Working In These Times
Bipartisanship on Jobs Bill: Agreeing to Fail
A snowstorm plunged the nation's capital into a deep freeze this week, but Congress has been paralyzed not so much by the cold, but by its own timidity.
On Thursday, Senators Max Baucus and Charles Grassley touted a new bipartisan jobs bill, which, according to Sen. Orrin Hatch (R-Utah), “demonstrates what can happen when both parties come together in a meaningful way to address the needs of the American people." Or more precisely, it demonstrated what does not happen—namely, a meaningful solution.
Bill Scher saw the proposal as a lesson on why compromise often doesn't pay off: “Bipartisan support was gained here precisely because the bill is so small," he wrote at Blog for Our Future. "If attracting large numbers of Republican votes to pass anything is considered a requirement, there's no way the jobs crisis can be addressed."
The consensus gets messier by the hour: by the end of the day, Senator Harry Reid had further diluted draft bill, and the already-feeble bipartisan triumph was looking downright anemic.
Reid claimed to be making the bill leaner by stripping out tax sweeteners aimed at Republicans. Still, though he promised to leave room for more jobs-focused legislation down the line, Reid dropped vital Democrat-backed provisions that, for many workers, just can't wait: absent from the new proposal are extensions of unemployment benefits and stopgap health coverage for people who have been out of work for months.
Steve Fraser at Tom Dispatch poetically described the Democrats' politics of self-defeat: “A long generation spent cowering in the shadows of the conservative ascendancy has left the newly empowered Democrats congenitally incapable of seizing their own historic moment.”
While the public doesn't necessarily object to reaching across the aisle, new polling data show that most folks would rather have a job than kumbaya in the Senate chamber, and about 70 percent support the Obama administration's $100 billion job creation package.
The Senate proposal's lukewarm centerpiece is not a massive public jobs program, as many progressives have recommended, but a set of job-creation tax breaks. As we've reported before, tax credits to spur hiring may help in the short term, but the impact won't be sustainable without systemic efforts to stem economic bleeding, put money in workers' pockets and spur demand. Critics also point out that the Senate tax-credit model initially pitched by Chuck Schumer (D-New York) and Hatch would yield far fewer jobs than the broader credit proposed by the White House.
The Obama administration is infected with bipartisan obsession, too (as well as a concurrent disorder known as deficit fetish). The White House Council of Economic Advisers delivered a massive policy forecast on Thursday that projected about 8 percent unemployment in 2012. With at least two years of misery ahead, we can expect about 95,000 new jobs added each month to meekly chip away at a loss of more than 8 million jobs since the recession began.
Council Chair Christina Romer told reporters that the sharp rise in unemployment has surprised officials, and “The usual relationship between G.D.P. growth and the unemployment rate has broken down somewhat.”
In other words, expect another jobless recovery, and brace yourself for more agonizing “compromise” solutions from Washington.
Economist Joseph Stiglitz cautioned against retrenching into fiscal conservatism, calling instead for more targeted spending combnined with structural reforms to prevent future financial implosions.
It is simply wrong to look at only one side of a country’s balance sheet. The deficit measures the increase in liabilities. The relevant question should be: What is happening on the asset side?...
When Washington reformed welfare for poor people, we imposed constraints - they had to look for a job or enter training programs. When the banks went on welfare, we gave them money without constraints.
So too, when the Federal Reserve lends money to the banks at close to zero interest rate. It could impose conditions. Regulatory reforms might make lending more attractive and speculation less attractive.
There are no easy ways out of the mess that the financial sector has created. But giving into mindless deficit fetishism risks higher unemployment and a larger long-run debt.
The economy needs another stimulus, and it needs it now.
Some have sought to reconcile both sides of the government's dysfunctional balance sheet. Rep. Sherrod Brown (D-Ohio) has proposed legislation for a small business loan fund, which would skim excessive bonuses of Wall Street banks in order to support new investments. The initiative parallels a short-term bank bonus tax in England, currently projected to yield more revenue than originally expected. Both Obama and British Prime Minister Gordon Brown have floated more extensive tax policies designed to discipline the financial sector. The proposed Volcker rule would be a step toward restraining big banks from growing dangerously fat. Meanwhile, Congress has been chewing on stalled plans for a consumer protection agency to regulate banks independently.
All those initiatives will stay frozen on Capitol Hill, however, even as the increasingly frustrated public boils with angst--as long as an obstructionist minority can gleefully threaten to block the way. And somehow, the Democratic establishment plunges ahead in feverish pursuit of “bipartisan consensus,” leaving the workers who elected them out in the cold.