Robert Reich: 4 things Obama can do to stem further job losses in the worst labor market in 70 year

[babylonsister]

http://www.salon.com/opinion/feature/2009/10/05/jobs/


What should be done about unemployment?

Four things Obama can do to stem further job losses in the worst labor market in 70 years

By Robert Reich

snip//

What to do? With the debt ceiling approaching and the gravitational pull of the 2010 elections increasing, the White House can't go back to Congress with a formal bill to enlarge the stimulus package. Four simpler moves would be to:

(1) Use existing authority under both the stimulus package enacted earlier this year and the nefarious TARP bailout fund -- extending and combining them into a fund to make up for state and local cuts in public school budgets, children's health, public health (we need workers to administer swine flu vaccine) and public transportation. Instead of bailing out banks and giant automakers, we should switch to bailing out public services that average people need.

(2) Propose a one-year payroll tax holiday on the first $20,000 of income. Republicans as well as Blue Dog Dems could go along with this, and it would be a highly progressive tax cut since 80 percent of Americans pay more in payroll taxes than they do in income taxes.

(3) Give small businesses a "new jobs tax credit" for every net new job created over the next year. Granted, under normal circumstances this sort of jobs credit doesn't have much effect, and it's difficult to separate hires that would have happened anyway from net new ones. But we're not in normal circumstances; small businesses, which are responsible for most new jobs, still aren't hiring. They need a boost.

(4) Dramatically expand the Small Business Administration's lending programs and have the Fed buy up the SBA's debt. Big banks are not lending to small businesses. TARP has been an utter failure in this regard. The SBA and the Fed should circumvent them and help small businesses get the capital they need, so they can start hiring again.

The politics of these four steps aren't difficult. It would be hard to get a new stimulus package through Congress, but no member who's up for reelection next year when unemployment is likely to be in double digits wants to be accused by rivals of voting against steps to help small businesses, public schools, children's health, and average working people who need a tax cut.

[Mudoria]

1. Looks like a good start to doing something about jobs..

[quiet.american]

2. Payroll tax holiday would be awesome. (GOP would howl about it, though.)

Reich still makes the mistake of giving the Republicans the benefit of the doubt that they've been taking their obstructionist positions because of philosophical differences (even if he's only doing it as a "just for the sake of argument" and doesn't actually believe it.)

The GOP will howl, wail, moan and knash their teeth over how much a payroll tax holiday will "add to the deficit." Their plan will be... altogether now... tax cuts for the wealthiest, and tort reform.

[exboyfil]

3. Actually I think those dependent on Social Security

would scream the loudest. It would really hammer the "trust fund". Cash inflows are already projected to go negative this year (the only reason the "trust fund" is expanding is the interest from the Treasury).

Also Medicare is already in critical condition - you are going to take a portion of a year's funding away from it as well.

[quiet.american]

14. Those could be good points, but I never underestimate the collective lung capacity of the GOP. nt

[Thickasabrick]

4. Good ideas but too slow. We need something fast. $10,000 to everyone

in the country....watch that stimulate the economy.

[girl gone mad]

5. Bush tried direct stimulus..

and it failed, as helicopter money so often does.

[Thickasabrick]

6. It was nothing - I'm talking money that would get a lot of people

caught up on their bills and a breather. If we bailed out the banks, why not the people?

[babylonsister]

7. How would that be paid for? And what happens after it's spent?

Same old?? Jobs are the answer.

[WestSeattle2]

8. Agreed. We have to get money into the hands of those who

will take the plunge and open businesses as well as those who will spend it.

[Thickasabrick]

9. Think of it as "trickle up". Trickle down has finally been killed

and buried. Consumers are afraid to buy, which halts demand, which halts orders for anything new, which halts hiring.

The federal government can not keep 25% of the of the working population on it's payrolls for very long and it would take years to get those projects up and running.

A large stimulus would help consumers which would drive demand again for normal everyday purchases, which would increase demand, which would increase orders, which world increase hiring.and decrease some of the massive consumer debt that is such an issue as some of those households would use it to decrease debt.

The Bush tax cuts should expire next year, we could use that.

[babylonsister]

10. You are not getting $10,000 and that is an awful idea. nt

[Thickasabrick]

11. LOL....I don't want $10,000....but I think it would be a great stimulus

to people whose incomes are in the middle to low ranges. I guess I just want something to happen fast because if employment does not pick up - in one year - our President will basically be a lame duck unable to pass anything.

[babylonsister]

12. This is yours?

Good ideas but too slow. We need something fast. $10,000 to everyone

in the country....watch that stimulate the economy.

[Thickasabrick]

13. Yes, that was my original but if we have to be "frugal" about it - give

it to people who are in the middle to low income groups so they can pay their mortgages, local and state taxes, etc. Since it is the "people's" money we are spending, why not trust them to spend it on what they want. This will in effect have a "trickle up" effect, which will prevent state and local government from shutting down services, create demand for services and products, which will increase jobs.

The current path and suggestions of "shovel ready" projects through the government is absolutely ludicrous. How long is that sustainable?

[twiceshy]

15. I agree about the "shovel ready jobs"

I never understood the emphasis on infrastructure jobs to get things moving. It sure as hell didn'd and won't help me as a systems analyst, when I was unemployed for 5 months. The money needs to go to entreprenuers of all income levels. I read something about the success of "microloans" in third world countries (we're gettin' there ourselves in a hurry). The problem is a lack of imagination. Keynesian economics does not work, has never worked, and never will work. The idea that bailing out banks is the solution is ludicrous. The Federal Government has the Constitutional power to issue "money" without any bank being involved - of course it has to be backed by gold or silver.

If I had the money to start a small business, I don't know if now would be the time - too many uncertainties about availability of financing, spiraling health care costs, ridiculous levels of red tape (like Sarbanes Oxley). Better to keep what you have under a matress and wait it out.