress to work with the Obama administration to get really serious about large-scale job creation. Specifically with Congress, President Obama needs to spend his political capital in moving initiatives forward -- initiatives that will be central to his reelection campaign and top priority items during the rest of this Congressional year including the lame duck session.
The alternative of totally leaving job creation to the private sector did not work under President George W. Bush, when the Recession was just starting and the magnitude of the impending real unemployment crisis was unknown. And it certainly won't work in the still-troubled economy we have today, with all respect to Governor Romney who seemingly believes otherwise.
As we await enactment of the four initiatives above which are still there for the picking -- and why PART 2 to our earlier writings is now necessary -- must now be added: (1) especially and most urgently, the pending highway bill (S. 1813); (2) President Obama's largely ignored initiative to immediately repair the nation's schools in a big way; and (3) expansion of the tax credit program for investments in manufacturing facilities for clean energy technologies, which was part of the American Recovery and Reinvestment Act and has proven highly effective in job creation.
These latter three initiatives, which almost no right-minded policy maker and economist can believe aren't being acted on, are the 2012 version of "shovel ready projects". Depending only on how much is actually committed to the programs, there is nothing in the very short term that could better and more meaningfully jumpstart our still troubled economy and substantially chip away at the nation's massive real unemployment challenge.
Not only would these initiatives materially jumpstart job creation in the immediate term, but it is likely that they would at once both reignite the debate in Congress on the four 'low hangers' that we first began to write about years ago and, as well, give corporate CEOs the confidence they need to start spending, on their own new investments and hiring, some of the $2 trillion now sitting fallow in their own treasuries. It's all that eventual combined spending which will sustain long-term job creation.
The school repair and renovation opportunity is such an obvious jobs creator -- and moral imperative -- that it needs no elaboration and really just a major push from Congress.
As for more clean energy manufacturing tax credits, the original $2.3 billion of credits for advanced energy manufacturing facilities will, when fully used, generate more than 17,000 jobs, while the matching or companion $5.4 billion or so in private sector funding will likely generate up to 41,000 additional jobs. These are meaningful numbers for sure, but they immediately pale when the magnitude of this energy sector is measured and the number of real unemployed workers is considered.
President Obama just announced (on May 8) that he wants Congress to extend this program and materially expand it. When Congress has done this, the program will, if it continues to follow its statutorily specified review criteria of greatest domestic job creation (both direct and indirect) and greatest potential for technological innovation and commercial deployment, create not just thousands of great new American jobs but rather millions of them in manufacturing facilities producing everything from solar, wind, geothermal, or other renewable energy equipment to electric grids and storage for renewables to fuel cells and microturbines to equipment for refining or blending renewable fuels.
The big immediate opportunity, however, is the pending highway bill and the projected 2.9 million jobs it would almost immediately create before the summer and fall construction seasons bleed away. This bill is, in fact, such an obvious massive, immediate job creator that if the Republicans in Congress continue to stall it from passing out of conference, there can be no better example of just how extremist in their governance they have become.
Unless the real unemployment jobs crisis -- with 26.7 million women and men still unemployed in real terms and a real unemployment rate of 16.6% -- is frontally challenged by pursuing all of the low-hanging job-creating initiatives -- of which four has now become seven -- it's not possible to anticipate a sustained economic recovery that fully revitalizes the middle class. But when they are picked and enacted, then the engines of economic growth will start to turn over and really roar.
Leo Hindery, Jr. and Leo W. Gerard are co-chairs of The Task Force on Jobs Creation. Hindery is also founder of Jobs First 2012 and a member of the Council on Foreign Relations. Gerard is international president of the United Steelworkers and a member of the executive council of the AFL-CIO.