The middle class needs a bailout for the same reason the banks needed a bailout -- long-term systemic risk. If the (much smaller) government during the Great Depression could hire 4 million people in 4 months, why can we not do that today, now, immediately, during the Great Recession?
Like the as-yet to be incurred, but already embedded, long-term costs of the Iraq War, the psychological and career trauma inflicted by prolonged unemployment are yet to be felt. But, they are real, they are profound, and they are increasing every day.
We bailed out the banks because of the risk their failure posed to the entire economic system. The systemic risk of unused and traumatized human capital is just as real and just as profound.
On August 17th of this year, Harry Hopkins, FDR's chief of the Federal Emergency Relief Administration (FERA), Civil Works Administration (CWA) and Works Progress Administration (WPA), would have been 120 years old.
August 17th is a good target date for a middle class bailout to celebrate Hopkins 120th birthday and his achievement during the Great Depression.
In 4 months Harry Hopkins hired 4 million people. They built and repaired 200 swimming pools, 3,700 playgrounds, 40,000 schools, 250,000 miles of road, and 12 million feet of sewer pipe.
Many of those pools, playgrounds, schools, roads and sewer pipe are still around. One can bet that many of them need repair or replacement. And, perhaps there are some of the miles of road that, instead, can be high-speed railroad track, some of that sewer pipe can be the electric grid, and so forth.
But, let us not get so far into the weeds that we miss the key concept -- hired. Yes, that evil doer, the Federal Government (OMG, no wonder we had a financial meltdown 75 years later, it was all due to government hiring) itself was their direct employer. And people, real people like the ones who live next to you and me, were working -- building things of lasting value, bringing home a paycheck, feeding their families, clothing their children, and regaining a measure of pride and self-respect.
But what about cost, what about cost, what about the deficit, help, save us, what can we do, great idea but important to panic first, isn't it, so the idiocracy can yap on TV about family budgets that bear no relevance to government debt in a Great Recession.
If it costs, say, $40,000 fully-loaded for each employed worker, that's $160B or less than ¼ of the cost to bailout the big banks. (As Federal employees they get health care coverage like the Members of Congress who passed the middle class bailout).
True, that is only about half the jobs we need to make up. Equally true, the money only covers one year's employment.
But, the private sector should be able to make up the other half with the pump-priming the first half creates. We can, if necessary, appropriate another $160B next year to keep the 4 million employed on these useful projects if we have to, and still be half of what it cost to bailout the big banks. Since, we are told, most of that TARP money is being repaid, then "voila!", we will still be running at net positive. And, of course, some of that money will come back as taxes.
On August 17th, let us bake a big cake, and blow out 120 candles to celebrate 4 million jobs -- and Harry Hopkins' 120th birthday.