Spending is the Key to Job Creation.

Today, TAPPED will feature a series of guest posts on progressive solutions to the unemployment problem. Heather Boushey is a senior economist at the Center for American Progress.

The president has laid out a compelling vision for promoting long-term economic growth and creating high-quality jobs. Establishing a prudent financial regulatory structure, making investments in energy and climate, and reforming our health-care system will all encourage a more competitive U.S. economy.

But none of these initiatives will immediately help the more than 15 million who are currently unemployed. To create jobs today, we need to do much more to fill in demand by giving businesses more customers. Unemployed workers have few dollars with which to purchase goods and services. Giving them jobs immediately boosts their family budget and allows them to buy goods and services, which then encourages businesses to hire to meet that demand. Joblessness is a self-perpetuating problem, and the simplest solution is for government to step in to get the unemployed back to work.

The House has already passed a jobs bill that would redirect $75 billion of Troubled Asset Relief Program (TARP) funds toward infrastructure investment and aid to states, which would immediately drive demand for goods and services, and thus employer hiring. The Senate should match -- or increase -- that investment.

Helping states with their budgets is the easiest way to improve the economy. All but two states had or still have shortfalls for fiscal year 2010, which is working against economic recovery at the local level. The aid to states contained in the recovery package was clearly helpful, but it addressed only 30 percent to 40 percent of the gap faced by state governments.

The federal government could also spur the creation of millions of mostly private-sector jobs by directing additional federal money into employment programs for younger people such as AmeriCorps, VISTA, and YouthBuild. We should also provide funding for child care, after-school programs, and in-home health services for the elderly and disabled -- as well as training for those providing these services. Nonprofit groups and small businesses provide most of these jobs, but they are paid for by programs currently being cut by state and local governments. These programs often have long waiting lists, and any new funds will meet pressing needs while quickly creating jobs.

These investments boost employment immediately and help build the middle class in the long term. As the Center for American Progress highlighted in The Shriver Report: A Woman’s Nation Changes Everythingtwo-thirds of families with children are now headed by working parents. Investments in child care are critical to creating job stability for the millions of American workers who are one step away from losing their job due to breakdowns in family care arrangements.

Finally, Congress should ensure that extended unemployment benefits do not expire this month. These benefits go to the long-term unemployed, who now account for a historically high share -- four in 10 -- of unemployed workers. Extending the subsidies to help the unemployed purchase health insurance -- or, better yet, allowing states the option to put unemployed workers on Medicaid -- must also be done before the year's end.

If we cannot agree on a spending package to raise demand, we risk stalling the nascent recovery. The deficit will rise regardless of whether Congress approves additional spending; the question is whether we will make the investments today to get the economy back on track or whether we will allow the scourge of unemployment to linger.

--Heather Boushey

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