What did the president do in response to last week's horrendous jobs report -- unemployment rising to 9.2 percent in June, with only 18,000 new jobs (125,000 are needed each month just to keep up with the growth in the potential labor force)?
He said the economy continues to be in a deep hole, and he urged Congress to extend the temporary reduction in the employee part of the payroll tax, approve pending free-trade agreements, and pass a measure to streamline patent procedures.
To call this inadequate would be a gross understatement.
Here's what the president should have said:
This job recession shows no sign of ending. It can no longer be blamed on supply-side disruptions from Japan, Europe's debt crisis, high oil prices, or bad weather.
We're in a vicious cycle where consumers won't buy more because they're scared of losing their jobs and their pay is dropping. And businesses won't hire because they don't have enough customers.
Here in Washington, we've been wasting time in a game of chicken over raising the debt ceiling. Republicans want you to believe the deficit is responsible for the bad economy. The truth is that when the private sector cannot and will not spend enough to get the economy going, the public sector must step into the breach. Cutting the deficit now would only create more joblessness.
My first priority is to get Americans back to work. I'm proposing a jobs plan that will do that.
First, we'll exempt the first $20,000 of income from payroll taxes for the next two years. This will put cash directly into American's pockets and boost consumer spending. We'll make up the revenue shortfall by applying Social Security taxes to incomes over $500,000.
Second, we'll recreate the WPA and Civilian Conservation Corps -- two of the most successful job innovations of the New Deal -- and put people back to work directly. The long-term unemployed will help rebuild our roads and bridges, ports and levees, and provide needed services in our schools and hospitals. Young people who can't find jobs will reclaim and improve our national parklands, restore urban parks and public spaces, recycle products and materials, and insulate public buildings and homes.
Third, we'll enlarge the Earned Income Tax Credit so lower-income Americans have more purchasing power.
Fourth, we'll lend money to cash-strapped state and local governments so they can rehire teachers, fire fighters, police officers, and others who provide needed public services. This isn't a bailout. When the economy improves, scheduled federal outlays to these states and locales will drop by an amount necessary to recover the loans.
Fifth, we'll amend the bankruptcy laws so struggling homeowners can declare bankruptcy on their primary residence. This will give them more bargaining leverage with their lenders to reorganize their mortgage loans. Why should the owners of commercial property and second homes be allowed to include these assets in bankruptcy but not regular home owners?
Sixth, we'll extend unemployment benefits to millions of Americans who have lost part-time jobs. They'll get partial benefits proportional to the time they put in on the job.
Yes, most of these measures will require more public spending in the short term. But unless we get this economy moving now, the long-term deficit problem will only grow worse.
Some in Congress will fight against this jobs plan on ideological grounds. They don't like the idea that government exists to help Americans who need it. And they don't believe we all benefit when jobs are more plentiful and the economy is growing again.
I am eager to take them on. Average Americans are hurting, and their pain is not going away.
We bailed out Wall Street so that the financial system would not crash. We stimulated the economy so that businesses would not tank. Now we must help ordinary people on the Main Streets of America -- for their own sakes, and also so that the real economy can fully mend.
My most important goal is restoring jobs and wages. Those who oppose me must explain why doing nothing is preferable.
Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.
Follow Robert Reich on Twitter: www.twitter.com/RBReich
Jeff Madrick: Impact of Job Numbers Goes Far Beyond the Jobless
Let's draft Bob Reich for President!
What about all of the EXPERIENCED construction workers who have lost their jobs because of this economy?
Spending money the government does NOT have and throwing it and public work, just increase needlessly our deficit, and take money from the private sector that needs the capital to increase business activities and employment….. Government never created wealth and true employment, mostly wasteful expenditures and make do work…. Wake up.
There are private companies in the business of repairing roads and bridges, mostly under contract with individual state departments of transportation. In many cases money is no longer available because the federal funds originally supposed to go towards these projects has been cut. These companies have had to lay off thousands of EXPERIENCED road and bridge builders. These are the "shovel ready" projects that were supposed to be paid for by one of BO's "stimulus" packages.
Now Mr Reich recommends taking federal money and using it for a WPA/CCC type of organization to do this work. Keep in mind that both of these organizations were started to help the UNSKILLED unemployed.
When the WPA/CCC were in existence, road building was mostly manual labor. This is no longer the case. Road building now involves the use of equipment that takes time to learn how to operate safely and properly.
So, under Reich's proposal, unskilled unemployed people would have to be hired and trained to do the job that we have skilled unemployed people available to do. We'd be better off just releasing the funds and letting construction companies do the work they're good at without another government bureaucracy.
What is the definition of a job and how/why is it created?
Come on now, everyone seems to have an opinion about various Jobs Programs and how to reduce unemployment, but no one willing to even provide a definition? Does this mean no one knows?
Those without skills or talent to produce anything of value will seek out management roles in order to place themselves in the cash stream between producers and consumers where they can siphon off cash and create drag on the system.
These managers often called 'C' level based on their average academic and professional performance. C level managers cannot not compete without resorting to unethical and unprincipled behavior towards the workers (producers). However, because of their access to cash stream, they are able to bribe their way into a legislative advantage over both producers and consumers.
I love the rest of your post, but I really shouldn't comment as it wouldn't be productive.
Where is the president's plan. Throughout his tenure in office, progressives have not held President Obama's feet-to-the-fire. Progressives have not insisted that President Obama present a jobs plan with specific costs, benefits and time frames. There has been no insistence on presenting a specific plan to reduce unsustainable deficits. There has been no specific plan to reduce insane defense spending.
