"We misread how bad the economy was, but we are now only about 120 days into the recovery package."
-- Joe Biden, July 4, 2009
What happened to all those green shoots, the cautious optimism, the market rallies and the dreams of 201ks again becoming 401ks?
Maybe we should ignore the chatter of "near bottoms" in share prices, "slowdowns" in mortgage foreclosures, "moderation" in housing price declines, "renewed" banking confidence and all the other pseudo-indicators. Instead, let's look at what really matters most: jobs. We face a shortfall of about 28 million jobs (according to analysis of Bureau of Labor Statistics data by Leo Hindery, chair of the Smart Globalization Initiative at the New America Foundation).
Where are those jobs going to come from and how do we keep them in this country?
The stimulus package took a puny poke at the problem. It was conceptually flawed from the get-go when Congress refused to let it make up for the obvious shortfall in state revenues that was sure to result from the financial crash of the economy. When Wall Street went belly up and we put the entire shebang on the dole, the real economy was starved for credit and crashed. Workers were laid off in a hurry and state revenues collapsed leading to fiscal crises. Since states have to balance their budgets they were forced to layoff public workers, further depressing their economies. It's so bad that California is passing around Confederate IOU's to plug their revenue gap.
And conservative Republicans and Democrats didn't want to let stimulus money cover these gaps? Why? Because they hate government and want as much money as possible to go to private contractors and tax cuts.
To paraphrase Nobel laureate Joseph Stiglitz, it really doesn't make much sense to layoff teachers in order to hire construction workers, when what you really need is both (unless the contractor firms are contributing to your campaigns.)
If we all weren't so afraid of big, bad government, we'd realize the obvious: expanding the public sector is the most efficient way both to create jobs and stimulate the economy. Let's do the math: Assume a new government job would cost about $60,000 (about $40,000 in pay; the rest in benefits and administrative costs). Then $787 billion stimulus could have generated more than 13 million jobs! (13,116,667 to be exact.)
Of course those jobs would last only for the life of the stimulus grants. But they would provide one hell of a jolt to the economy and put a lot of smiles on the faces of displaced workers. The indirect impact on private sector jobs just through added consumer spending would be colossal. We'd have a jobs-oriented boom instead of a fantasy finance casino.
How do we pay for it since we've already spent several trillion on TARP, the stimulus and other bank guarantees? Here's a package that would drive Joe the Plumber nuts: 1) a small excise tax on each and every financial transaction that would yield somewhere between $50 and $500 billion per year. 2) a 10 percent surcharge on those earning $1 million or more that would yield about $120 billion per year.
Not only would both measures raise badly needed revenue, but they would help reduce the fantasy finance bubbles caused by having a bloated financial sector with far too much money in the hands of the few. (See The Looting of America).
And in case you're worried about not having enough work to do, think New Deal type programs (with jobs that are not likely ever to leave the country):
"[WPA] workers constructed or repaired more than 125,000 buildings, including 83,000 schools; 800 airports; 950 sewage plants; and 650,000 miles of roads. They built or improved 78,000 bridges and 25,000 playgrounds; terraced 271,000 acres of eroded land; and taught two million people to read. They also ran a famous Federal Art Project, which hired destitute artists to create murals for public buildings, posters, and paintings. The WPA produced a highly regarded series of state guidebooks and an acclaimed collection of interviews with former slaves, and it played a major role in building the San Antonio Zoo, New York City's LaGuardia and Washington's Reagan airports, and the presidential retreat at Camp David. In 1965, on the program's thirtieth anniversary, The New York Times quoted a dispossessed North Carolina tenant farmer living in an abandoned gas station, who had been rescued by a WPA job. 'I'm proud of our United States, and every time I hear The Star Spangled Banner I feel a lump in my throat,' he said. 'There ain't no other nation in the world that would have had the sense enough to think of WPA."
Sooner or later, we'll be forced to choose. Either we will continue to bailout bankers and cater to implacable conservative politicians, or we will directly employ those who truly need the work until the economy actually recovers.
A nation has many duties, but none more important than putting its people to work. If Obama, Biden, and a slew of dilly-dallying Democrats can't do it, history teaches us to fear a new wave of unscrupulous leaders who might forge more jingoistic ways to deploy our people.
Les Leopold is the author of The Looting of America: How Wall Street's Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It, Chelsea Green Publishing, June 2009.