We Need a Jobs Package, Not a Stimulus Package

This seems like Framing and Political Strategy 101 to me, but since few other people are talking in this way, let me just lay out a basic idea: all this talk about doing a stimulus package versus not doing a stimulus package is fundamentally besides the point. What we need is a comprehensive policy package that is very simply focused on one thing and one thing only: jobs.

I know the policy wonks on Capitol Hill may be confused by that paragraph because, they would say, well, a stimulus program would create jobs. Well, yeah, that is the idea of stimulus. But my point is this: the politics of a second stimulus package are a dead end. The politics of having a debate about a policy package that will create jobs is a helpful thing. Announcing a second stimulus package gets Democrats into a defensive crouch about why the first one failed, and gets us into that same "can we get to 60" dance with Ben Nelson, Arlen Specter, Olympia Snowe, and Susan Collins that caused the first stimulus bill to be pared back and rendered less effective.

Voters don't know what it means to say you are going to stimulate the economy, but they do know what a job is. And right now, what we need is jobs sooner rather than later. My point here is not to just rename the stimulus bill the jobs bill. In fact, there are quite a few things the White House and Congress can do to focus on jobs that don't involve just spending more, although more money will certainly need to be spent. Here is what I would include in a comprehensive package:

1. Take on, far more aggressively than now, the currency manipulation going on in China. Our balance of trade problem and big losses in our manufacturing sector will not be solved without aggressively dealing with the country that we have by far and away our biggest trade deficit with, and China's policy of currency manipulation is a huge part of the problem.

2. A serious industrial policy that helps emerging industries grow. Every other industrialized country in the world has an industrial policy that helps emerging industries quickly grow and create new jobs. Yes, it does mean picking winners and losers, but we need to get over our reticence about doing that so that we can help the industries with the most potential for producing big numbers of good jobs.

3. Force every big bank that was propped up during the financial collapse -- which is pretty much all of them when you include the Federal Reserve dollars sloshing around the system -- to actually make loans to businesses so that they can create jobs. This "money for nothing and your kicks for free" philosophy has to end. The big banks need to understand very clearly that we expect something more from them, after all they have been given, than merging with other banks and giving record bonuses to their executives.

4. Direct the Justice Department to actually use existing antitrust law (and then beef it up where necessary) to break up the big banks and other mega-corporations stifling small business and competition. Promoting real competition in these industries will produce real jobs.

5. Fundamentally restructure the corporate tax system to incentivize American job creation and dis-incentivize the outsourcing of jobs.

6. Consistent with what every other industrialized country in the world, and consistent with existing WTO rules, have our federal purchases (20% plus of the economy right now) buy from companies producing goods in America. Big business and media elites will scream protectionism, but it would just be doing what every other economic power does.

7. And yes, spend some more money -- on infrastructure, on green jobs, on state revenue sharing. On all those things that were foolishly cut in the last stimulus package by the Nelson/Specter/Collins/Snowe cabal. But this time, just add the money into the federal budget so the job-killing Senators can't screw things up with a filibuster.

I've said it before and will likely say it again: this economy will not recover, and Barack Obama will not have a successful presidency, without a laser beam focus on creating good jobs. Resuscitating the big banks, whether you believe that needed to be done or not, did not create any new jobs (although it did save a few bank executives' jobs, and I'm sure their record bonuses will someday trickle down to the rest of us. Or maybe not). What we need is not another short-term stimulus package, what we need is a real plan, a comprehensive plan, to create good jobs ASAP over the short and long term.

Comments

[MacQ]

Jobs would return if employers and investors had any shred of confidence that this administration and congress knew what they were doing, were pursuing prudent policy, and would not shaft anyone who makes too much money (the definition of which is fluid).
Unfortunately, that confidence does not exist. I wouldn't look for a recovery any time soon.
Mr. Obama is already PAST the point where he can save face.

[inmyhumbleopinion]

Regarding point number 3, I've always viewed the stimulus package and TARP program as a sort of corporate Freidman-esque Supply Side economics exercise, in which the theory went that if you give more money to the rich, jobs and wealth will trickle down.

Didn't work in the 80's. Didn't work in the 90's. Not working again in the 00's. Um, I'm no economist, but haven't we proven this theory wrong time and again? What will it take to get government to ignore the lobbies and invest in our future?

[vippy]

Jobs are still moving overseas. I don't see any holes being plugged.

[MacQ]

They will move oversees in ever larger numbers if our genius government continues to tax business.

[econobiker]

Anyone really interested in this and similar subjects needs to read the books by David Cay Johnston such as Perfectly Legal, Gotcha Capitalism, and Free Lunch.

You can learn in depth how the tax subsidies given to big corporations harm this country's infastructure and how these corporations play the lobbying and "we won't build in your town" blackmail game to get these subsidies...

[econobiker]

Quit giving businesses subsidies to build- walmart has most of its business model based on sucking taxes out of the local economy via tax subsidies and then retail strip mining the local population for their paychecks. The money "returned" in wages/ sales taxes is a nothing % compared to what it gets...

