It is now abundantly clear that the unemployment rate will largely determine the fate of the Democrats and their policies this fall and beyond. Public concerns over jobs and the economy overshadow everything else, to the point that just two years after the historic 2008 election, much of the administration's agenda could be in jeopardy.
The exceptions are health care and financial reform, and even those achievements could be compromised if Republican wins are big enough this November.
Democrats headed home for the mid-term elections need a new plan that will give voters powerful reasons to get to the polls and vote for them. We have one. Call it Plan B. It creates jobs, stimulates the economy, and addresses energy and climate concerns at the same time. Here's how it goes.
First, in order to stimulate job creation under our current conditions, Congress and the President need to make it cheaper for American companies to hire new people. The most direct and effective way to do that is to sharply cut the employer's share of payroll taxes for new, net hires. That would cover all new employees in firms that expand their total workforce and their total payrolls. In the second year, the tax break would cover a smaller share of the employer's payroll tax contribution. If the economy recovers nicely and job creation returns to healthy levels, the break can be phased out. Workers who have worked hard for those two years will know how to do their jobs well, which will be enough for their companies to keep them on without the payroll tax break.
The experts at the Congressional Budget Office report that this approach creates more jobs, per federal dollar spent, than any other. In fact, the jobs bill passed two weeks ago includes a light version of this approach, in a seven-month payroll tax holiday for hiring people who have been out of work for a long time. It's a good start. But we need a broader and more long-term program, not a small temporary fix that doesn't ask people to remain jobless for months and months before they qualify.
Second, we need to stimulate demand so that companies feel secure enough to take on new workers. We can do that by cutting the employee's share of payroll taxes permanently, so that everyone has more money to spend for the foreseeable future.
The large and obvious problem with this plan is the impact of lower payroll taxes on the Social Security and Medicare Trust Funds, which can't spare a dime. So, the third part of the plan would keep those funds whole by putting a new fee on carbon big enough to make up the revenues lost by the payroll-tax cuts. In order to get the necessary economic stimulus from the payroll tax cuts, the economy-wide carbon fee should kick in one year after the payroll tax cuts.
The carbon fee would be a powerful nudge for everyone to consume less energy, and a compelling incentive for companies to invest in developing more energy-efficient and climate friendly fuels and technologies. But our political leaders should not pretend that finally putting a price on carbon will not affect gas and electricity prices. In fact, Congress and the President should advertise that price increases are coming. Why? So that taxpayers have a good reason to make the changes in their offices and homes that will protect them from the higher gas and electricity prices.
If Americans know that higher prices are coming, they can use the extra money in their pockets to make their homes and offices more energy efficient -- which also can help put thousands of people to work -- and buy cars and trucks that use less gas.
In the current economic climate, the urgency of global warming has receded sharply - but the threat only grows more serious with every passing year. To deal with climate change, we have to move our entire economy to low-carbon sources of energy. Tying a carbon fee to lower payroll taxes for workers on a permanent basis can not only take the sting out of what has to be done for the climate, it also can help create thousands of jobs and stimulate more innovation. The current favored approach for climate, cap-and-trade, is dying in the Senate, because its proponents can never guarantee that it won't turn into one more playground for Wall Street traders.
It's time for Plan B. As Al Gore pointed out decades ago when he first called for action against green house gases, let's stop taxing jobs and start taxing carbon.
Dr. Robert J. Shapiro, Chair of the U.S. Climate Task Force (CTF) and head of the economic advisory firm Sonecon, LLC , served as Under Secretary of Commerce in the Clinton administration. Dr. Elaine C. Kamarck, former senior policy advisor to Vice President Al Gore, serves as CTF Co-Chair and lectures at the Kennedy School of Government at Harvard University.
SAYS GOLDMAN SACHS AND THE BANKSTERS WANT THE CARBON TAX.
Taibbi: Guess Who's Getting Rich Off The Cap-and-Trade Bill? Our ...
Jun 27, 2009... I read Matt Taibbi's latest story for Rolling Stone: "How Goldman Sachs ... a carbon tax so that private interests collect the revenues. ...
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When will these people get the fact that their dream of a carbon tax will hurt the average American?
Mr Shapiro is working for the Peter G Peterson Foundation. Peter G Peterson is the Billionaire that dedicated a BILLION dollars aimed at eliminating Social Security. This is why you have been hearing all the talk about using the SS funds for Stimulating the Economy. They are trying to make it fail.
For More Information, http://bruceweb.blogspot.com/2008/08/angry-bear-social-security-series.html
A permanent severing of the employers contribution to social security in exchange for taxing total carbon emissions at @ 2.5% of gdp is not good public policy. It's a massive give away to corporations.
Lets look structurally at it. Withholdings are based on pay amount capped at a specific value which creates an incentive to hold employee pay down. This proposal would reinforce that downward pressure on worker pay and add an energy cost tie in. meanwhile in designating the carbon tax to backfill social security you would not withold funds to offset negative impacts on the poor.
Finally you would end up taxing a commodity you are phasing out to support employer share of retirement.
So what happens when energy has gone zero carbon and only process emission remain.
This would be a phase out plan for employers obligations under SS etc. A 30 year hiatus in exchange for a 2-2.5% GDP fee on carbon maybe I could buy. But only if it included targetted relief for families under a median of about 60K income and if the cap on witholdings was removed so as to fully capture high level manager salaries.
Things just KEEP getting better all the time!
I'm already spending all the extra swag I'm SURE I'll have now that healthcare is "reformed"....
Now I just need to figure out what to do with all the extra money I'll have after my payroll taxes are slashed!
Who cares if I my heating and ac costs triple or I might need to walk to work with gas at 6$ a gallon?
I trust my govt. to think and care for me after all....
Yeah--so why not just cut the payroll tax? Period.
That is, a supply that is in such short supply that it generates the enthusiasm needed for healthy capitalism. What we have now is high cholesterol/congestive-heart-failure capitalism. We need new remedies if we want to extend our economy's life with any quality at all.
The investment potential of your plan proposed in the article would put us in a position to actually expand our horizons. The need (necessity) to develop green energy technologies and infrastructure (invention) is the demand needed to spur the supply we crave.
That is, a supply that is in such short supply that it generates the enthusiasm needed for healthy capitalism. What we have now is high cholesterol/congestive-heart-failure capitalism. We need new remedies if we want to extend our economy's life with any quality at all.