Through the past 2 1/2 years, Obama gives a vague speech with virtually no specific. Conservatives jump all over Obama. Progressives reflexively defend Obama (against the conservatives). Obama castigates both the conservatives and progressives for intransigence.
Through all of this nonsense Obama looks good. Progressives and conservatives look partisan. And nothing gets done.
So, while I don't agree with this plan, I do think its author should be commended for having a plan...unlike our president.
Obama certainly hasn't fooled you. You caught on to all his hollow rhetoric.
First he had a jobs summit that was blatantly stated 'wasn't about jobs."
How many times has he told us he is focused like a laser beam on job creation.
He formed a Presidential Deficit Commission and then so ignored their recommendations the Commission looked like a make-work assignment.
He comes up with a budget that is voted down 97-0.
Then he makes a speech full of platitudes, bumper sticker phrases that is somehow supposed to be construed as a budget proposal.
I submit most people think he comes off looking good.
For the record, I think Reich's plan is the Recovery Act on steroids.
Spend and borrow. Spend and tax. Same old mantra. In detail:
1) 6.75% savings on payroll taxes is not enough money to overcome lost sales, increasing health care costs, and increasing unemployment taxes.
2)Creating new agencies for temporary projects will only work if you get rid of the Davis Act and all of the millions of rules and regulations that add tremendously to the cost of the project, the increased debt, and the increased interest expense on the debt.
3)Increasing the Earned Income Credit gives people more incentive to not work and increases the debt. The US government is bankrupt.
4)States, cities, and counties need to cut their spending and their rules and regulations. We are the new Greece and Japan. Adding more debt will compound our problems.
5)We have already changed the real estate laws and made things worse, so that there are more requirements and less mortgage underwriters to make loans. We now have less loans going through. Now, you want to force the banks and mortgage companies to take even more losses, and then you wonder why banks aren't lending more money?
6)Let's extend unemployment benefits to everybody forever. My unemployment tax rate is 8%. Colorado is about to assess an unemployment tax surcharge. The President wants to practically double the Federal Unemployment tax rate. And you want to increase my tax rate by extending benefits. I am doing everything I can not to hire more people.
If you want to give monies to States and collect it later then get some kind of mortage on assets that can be foreclosed - put some collateral behind it and stop with the liberal "we will give you less 10 years from now" - it NEVER comes TRUE!
Shovel ready jobs are a joke. Years ago it took 100's of men with shovels and jack hammers working 10 hours a day to pave roads 50 feet at a time. Jack hammers to tear up the pavement; men to pick up the pieces etc. Then they would dump a mountain of hot tar/asphalt and everyone would grab a shovel and run down the road (Like in the movie 'Cool Hand Luke") followed by steamroller. Today I can a hire ten men and use machines and pretty much rip up and repave roads from NY to California in 1/2 a weekend.
Insulating homes? You need to be pretty skilled to do windows, insulation etc.
No more welfare to the bottom! Stop this incentive NOW!
Get these homes foreclosed NOW and back on the market! Bankruptcy only delays matters for years.
Sorry Mr President there are no more mulligans - you are now required to hit a hole in one every time.
As usual I totally agree, your plan would be of benefit. But Obama given his vast inexperience, gets Bernake to announce QE3 in order to help Wall Street Finicials and Big Banks, why because he has Bush's economic team still in place and Obama is to stupid to think for himself and listens to little Timmy and Benny. This in turn keeps the middle class and therefore the country in tailspin. The good news is we are no longer on the verge of collapse. Know what the bad news is?
Who's "social agenda" appears to want to tell people what they can and cannot do with their own bodies but don't appear to want to contend with the consequences of that (including caring for children who didn't have a say in WHO their parents are or WHAT their economic or physical condition is.
The abuses in the "social welfare" is FAR less then the abuses of the "corporate welfare".
When we ALL have a choice as to where our tax dollars go (I would just assume my go to the "social welfare" and care of the military's personnel as to go to the defense contractors who lie and cheat and even k1ll our soldiers) then we can talk about "my" money and "your" money but until then, you and I don't have much say either...except to vote for people to represent your viewpoint into Congress and pray they can do something about it.
I am going to suggest a tax form that lets us proportion our "tax liability" out as we please. Might be VERY surprised at how many of us "working schmucks" will give to these "social welfare' programs over the "corporate welfare". (Point...how many millions of dollars have people donated for FREE health clinics across the country with AFTER tax dollars to take care of poor people?)
Social welfare vs. corporate welfare...I choose SOCIAL.
the president needs all the prodding he can get.
for all of you who are quick to criticize, i know it's counter-intuitive, but massive federal spending has always been the most effective way to end a recession.
both political parties know this, and have done so in the past.
owners of stagnant businesses cannot be expected to put extra spending money in people's pockets.
folks need to quit beating the drum for ideologies and instead do some research and discover what works - not just in the theoretical "on paper" sense, but in actual practice.
trickle-down economics has never succeeded in making this country a better place.
to expect that dis-proven theory to magically pull us out of 9%+ unemployment is fantasy.
i would add one more item to professor reich's list:
set a new corporate tax rate that encourages businesses to hire americans rather than hire abroad.
if a corporation has 100% american work force, they pay 0% corporate tax.
a 90% american work force = 10% corporate tax rate, and so on.
then, as extra incentive, offer to either move their manufacturing equipment back to america for free, or re-equip them with new machinery.
yes, that would be expensive, but the return of our good-paying manufacturing base would make our economy sing.