As Dick Polman writes today, the Obama Administration put themselves in a box on jobs that will be difficult to emerge from. While the spending cuts in the near term are not all that large, the very real shift to austerity on practical and rhetorical terms means that legitimate job creation programs are right out. And you can see that with the kind of programs the Administration is floating today as boosts to the economy.
White House officials are weighing a proposal to offer tax cuts to employers in return for hiring new workers. The administration considered this idea last year, but it gave way to a broader payroll tax deduction for workers in a bipartisan deal in December.
In addition, administration officials are considering proposing new investments in domestic clean energy as well as renewing tax breaks for companies using renewable energy — particularly wind power — that are to expire this year.
Also on the table is an initiative designed to help the ailing housing market without the need for more public spending. Under that proposal, the government-controlled mortgage giants Fannie Mae and Freddie Mac would rent out foreclosed properties that they own rather than try to sell them at depressed prices. That approach could relieve pressure on the housing market, one of the main drags on the economy.
Former administration officials are pushing other initiatives, such as a program to rebuild and rehabilitate schools as a way to improve education and stimulate the economy. A fan of this approach, Jared Bernstein, a former chief economist for Vice President Biden, calls the program “Fix America’s Schools Today.”
The FAST program is actually a good idea, but there’s no indication that anyone who actually still has a job at the White House is behind it. Fannie and Freddie leasing out their housing stock is nice as well, but really below the minimum of what they could be doing. And then the rest are a bunch of tax breaks, after the first 16-20 didn’t work. We already have a job hiring tax break, in fact.
Then there are the bills that are likely to pass Congress. In particular, you have the patent reform bill, which is actually just another one of these lobby-fests that pit giant corporate interests against one another in a dash for spoils. Zach Carter documents the atrocities on that today. If you asked any of the 800 lobbyists working on patent reform whether or not it would be a job creator, they’d look at you as if you just told them you were made of green cheese.
Next, we have the three free trade deals, and there’s been an agreement to move forward on them:
Senate Majority Leader Harry Reid, a Nevada Democrat, and Republican leader Mitch McConnell of Kentucky pledged action yesterday to pass the agreements with Colombia, Panama and South Korea. The U.S. Trade Representative’s Office and Republican House Speaker John Boehner praised the compromise, signaling all sides concur on the process.
The Senate leaders agreed that after Congress returns to work, lawmakers will consider “a bipartisan compromise on the Trade Adjustment Assistance program, followed by passage of the three FTAs,” Reid said in a statement on his website. Boehner of Ohio also pledged to move ahead with trade and worker-aid bills. Republicans had balked at the administration’s plan to combine worker aid and the Korea trade deal into a single bill, and that plan was dropped.
It feels like a classic bait-and-switch, with TAA failing and the free trade agreements passing, but even if all goes “well,” you have three corporate written trade deals which will, if anything, cost American workers their jobs. Don’t tell that to Luke Russert, but it happens to be true. Even Nancy Pelosi questions whether these deals will create any jobs, calling the idea “debatable.”
What we have here is actually a poverty of imagination. There are plenty of things that the executive branch can do – power they’ve had since they came into office – to boost jobs. They have $80-$100 billion in unused TARP funds that could be put to productive use, including at least $40 billion dedicated for housing. They could use Fannie and Freddie much more aggressively than this renting idea, creating a kind of modern-day HOLC to buy up homes. They could use authorized programs like TALF to give aid to states or fund infrastructure projects. They could use monetary policy to force bank reserves into the lending sphere; at the very least they could fill the slots on the Federal Reserve Board of Governors, at least one of which has been vacant since the beginning of the Obama Presidency. They could get any of the $30 billion small business lending fund out into the economy. They could use Treasury to legitimately punish China for manipulating their currency. Put these all together, along with ones I haven’t thought of, and you have a “second stimulus” of equal or greater value than the first. And you don’t have to consult John Boehner at all.
This is what people who recognize a crisis when they see one would do. The quarter before Barack Obama became President had an 8.9% reduction in GDP growth. That’s a depression, and it requires bold and relentless experimentation. Instead we get pivots and a focus on jobs, without the kind of innovation that would actually create them. I don’t mean to criticize Nancy Pelosi here, she has a political responsibility, and should be talking about her agenda in contrast to the Republicans. But absent actual action to create jobs, a bushel of talk could only weaken the political position, as people see it amounting to nothing. This doesn’t have to happen this way – a president has a good deal of power. It’s just not being used.