On a conference call this morning, Nancy Pelosi laid out a variety of strategies for job creation, and rejected the conventional wisdom that deficit reduction would be bigger goal at this time, saying, we’ll never have deficit reduction unless we have job creation.”

“What I’ve told the members is that we have a lot of good ideas [regarding job creation]. We have to prioritize them, get them out there and figure out how we will eventually pay for them, but not be bogged down in the next couple years by that,” Pelosi said on a conference call with a handful of economic reporters and economists who blog.

“The debate between deficit reduction and job creation is not a real choice, because we’ll never have deficit reduction unless we have job creation. Of course we have to be sensitive to how this is paid for, but that doesn’t mean we don’t do it.”

It’s refreshing to see a leading politician reject the deficit mania which has taken over Washington. And she’s correct – if income tax revenue implodes because of joblessness, the deficit will only widen no matter what. You can hear Pelosi debunk the deficit scolds here.

But what specific job creation strategies is Pelosi talking about? According to Ryan Grim:

Pelosi said that the House is considering a variety of plans, including extending unemployment insurance (UI), subsidized health benefits (COBRA), assistance to state and local governments, improving small businesses’ access to credit, investing in green buildings and “targeted public service jobs.”

Democrats are also considering a transaction tax on short-term trades on Wall Street, a measure being pushed by House Majority Whip James Clyburn. “We have seen a great deal of anger from the public about the fact that once again we see Wall Street nationalizing the risk and privatizing the gain,” said Pelosi. “The downside is always felt by the worker and the upside is always realized by those who never seem to take a loss no matter what happens.”

Aid to states is complicated by the fact that some GOP governors squirrel the money away in the hope of cutting taxes — or reject assistance outright. Economist James Galbraith suggested on the call that as a condition of accepting the aid, the states agree to keep their tax structure constant. “I think we probably will go down that route. I think we have to. Dave Obey thinks we have to and he’s writing the bill for us,” Pelosi said, referring to the chairman of the Appropriations Committee.

These are all pretty good ideas, but the Vice President’s chief economist is floating a different one – a hiring tax credit:

“A couple of weeks ago, when the president talked about ideas that he was asking his macroeconomic team to consider, he did mention potentially a hiring tax credit targeted at businesses,” said Jared Bernstein, the chief economist for Vice President Joe Biden. Bernstein made the remarks Tuesday during a briefing with reporters on the $787 billion stimulus.

The hiring tax credit would go to companies that bring on new employees. Obama had proposed a $3,000 tax credit for each new full- time employee when he was running for president last year. The tax credit was mentioned as a possible item to be included the stimulus as it was being crafted earlier this year. But Democrats in Congress eventually nixed the idea, arguing that stimulus aid should go directly to individuals and to spending projects that create jobs.

The struggling economic picture has led to a predictable decline in the President’s job approval ratings, and Democrats are worried about losses in the midterm elections as a result.

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