[MacQ]

The "econo" in your name obviously doesn't mean you took economics.
Exactly WHAT "subsidies" is Walmart getting? And exactly how are they taking people's paychecks?

[econobiker]

MacQ-
Please reference David Cay Johnston's books about Walmart getting property tax rebates or building subsidies from local governments to locate in towns/cities/etc. I had long known about these type of issues (see other sources critical of Walmart et al) but Mr. Johnston lays them out in a clean and concise fashion. Cabellas is another example he used in one of his more recent books. The inequality of the subsidies seems to be that Walmart, etc has the lobbying/publicity game down so much that it is a profitable part of their business model. The little "main street" retailer can't approach the government officials and ask for subsidies as they (the local politicians) get no traction out of giving an existing small business money- where else is Darla's Dress Barn going to go- Darla lives in the town already? Those same politicians then can and do crow about all the "jobs and development" that they have "worked" to bring in when a Walmart is built and then operates. A point Johnston makes is that many subsidies get buried in fine print of contracts and/or annual company filings. Companies which benefit certaintly don't go out of their way to pubilize this corporate "welfare" while executives and other high ranking people whine about individual welfare "leaches". cont'd

[econobiker]

Paychecks- "retail strip mining" refers to people spending more money at Walmart that than returns to the local populace or economy- re subsidies/tax rebates given and that Walmart globaly sources products. There is no re-investment in the local economy that there would be if say, 1/2 of 1% of companies selling goods made the same goods in the same town as each Walmart. The bulk of the money spent in the store does not directly help the local economy anymore- probably not even a state's economy anymore due to global sourcing. Wealth is removed from a town and sent to the Walton clan or vendor companies which are forced to manufacture offshore in order to toe the line on cost downs and profitabily to their customer.

"econo" refers to "cheap" not economics.Hope this clears some issues for you to think about. Please do not believe regular media but follow the money, always follow the money...

[humanbeing-rick]

EXACTLY !!!
Well said, Mike Lux.
Thank you.
The American people need jobs to pay for things in America.
That is how we can recover.
Damn the banks and global corporations, save the People of America!

[KHAAANNN]

What we NEED is a resurrection of the C.C.C. (Community Construction Corps.)
Unfortunately, the Foaming-at-the-mouth Right Wing and the I-see-racism-behind-every-tree Left Wing would both attack it and make sure it never happens.
The Right because it would actually work, and help rebuild our crumbling infrastructure and give lots of unemployed people work.
The Left because they would see it as RACIST because most of the people joining would be inner-city dwellers who would then be shipped to the wilderness to do hard labor (it is a construction corps after all, not a day camp.)

[TXfemmom]

The government needs roads, schools, products, etc. so purchase the stuff from companies who HIRE PEOPLE. Stop buying stuff from abroad, even if it means that we pay a little more for things. That would start the ball rolling on bringing manufacturing back to this country. When bids are submitted on purchases which are large, make the company submit data on how many jobs are in the U. S. and how many are abroad. If they want the contracts, then bring the jobs home to the USA.

[DuganS1]

Most companies in the construction space manufacture in the US and employe US workers. Just look at Astec, Valmont Industries, Terex, Caterpillar, Deere, Quanta, Martin Marietta, Texas Industries, Foster LB, US Steel etc. etc. Some of the production will probably be in Canada, but it won't be much plus so what? Some Chinese or S Korean steel will also be purchased, but the money saved from cheaper steel trumps the small number of folks in the steel industry that will be called back to work. Note that it would take a tremendous amount of infrastructure spending to call for more capacity in the steel industry, as commercial construction is in collapse, which will result in a high level of lost output for companies in this space, including steel.

[therealredstateblues]

Most of these companies you cite are also laying off workers, outsourcing and offshoring - Catapillar is a prime example

[steelmill]

Jobs are being lost in the steel industry,The mill I worked for was sold to a Chinese company which the Chinese closed and that was in the states.US Steel have also been closing plants including the one not far from my home.As for calling people back to work in the mills,that isn't happening,most of the steel is imported now,even from China and India,countries we USE to export to.

[econobiker]

And make those companies prove two things:
1.All of their workers and subcontractor workers are citizens legally in the USA
2. That the workers are paid at least minimum wages and taxes for the amount that the contract is for. No paying a subcontractor $50hr for 10 men to work.

[novoorganum]

We need a jobs package, and a jobs package that pay's a livable wage, and one that does not force people to live from pay-check to pay-check. We also need more worker protection against the abuses of the mercantile and finacial classes--a new worker's rights bill ! We need to end the displacement of the American worker through import and exportation of human capital--Jobs for Americans first ! The running of our government should not borne on the backs of hardworking middle and working class people.

[DuganS1]

Most the people living paycheck to paycheck do so because they over-spend. If they didn't overspend, they'd be able to save, and that has been a large part of the problem with the US economy over the past 15 years - lack of savings.

