Job Creation Is Up to the States

10/31/2011 03:00 pm ET | Updated Dec 31, 2011

Whatever the dubious provenance of States' Rights, the current national economic and political paralysis is an opportunity for states to create their own jobs programs, damn the torpedoes and full speed ahead. Washington is caught in a conflict of ideas (Keynes v Hayek, stimulus v. laissez-faire) and a nasty power struggle where Republicans oppose anything that makes Obama look good. Washington is completely sidelined and out-of-work Americans are on their own.

A real alternative to Washington's inaction is raising its head in New York: A state jobs programs is being talked about. Its' elements are easy to put together. Road, bridge, mass transit and flooding infrastructure investments, small business tax credits, retaining teachers and public employees who provide essential services, youth job programs, green job stimulus, and other practical and sensible ways of putting people to work and providing needed investment and services are stirring real interest.

States do not have the luxury of deficit spending, so the problem of funding these programs looms large on both the policy and political front. There's a way to address these problems that works economically and politically. If New York funds these job-creating efforts with a state millionaire's tax, it will achieve what Washington can't.

The "No-tax, No-debt" political crowd has had the public debate about the economy by the short hairs. The "Reinvest and Stimulate" crowd has allowed itself to be nudged off center stage. While there have been strong efforts to enact a millionaire's tax, the monies raised were targeted to save important public services, which is a very good thing. But it ran into a political critique that we can't return to spending and tax levels that allegedly caused our current mess. And that political opposition remains emboldened by their read of the national mood. New York's Governor Andrew Cuomo, for example, compared his opposition to a millionaire's tax to his father's opposition to the death penalty. Such is the level of the debate on stimulating the economy.

The proposal is a "yes-able proposition" that addresses both New York's lagging job market and New York State's budget crisis. It's paid for by imposing a small, three-year income tax surcharge on those whose annual income exceeds $1 million. It was published in an Op-Ed in the New York Daily News last week. Here are the nuts and bolts of the plan:

- New York needs a $5 billion jobs infrastructure bond act to fund road, bridge, mass transportation and flooding improvements. This will directly create 25,000 well-paying jobs while rebuilding our physical infrastructure and spurring long-term economic growth.

- New York needs a $1 billion youth employment program to provide constructive employment annually for 20,000 young New Yorkers in the private and public sectors over five years. It will create 100,000 median-wage jobs.

- New York needs a $1,000-per-job small business tax credit for the creation of new jobs for three years. Where we can provide real incentives to the private sector to create real jobs, we've got to do it. This should directly create 15,000 jobs.

- New York needs a $1 billion program to avoid the layoff of 50,000 essential public- sector employees over the next three years, with a special focus on the needs of educational institutions. It does our economy no good to create new private-sector jobs and at the same time savage the ranks of public sector employees who provide essential services.

- New York needs a $500 million three-year program to subsidize the creation of green jobs, those that will move New York in the direction of energy conservation and make us the center of a new and growing source of private sector jobs. That should directly create 10,000 jobs.

- New York needs a $400 million, three-year program to ensure affordable mass transit fares across New York. Our urban areas must remain attractive to private sector employers and effective mass transit systems are crucial. It should indirectly create 1,000 jobs.

There's a real political opportunity here. The plan sidesteps the counter-attack on a millionaire's tax. It links two very popular ideas, job creation and taxing the top 1%. Give some credit to Occupy Wall Street for the change in the national conversation about a millionaire's tax. But nothing is likely to come of a change in mood without concrete, "yes-able propositions" where political leaders take the general consensus and turn it into things that Governors and Legislatures can actually enact. It's up to states to do what they must to make up for what Washington can't or won't do. States need to create jobs program. It's time.