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The President’s jobs plan (not)

Robert Reich, professor of public policy | July 12, 2011

What did the President do in response to last week’s horrendous job 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.

Cross-posted from Robert Reich’s blog.

Comments to “The President’s jobs plan (not)

  1. It is now September and where is our job bill? Still being debated on in congress!!! If our leaders can not agree on anything I don’t believe they will agree on this job bill and it seems that throwing more money at all of our problems is what the government ends up doing for every problem. Has any of the bills passed so far actually shown real, and I mean REAL NOTICEABLE results. If we keep printing more money we will lose our position as the Dollar being the world reserve currency then we will be in real trouble with our dollar being worthless. Will we one day be in that position?I have been unemployed for over a year and I have tried everything and still I can not find a decent job. I have friends with hundred thousand dollar educations and four year masters degrees working at walmart. What is gong to have to give before this government acts? OH! I know AN ELECTION!!! now that the election year draws closer bills get passed around like hot potatoes and if the leadership does not act there will be a new lineup in 2012.One final comment “A house divided against itself cannot stand” I think you should know who said that.

  2. Fantastic advice. However, since Obama is not interested in our advice, and we won the last presidential election and don’t have anyone else to vote for, what should we do?

    What should WE do?

    I know, that’s not your department – you tell the government what to do. But when the government is beyond the reach of the people’s will, and the people are enervated and frightened and alienated; when the unions are weak and getting weaker, and the banners of past social movements have lost credibility and no longer feel up to date; when we know so much and read so constantly about what is wrong with the economy and how our position as workers has been eroded…

    What can we do???

  3. Rafael,

    You might be right. But since we can’t know the future for certain–and we know that “impossibilities” sometimes prove possible–this is a time for a leader to be bold and daring.

    One thing for sure, we’d have a president who acts not like a patsy but like a leader. Doing nothing guarantees failure. Trying….

  4. The recreation of the WPA and CCC would be a wonderful thing. However, there are more profound and fundamental changes in the economy which Dr Reich does not address. Namely, a smaller and smaller percentage of the workforce is employable in the US economy. These and other goverment programs might be great and also necessary, but let’s not pretend they are temporary.

  5. Your plan seems both to address the problems and give a decent chance of getting things back on track permanently. Sadly, as the other comments have said, the conservative opposition to public spending is selfish and uncalled for. Still, Mr. Obama’s a very smart man, and I know he’s trying hard to steer us through these tough times; perhaps he will see the merit in your ideas. May God be with the both of you, sir!

  6. How can Robert Reich be so right, and yet we know that the
    Congress and the President won’t follow this important plan?
    Does Congress have to go back to college and study economics? It makes one despair of democracy to hear their speeches. What can the ordinary citizen who sees the wisdom of this proposal do about it?

  7. Really, the answer is more Government spending. If that was the case we would have seen the stimulus work. Who pays for the Teachers, Firefighters, and Police? The private sector does and those of us that actually pay taxes. This country needs to create more wealth and that’s what the private sector does best. The united State has generated more wealth in 200 years then most countries have in 4000 years and it is not because we let our Government becomes a major Employer. You cannot spend nor tax yourselves out of a financial crisis on a Macro or Micro Level. Basically we need to make the pie bigger not the slices smaller and the baker is Private Business not the Government. Both parties have spent tax dollars foolishly agreed. You might want to take a good look at your retirement fund and ask yourself why all your mutual funds and stocks are in Corporations and not in the Government sector. Even Liberal academia knows what horse to bet on. Look at California as a smaller example of a bigger problem. Great resources but broke not because we have a State Government thats afraid to hire more government workers. The problem is rate number 50 on States on not being business friendly.

  8. If “doing nothing” includes stopping the holds on oil drilling, allowing construction to proceed on the trans-Canada pipeline, allowing Boeing to build a plant in South Carolina, etc, it seems obvious how all those would result in jobs without putting us billions or trillions more in debt.

  9. If nothing else, the President should strongly push for programs like the WPA and Civilian Conservation Corps and he should do it immediately. The arguments in favor of such programs are incontrovertible (1) endorsed by many respected scholars; (2) successfully worked before; and (3) responsible for many wonderful projects including the photographic work of the FSA photographers like Dorothea Lange.

  10. As ingenious, effective and productive for the average American people your plan might be, there isn’t any chance it would ever be applied. Sadly, modern politics has gotten nastier than ever before.

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