[therealredstateblues]

nope lack of income

people see their local taxes and fees, medical costs, untilities, energy, utilities, food and other costs go up yet their wages stagnate

you can onlyscrimp and save so much

[alvdh1]

Dear Mike,

If you want an unprecedented jobs package, then ignore what you wrote and do the following.

Eliminate the Guaranteed Rate of Return (GROI) utility model used in 48 states. Replace it with the Independent Service Operator (ISO) model used in California and New York. The Ca/NY ISO model needs one small adjustment for it to become a perfect system. Allow residential and small business producers to sell their excess capacity into the grid at market rates. Leave the solar, wind and biomass investment tax credits in place through 2011.

You will see an unprecedented job and maufacturing boom occur in America. Couple this to the cap and trade bill with all of the funds going to energy efficiency and a supercharged jobs and manufacturing boom will emerge. The GROI utility model promotes highly centralized power stations on the backs of ratepayers. It removes all competition for electric power production and does nothing to promote energy efficiency.

The ISO model which allows residential and small business producers to get paid market rates for their power promotes competition. Utilities with old and inefficient power plants will take them out of service because they will no longer be able to compete in this market. It will relieve the strain on the national power grid because gigawatts of power will be produced primarily where it is used.

[MSNichols]

Great article and I completely agree especially on item 5. The outsourcing of jobs continue today resulting in the further loss of American jobs.

I don't want to see a closed society or not participate in the global economy but the ease big corporations decide to send a job off-shore needs to be addressed as well.

I would also suggest that the number of work visa's for tech jobs in the US might warrant review. To many friends complain about going to "job fairs" and seeing foriegn nationals with work visa's competing for good tech jobs is increasing the frustration in trying to find work.

Our people are hurting and at some point, we need to take care of our own to allow us to regain our financial well-being before we start trying to employ the rest of the world. The more successful we are, the more successful the rest of the world will become.

[GHO]

First off, I'd like to mention the popular misnomer "second stimulus package". Wouldn't this actually be the 3rd? As I recall, Bush threw $200B down the drain in 2008 to "jump start" the economy with zero success. Then Obama tosses $800B to the wind this year with equal results. So if we do this again, isn't it actually Stimulus III?

This is a perfect example of the difference between industry and government. Only in government is the abject failure of a program justification to continue and even expand the program. In industry, a program that failed this spectacularly (and expensively) would be immediately discontinued, and an effort would be made to recoup any unspent funds and re-allocate them to a different program.

One thing about DC, regardless of party affiliation, it's a town full of slow learners... :(

[therealredstateblues]

Would certainly get more bang for the buck giving mfg a helping hand at a much lower cost to the tax payers

even in its much diminished state mfg still employs more then the financial sector - the very sector that got us in trouble in the first place

putting mfg back to work would mean real jobs in the real economy with real benefits for main street

The economists of every political stripe are lining up to say we can't borrow and spend our way out of this one - we need to PRODUCE or way out

[Overtone]

A Human Investment Tax Credit program was designed to generate encourage between 1 to 4 million men and women to become entrepreneurs and create 3 to 6 million new jobs..

The 2009 Report can be downloaded free at aesopinstitute.org.

The 1977 job tax credit program, which adopted a few of the incentives recommended in an earlier Report, generated almost a million private-sector jobs; twenty percent of all new jobs created that year. It resulted in more jobs in less time than any prior legislation.

There are now two versions. The full 52 page document contains a new economic analysis. A shorter version contains the Summary and a total of 15 pages. The tax incentives in the Human Investment Tax Credit program have been updated and can be debated and voted into law.

Readers might want to urge your Representative as well as the House Ways and Means Committee to debate and discuss this jobs stimulus legislation without delay.

[The Albany Kid]

Great article by Mr. Lux.

I've heard conservatives slam Obama on the basis that nothing he can do will create *sustained* job growth (i.e., all he can do is create "make work" jobs that will disappear when they are no longer funded by tax payers). However, Mr. Lux's item # 2 seems to deal with that issue very well.

[Giordano Bruno]

The concept of fundamentally restructuring "the corporate tax system to incentivize American job creation and dis-incentivize the outsourcing of jobs" has not been sufficiently explored, although it has been advanced by Leo Hindery as a means to providing a permanent tax break to promote job creation stateside. Businessmen are basically whores, they go where the money is. If it is to their advantage to provide good jobs, they will do it. The tax incentives are misaligned. Probably a lot of the stimulus money found itself funneled into foreign hands. The flat world, as Freidman has described it, has left the US behind, and the time for recovery may well have been lost. All empires fall, and ours was given an enormous dagger in the back by King George 43. But it began long before him. Our manufacturing sector has all but disappeared. We have gone from an industrial economy to a service economy. From all appearances the current administration is either incapable of or frightened of taking on the vested interests which promote the plundering of our national wealth. It is a shame, but it is, what it is. Somebody, please, Hide the cheese! I think we are all going to have to adjust. Those who say, "our best days are ahead of us" aren't paying attention. Mr. Obama may have a golden tongue, but he has a cartilaginous spine.