President Obama is sensibly focused on jobs, unveiling a new initiative yesterday in the wake of the jobs summit. Elements included everything from new infrastructure spending to "cash for caulkers," tax breaks for weatherizing homes, as well as aid to cities, states and the unemployed. The president suggested that the $200 billion recouped from the banks in the TARP program could be used to both to reduce the deficit and help finance the initiative.
The president's speech was masterful. But what was left out of the speech was, in many ways, more telling that what was included.
1. Size Matters
The president made no mention of the size of his program. Reports range from some $70 billion to $200 billion. This leaves the House leadership with the responsibility to insure the program is big enough to do the job.
And they should think big. We've lost over 7 million jobs; 15 million are unemployed. States and localities are facing staggering deficits over the next year, with an estimated 900,000 jobs at risk. Foreclosures continue. Consumers and businesses are cutting back. In fact, for all the talk of deficits, the nation actually experienced no increase in total debt over the last year, as the rising federal deficit was more than matched by the reduced borrowing of consumers and businesses.
The first recovery plan staved off a far worse collapse. And the latest monthly report suggests that we're finally hiring nearly as many people as we're firing (due to rising public sector employment). But zero job growth is not a victory. It takes over 125,000 new jobs a month simply to keep up with population growth. Economist Jamie Galbraith notes that to return to the levels of employment needed to generate rising incomes, we'll need 250,000 new jobs a month for five years.
So go big. $100 billion or more for states and localities; 100 billion for extending unemployment and food stamps for the victims, 50 billion a year for infrastructure projects, 40 billion a year to create a million public service jobs, plus opening up loans to small and medium sized businesses, plus the inevitable tax cuts and credits -- to senior, for weatherization, for small businesses -- Congress should be considering, as Paul Krugman suggests, a several hundred billion dollar program over two years.
This will elicit screeds about deficit spending, but the president has this right. If you want to get the deficit down, the first priority is to get people working, earning money, paying taxes, and not drawing on government aid. In his words:
Now, there are those who claim we have to choose between paying down our deficits on the one hand, and investing in job creation and economic growth on the other. This is a false choice. Ensuring that economic growth and job creation are strong and sustained is critical to ensuring that we are increasing revenues and decreasing spending on things like unemployment insurance so that our deficits will start coming down.
Once people are back to work and business is beginning to invest, we can deal with the remaining deficits. And most of the red ink projected over time is caused by our broken health care system and its soaring costs that must get fixed.
Size matters, but not to the party of no. Republicans will howl about deficits whether Democrats spend $7 million or $700 billion. People don't like deficits, but ask them to choose -- jobs programs or deficit reduction, and a large majority choose the former. The key is to put people to work. The last recovery program helped, but it was too small. And Democrats are paying a not undeserved price for an economic program that is producing million-dollar bonuses on Wall Street but too few jobs on Main Street. It is time to be bold, not cautious about jobs.
2. Why not public service?
Obama's agenda included many of the items detailed by progressives with one glaring exception: there was no mention of direct public service jobs. No modern day WPA that Roosevelt created; no CETA employment project that the last liberal president, Richard Nixon, championed. With long term unemployment at record levels, and joblessness among young people in cities simply devastating, progressives in the Congress should push hard for direct public service jobs -- both an expansion of existing programs like AmericaCorps, and the creation of a new Urban and Green Corps to put people directly to work on work that needs to be done. For example, legions could be gainfully employed in taking down or fixing up abandoned houses, turning empty lots into mini-parks, etc. They would gain the benefits of work, learn skills and the society would benefit. They could be paid at prevailing wage scales to avoid undermining current public workers.
3. Ideas Matter
In his speech, the president returned to his vital theme -- that we can't go back to the old economy that was based on booms and busts, finance capturing 40% of the profits, people and the nation living beyond their means, racking up more and more debt. He took a shot at Republicans who ran up deficits with wars abroad and top end tax cuts at home when the economy was growing and now object to them to help people survive after they drove us off the cliff. With Republicans trying to pin the economic mess on Obama, it is vital that the president take them on.
But here's how the president described why we got in that fix:
In the end, the economic crisis of the past year was not just the result of weaknesses in our economy. It was also the result of weaknesses in our political system, because for decades, too many in Washington put off the hard decisions. For decades, we've watched as efforts to solve tough problems have fallen prey to the bitterness of partisanship, to prosaic concerns of politics, to ever-quickening news cycles, to endless campaigns focused on scoring points instead of meeting our common challenges.
Well. No doubt Washington is petty and partisan, with endless campaigns. But in fact, it wasn't "putting off hard decisions" that drove us off the cliff. It was conservative ideology implemented into policy. George Bush got things done -- they just turned out to be ruinous. Top end tax cuts squandered budget surpluses, and contributed to Gilded Age inequality. Scorn for regulation and government gave bankers multi-million dollar personal incentives to gamble recklessly, while gutting enforcement of everything from clean water to labor laws. "Free trade" policies -- defined by multinational banks and corporations -- shipped good jobs abroad, while providing cheap money to fuel the housing bubble. Under Bush, the special interests ruled, plundering taxpayers for subsidies -- for big oil, for Phrma, for agribusiness. Privatization opened up new areas for plunder, with Halliburton providing the poster child. Fundamental challenges -- like soaring health care costs, catastrophic climate change, a disintegrating infrastructure -- were ignored in the confidence that the market would eventually work things out. It wasn't gridlock that drove us off the cliff. It was, as Alan Greenspan admitted, an ideology that was simply wrong. It wasn't inaction that brought us to grief. It was action going in the wrong direction.
This isn't an academic exercise. Americans will be given a choice in the elections next year. Go back to the old policies that drove us into this mess, or stay on the course Obama has charted to dig out of it. Republicans, increasingly purged of any moderate voices, will blame the economy on Obama, and renew their old mantra of smaller government, lower taxes, less regulation. They won't accuse Obama of inaction; they'll accuse him of going the wrong way. Democrats will have to remind people of exactly what put us into this hole. It wasn't gridlock. It was conservatives having their way and bringing us down. There is no person better able to make this argument than the president. And he should be pounding on it -- just as he focuses on jobs -- from this day forward.
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