The worst recession in three-quarters of a century ended in the second half of 2010, thanks in part to the proactive policies of the Obama Administration and the Federal Reserve. However, with millions of Americans still out of work, government at all levels can and should do much more to help the private sector create jobs and accelerate the country's economic recovery. Simply lowering taxes and easing the regulatory burden is not enough, as our economic history has demonstrated repeatedly.
As we've seen here in Los Angeles, only governments (at every level) can really do certain things that are needed to be done to optimize the growth of our economy and they can often be done in conjunction with the private sector.
Here are six important approaches government should take:
- Optimize what government already owns: Governments actually own important economic assets that can do much more to foster economic growth without raising taxes. Sometimes, it just means facilitating investments and/or management by private companies that are willing, even eager, to invest. In Los Angeles, for example, our LA Coalition has urged local officials to stimulate trade and tourism with private investments that will expand and modernize our harbor, our airport and our Convention Center (all are owned by the City). For example, two major railroads want to invest $1 billion to build two new rail lines that would speed the shipment of cargo, ease traffic on local freeways and create an estimated 8,000 jobs. Their proposals require government approvals but in spite of being analyzed repeatedly for over seven years, there's still no decision, no construction and no jobs.
Streamline the environmental review process: Strong environmental safeguards are vital. Our nation must protect its air and water and fight climate change. But we need to expedite the review process and reach good decisions sooner -- not in seven years or more. The E.I.R. review process should be limited to 12 months and a final impartial decision. This is the concept for new state laws in California that limit to six months the environmental review for the construction of a proposed football stadium and convention center project. This law should be expanded to expedite many other good construction projects that are ready to go -- with thousands of jobs -- but are waiting indefinitely for government clearance (like those two rail lines).
Improve the nation's infrastructure: The federal transportation bill just signed into law by President Obama is a good example of much-needed and appropriate government action. The measure will fund billions of dollars in highway and transit improvements and make America's economy more productive by speeding the flow of people and products. Yet the American Society of Engineers estimates the total cost of America's unmet infrastructure needs is vastly greater:2.2 trillion.
Roads, mass transit, water projects, and the electrical grid are the types of projects and investments that government at every level is uniquely suited to make. They should borrow more money now, while interest rates are at all-time lows (especially with federal bonding support) and couple some of these costs with specific revenue -- be it taxes, tolls and/or fees, as well as private sector investments. Here in Los Angeles we have a good example with a voter-approved 30-year additional 1/2-cent sales tax to fund the building of 12 transportation systems. A complex funding structure with some federal support will now accelerate building this 30-year public transit improvement program into approximately 10 years.
Educate our kids: In the 21st century to get a good job, you need a good education. For college graduates today, the unemployment rate is less than 4.5 percent. But among those who drop out of high school, it is over 12 percent. We need to produce more workers who have the skills needed in engineering, technology, health care and other growth sectors that are creating jobs that can't be filled by today's unemployed. And we need to re-train thousands of blue-collar workers whose jobs are never coming back. Education is an appropriate investment that only government -- at every level -- has the resources to do for everyone in America.
Reform immigration: America's visa system needs to be reformed in order to retain foreign students who earn their degrees here. Tens of thousands of needed jobs in America are vacant because of a lack of skilled engineers, doctors, nurses, scientists and more. We want to encourage these graduates to build the next Google right here in America (or at least work here) and not send them abroad. But to keep them here, the federal government must change its visa rules. As Michael Bloomberg has said, sending them elsewhere is "national suicide."
Federal fiscal and tax policy: Resolve the fiscal cliff. The enormous uncertainty over the tax and fiscal policy of the federal government in 2013 has caused many in the private sector to delay investments and hiring until they know what their tax rates and the economic outlook will be. President Obama's "grand bargain" proposal last summer would have provided just what the economy needs now: short term stimulus and a clear and stable path of higher tax revenues and lower federal spending for the medium and long term. The President's Jobs Act also needs to be passed by Congress. It would create one million new jobs, including funding the hiring of more teachers and police. This is exactly what government is supposed to do.
To create millions of jobs and generate stronger economic growth, government must play its critical role. It's time for the elected leaders of governments at every level and in both parties to take more steps like these six and to work constructively, quickly and cost-effectively with the private sector to truly accelerate the growth of our economy and its quality jobs.