The House of Representatives, which returns from its summer recess today, and the Senate, which returned Monday, really only has one legislative priority it should be focused on before members return to the campaign trail: Treat the jobs emergency as the emergency that it is, and enact the legislation that will get unemployed Americans back to work quickly.
That means calling for more than the tax incentives and accelerated infrastructure investment that President Obama has put forward in a series of recent speeches. It will mean making the case for, and enacting, direct spending on jobs creation.
If Obama and the Democratic leadership in Congress would embrace a more aggressive jobs agenda that recognizes the jobs emergency for what it is, they would find broad grassroots support. For example, the Jobs for America Now coalition is preparing a renewed legislative push this week in support of the Local Jobs for America Act, which would funnel up of $100 billion to states and localities to keep people working on vital public services. The Jobs with Justice coalition is declaring Wednesday a “jobs emergency national day of action,” with at least 120 demonstrations and events around the country.
Listening to Senate Minority Leader Mitch McConnell and to some of the chattering class on cable news, you would think that the most urgent question facing the Congress is whether individuals earning more than $250,000 should continue to receive the tax break they received from the Bush administration—the tax break that helped turn the budget surplus President Bush inherited into a deep deficit.
Seemingly lost in the discussion is the fact that the unemployment rate in the U.S. is 9.6 percent (and much higher in many rural areas and among African-Americans and Latinos), and that tax cuts for wealthy individuals will have no significant impact on creating jobs for these people. On Monday, Moody’s Analytics reiterated what progressive economists have been saying for years: Wealthy individuals pocketed a significant share of the Bush tax cuts rather than reinvest that money in job-creating investments. What really drives investment, Moody’s says, is a growing economy that employs its people.
“I would tend to wonder how much the tax cut actually influences spending behavior,” said Chris Cornell, an economist who mined government reports back to 1989 for West Chester, Pennsylvania-based Moody’s Analytics. “Spending by the top 5 percent of households seems much more closely tied to business- cycle issues than it does to tax-cut issues.”
The Moody’s research covering couples earning more than $210,000 found that spending by the wealthy is more likely to be influenced by the ups and downs of the stock market than changes in income-tax rates.
Stock-market performance is the “primary factor that is driving the savings of the top 5 percent of households,” said Mustafa Akcay, economist and co-researcher of the savings data.
The wisdom of direct spending on job creation, and the folly of extending the Bush tax cuts on the wealthy, is reinforced by sobering warnings about the global economy such as the one Monday from the chief economist of the International Monetary Fund, who said that the financial crisis “won’t be over until unemployment significantly decreases” and said that nations should spend more on job creation in order to regain financial stability. The comments are a sharp rebuke to conservatives in the United States and other industrialized countries who have used the global economic crisis to drive their agenda of dismantling government.
The message is clear: The best way to reduce a government deficit is with a growing economy that offers good-paying jobs.
The Obama administration deserves credit for pointing in the right direction. In an interview with the Wall Street Journal, Treasury Secretary Timothy Geithner offered a twist on the conservative canard that “uncertainty” about government policy in Washington is holding the economy back: It’s the paralysis created by a conservative obstructionist minority, particularly in the Senate, that has blocked initiatives such as the Local Jobs for America Act that otherwise would already be working to help revive the economy. “If the government does nothing going forward, then the impact of policy in Washington will shift from supporting economic growth to hurting economic growth,” Geithner warned in that interview.
And the last thing that Americans can afford is a Washington that does nothing in the face of this crisis.
According to the Economic Policy Institute, if Congress would spend $75 billion on direct jobs creation, taxpayers would see a $39 billion return as newly hired workers pay taxes and no longer need such government services as food stamps. Plus, in addition to the more than 675,000 people who would be directly hired with those funds, another 150,000 jobs would be created just as a result of the increased economic activity of putting that many people back to work.
There is also a jobs program that is set to expire in just 16 days if Congress does not act. A welfare-to-work program, the Targeted Assistance for Needy Families (TANF) Energency Fund, has employed more than 250,000 people. Yet, despite being a program that does what conservatives demand—that needy people work and receive job training instead of collecting welfare—House conservatives led by House Whip Eric Cantor have been working to shut the program down. The Obama administration wants $2.5 billion to extend the program into 2011.
For the 15 million unemployed and 11 million underemployed people in the country, Congress needs to enact this TANF Emergency Fund extension and other job-creating bills this month—and force conservatives to explain why they are willing to see hundreds of billions of dollars go toward extending tax breaks for the wealthiest Americans while being unwilling to spend a fraction of that to help an unemployed American who needs a job.