March Madness: Washington Forgets About Jobs

Politicians aren't fools, so they talk constantly about jobs. Republicans have been taught to "finish the sentence," to end every recommendation with the phrase "to create jobs." Cut spending to create jobs. Cut support for jobs programs to create jobs. It's time to put aside the talking points: cutting spending costs jobs.
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Washington is afflicted with its own version of March Madness, and we're not talking college basketball. Call it a severe case of attention disorder. Washington has forgotten that 25 million Americans remain in need of full-time work -- a human calamity and national emergency.

When the Campaign for America's Future (which I help direct) convenes its Jobs Summit on March 10 to address what to do about jobs, it will have to pierce through a bipartisan clamor about cutting spending.

"The American people want the government to stay open and they want us to cut spending" House Speaker John Boehner trumpets, apparently forgetting that he just campaigned across the country bellowing "Where are the jobs?" In Washington, the argument is about less -- how much and what to cut. And if cutting spending costs jobs, the speaker tells us "so be it."

But So Be It economics is both bad policy and bad politics. It ignores the human casualties of mass unemployment, threatens already faltering growth, scorns the broad consensus of economists, and offends the priorities of voters.

Americans have been consistently clear about what they want from Washington. Sure they don't like deficits and think government wastes their money, but, again and again, most recently in last week's NBC/WSJ poll, they tell Washington to focus on jobs and the economy. Nothing else comes close.

Politicians aren't fools, so they talk constantly about jobs. Republicans have been taught to "finish the sentence," to end every recommendation with the phrase "to create jobs." Cut spending to create jobs. Cut support for jobs programs to create jobs. Democrats hold a press conference a day indicting Republicans for focusing on everything other than jobs. But neither party has a jobs agenda. The president assumes the recovery, and accepts the need to "tighten our belts," while arguing to preserve investments vital to "winning the future."

Meanwhile, 25 million people are desperate for work -- and millions more face wage and benefit cuts. Obama's recovery program rescued the economy from free fall, and 1.3 million jobs have been created over the last year. But as Fed Chair Ben Bernanke told the Congress, that isn't enough to cover new people coming into the workforce, much less begin to replace the 8.5 million jobs lost in the Great Recession. At the current rate, it will take eight years or more to return to pre-recession employment levels. And now the economy faces harsh headwinds with home prices falling again, gas prices rising, state and local governments cutting, and trade deficits growing. For the unemployed, time is measured in lost skills, lost homes, broken marriages, illness, depression and worse.

Put aside the talking points, cutting spending costs jobs. According to Goldman Sachs, the Republican So Be It plan would cost 700,000 jobs. That's why everyone from Bush's former economic advisor (Bernanke), McCain's lead economist (Mark Zandi), Obama's former chief economist (Larry Summers) to Nobel Prize winners like Paul Krugman and Joe Stiglitz caution against cuts in spending now. Even Republican billionaire deficit scourge Pete Peterson agrees with that.

In fact, the most effective deficit reduction plan is to put 8 million people back to work, taking them off of food stamps and unemployment and turning them into consumers and taxpayers. The recession -- and the mass unemployment that it caused -- is the largest cause of the current deficits. In every deficit reduction plan from right to left, rising employment does most of the work in closing deficits in the near term. None of them work if people don't go back to work.

Yet, absent from Washington's debate is any murmur of what's needed: a serious plan to create jobs and revive the American middle class. This isn't rocket science. Businesses are sitting on over a trillion in capital waiting for demand to pick up. Rising trade deficits costs jobs. Consumers are still trying to recover from the economic collapse. State and local governments are struggling with budget deficits. That doesn't leave much else besides the federal government to act.

Elements of a bold jobs plan are simple and popular. Start with reviving "Made in America" as a policy, not a slogan. Our unsustainable trade deficits are over $1 billion a day and rising. China's effective mercantilist policies now generate over 80% of our non-oil trade deficits. Enough. Announce to the Chinese that we want more, but more balanced trade with them. We will henceforth treat their exports the same way they treat ours. And launch a serious strategy to revive manufacturing in America. Make the transition to new energy a national security imperative. Add a Green Corps to train idle young people to retrofit homes and small apartment buildings. Call on states and localities to favor buy America on all purchases. Give companies clear signals that in the future, if you want to sell in America, you will have to produce in America. Remember it was Reagan's call for "orderly marketing agreements" with Japan that led the Japanese auto companies to set up plants in the South.

Second, there has never been a better time to rebuild America. Our decrepit infrastructure risks lives, wastes time and money, and impedes our competitiveness. The construction industry is flat on its back. Interest rates are low. Set up an infrastructure bank, give pension funds guarantees to invest in Rebuild America bonds, pass an expanded transportation bill that accelerates projects needed and planned. Were the US run like a business, any CEO with a wit of sense would grab this opportunity to make vital investments in the future.

Finally, the president's pledge to invest in education, to train 10,000 math and science teachers over the next five years is exactly right. But it doesn't make sense to sit by while the fiscal crisis caused by Wall Street's excesses results in debilitating state level cuts in teachers, schools and colleges, to say nothing of cops, firefighters and nurses. The federal government should continue to ease state and localities through the recession caused budget crises, tying the aid to guarantees of continued support of vital services. And we should put people directly to work in public service jobs. The Green Corps mentioned above could give young people needed skills and hope. A Veterans Corps could help veterans make the transition into economic battlegrounds. Instead of zeroing out AmeriCorps, we should be expanding it dramatically to put people to work.

We can afford this. Contrary to conservative naysayers, America is far from broke. (And the Right isn't focused on deficits anyway; they're focused on cutting government. You can't demand tax cuts for the wealthiest Americans in December, and then claim you're for deficit reduction in March. )

Some of this agenda -- like a more flinty eyed Yankee trade policy -- doesn't cost much. Some, like rebuilding America, can and should be financed. Other parts -- core investment in education, revenue sharing for the states and the like -- can be paid for with sensible priorities. Tax the richest Americans, the top 1% that capture 23% of the nation's income and pay lower effective tax rates than the nation's teachers. Levy a transactions tax to slow Wall Street's financial speculation. End the subsidies to Big Oil, the drug companies, the multinationals that ship jobs abroad. Crack down on the off-shore tax havens. Put a lid on the Pentagon which is spending about as much as the rest of the world's militaries combined and is the largest source of waste, fraud and abuse in the federal budget. That would bring deficits down in the near term. (For a more detailed discussion see the Citizen's Commission Report on Jobs, Deficits and America's Economic Future)

The long-term blood curdling projections of rising debt are entirely driven by soaring health care costs. That's not a question of Medicare and Medicaid -- that's a question of taking on the powerful corporate interests -- the insurance companies, drug companies and hospitals -- that have the US paying about twice as much as other industrial countries per capita for health care.

This is mostly common sense. Every part of it has popular support. But it can't even get a hearing in Washington. So, just as the union pushback in Wisconsin and Ohio challenged the war on the middle class, citizens outside the beltway will need to intervene in Washington's March Madness.

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