"Now, government can't create jobs, but it can help create the conditions for small businesses to grow and thrive and hire more workers," President Barack Obama said yesterday as he urged Congress to take up new jobs legislation at an event honoring Small Business Owners of the Year. "Government can't guarantee a company's success, but it can knock down the barriers that prevent small-business owners from getting loans or investing in the future."
The president was right, except for one little clause: the idea that government can't create jobs. Of course the government can create jobs, unless you rank police officers and teachers, or in a less Norman Rockwell-mode, DMV employees and meter readers, among the unemployed. Which, to be clear, you should not.
Precisely because of this concession to conservative talking points, the president is missing an easy opportunity to create jobs, indeed, 750,000 of them, by supporting a bill introduced by Rep. George Miller earlier this spring. While Obama's efforts to support two other jobs bills now in Congress are laudable -- one to help small businesses and another to extend unemployment and other social-safety-net measures alongside a melange of job-creating proposals -- his acceptance of doctrinaire conservative ideology stands to leave some Americans without work.
Before we talk about the specific legislation, it's important to remember why policy-makers ought to take some action on jobs even as the economy begins to grow again. Under most optimistic economic forecasts, the United States will still have 9 percent unemployment come the end of 2010, and if you factor in those who have lost hours or given up on finding work, the percentage of workers affected is even higher. Today, there is one job opening for every five people seeking work.
The slack in the U.S. economy isn't going away anytime soon. With deflation a bigger concern than inflation -- suggesting that budget deficits are manageable -- now is the time to spend money to support jobs. On the scale that balances short-term concerns about unemployment with long-term concerns about debt, the short-term priority still weighs more.
Thus, when the president announced his 2010 budget, he included a placeholder for some $266 billion in jobs funding. This is reflected in the American Jobs and Closing Tax Loopholes Act of 2010, a jobs bill proposed by Charlie Rangel that contains the grab bag of stimulus and safety-net extensions mentioned above and also closes tax loopholes that encourage businesses to send jobs overseas. It's likely to pass Congress -- perhaps even this week -- with a final vote in the House.
The bill is good legislation, but more is still needed -- the Center on Budget and Policy Priorities estimates that states will need to cut their budgets some $375 million in the next two years; California alone is set to eliminate a variety of health, education, and welfare services.
The president's answer is a $30 billion lending program for small business that, combined with tax cuts on small-business investments, will stimulate hiring across the country. As far as policy mechanisms, there is nothing particularly troubling about this except for the size of the program (it is relatively modest) and that it diagnoses our economic problem as a lack of available lending when the real crisis may be the absence of demand for loans.
Politically, however, this is gold: Supporting small business in a moderate way is something that even Republicans can get behind. Immediately after the president finished congratulating the small-business winners, he was off to kibitz with the Senate Republican caucus, encouraging it to support the small-business program. (Only four Republicans joined the Democrats to pass the American Jobs act in the Senate.)
The president did not, however, mention Miller's bill, which is so straightforward that it is hard to believe it came from a member of Congress. If the bill is passed, local officials desperately cutting jobs to balance their budgets would instead have the opportunity to apply to the Department of Labor for funds to prevent layoffs. (It will also apply retroactively -- municipalities can apply for support to rehire laid-off workers.) Additionally, it will fund local nonprofits and create new jobs in local government. The bill also includes funding to support teachers, law-enforcement officers, and firefighters as well as funding for training positions at private businesses.
All in all, Miller and the bill's backers hope to create 750,000 jobs. An analysis from the Economic Policy Institute, a labor think tank, concludes the bill will indirectly create some 195,000 additional jobs thanks to increase in demand that comes from the virtuous cycle of employment -- when a local worker isn't laid off or a new job is filled, she's able to keep spending at other businesses, providing demand for other workers.
The United States Conference of Mayors is behind this bill, as is the National League of Cities and some 159 members of the House (216 are needed for passage). However, there is still no Senate companion to the legislation, nor support from the White House.
The lack of support comes from the same facile political analysis the president deployed to claim that the government can't create a job. There is a great fear that if Democrats embrace the idea that some work is government work, conservatives will call them socialists or worse.
We've already crossed that line, but know this: The vast majority of the American public only listens to this ideological slander when it appears the president's policies aren't working. Where they are working -- in the private sector or the public -- people are happy to have an honest day's reward for an honest day's labor and to support candidates whose policies make that dream so.
If the majority party in our government can't look at the crushing unemployment and drastic budget cuts in local government and put two and two together, perhaps they're due another spell in the minority. If not, though, they should get behind Miller's bill, along with the other two major employment bills, and do their jobs so the rest of America can get back to work.
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