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Working In These Times

Thursday, Mar 4, 2010, 12:30 pm

After Breaking Logjam, Will New Senate Jobs Bills Fall Short?

BY Art Levine

On Tuesday, Sen. Jim Bunning (R-Ky.) stopped his one-man filibuster of a 30-day extension of unemployment benefits.   (Photo by SAUL LOEB/Getty Images)

After breaking Senator Jim Bunning's one-man roadblock to extending jobless benefits for 30 days, the Senate will be turning next week to a year-long extension in jobless benefits. But even coupled with more business tax breaks, that still won't make much of a dent in finding work for nearly 30 million people who need full-time jobs, critics say.

"It's nickel and dime stuff," says economist Dean Baker, co-director of the Center for Economic and Policy Research, of the proposed jobs package. He welcomed the aid the new $100 billion proposal offers workers but notes, along with others, that it doesn't create the new jobs that need to be created after this recession—nearly 11 million  are required to make up the jobs lost.

What's gone wrong here? The future of the Democratic Party and the economy depend on returning the unemployed to work and slashing the unemployment rate, but, despite high-flying rhetoric, there's no real urgency to do so in Washington in a major way. "We've had this big yelling about the deficit, and Obama gave into that," Baker observes. "We've somehow accepted that we're going to have high unemployment rates—it's 9.7% now— for a long time."

Yet at the AFL-CIO executive council in Florida, they took a far bolder stand, commensurate with the depth of the jobs crisis. As the council declared:

Mass unemployment is intolerable. Action is required. The AFL-CIO calls upon the entire labor movement--our affiliated unions, our state and local labor councils, the millions of members of Working America and our allies in communities and progressive movements across this country--to come together in a great effort to create and protect good jobs.

Part of the political effort: target politicians who only take "half measures" or coddle Wall Street.

As the AFL-CIO Now blog reported:

[T]he council urges enactment of the AFL-CIO's five-point plan for good jobs now ... :
  • Extending current federal supplemental unemployment benefits programs to prevent a downward spiral as families fall into bankruptcy and lose their health care and their homes to foreclosure.
  • Investing the money to meet the2.2 trillion in unmet infrastructure needs, while including prevailing wage protections and strong Buy America provisions.
  • Helping state and local governments meet pressing needs to overcome an estimated180 billion shortfall in the fiscal year 2011 and588 billion over the next four years.
  • Putting people back to work doing work that needs to be done by preserving good public jobs that provide vital services and capacity for building strong communities. In addition, expansion of vital services in targeted areas can reduce unemployment and provide infrastructure for economic growth.
  • Easing the credit crunch for small- and medium-sized businesses by establishing a fund to lend TARP money to small- and medium-sized businesses at commercial rates, managed by the community banks left out of the Wall Street bailout, with the banks taking first-dollar risk.

The AFL-CIO also vowed to go after politicians who don't create jobs or who protect Wall Street, but it's not at all clear that this was meant as a declaration of war against conservaDems or a vow to support primary challenges against them.

Still, the AFL-CIO declared, "Who is the target of our campaign?  Politicians who vote to deny aid for the unemployed and against action to create jobs, politicians who offer half measures and caution while working people suffer, Wall Street firms that pay bonuses but won't pay taxes, corporations that take the public's money and use it to downsize and outsource jobs—and all those who stand in the way of an economy that works for all in the name of speculation that benefits the few."

Compare that labor vision to what Congress is actually doing.

In fact, even the scaled-down $15 billion jobs bill that the Senate passed recently was having trouble getting through the House without some changes to please conservatives, and, to a lesser degree, liberals. As Politico reported Monday:

House Democrats are coming up short on a $15 billion jobs bill and won't take up the legislation on Tuesday as Democratic leaders try to negotiate among various factions, according to a leadership aide.

The jobs bill, passed by a wide margin in the Senate last week, faces opposition from conservative Blue Dogs and liberal members of the Congressional Black Caucus.

Ultimately, the House passed the bill on Thursday. As Reuters noted:

The 217 to 201 vote gave Democrats a much-needed victory after weeks of delay caused by Republican tactics, a record-setting snowstorm and internal bickering.

More job-creation efforts are in the pipeline, House Speaker Nancy Pelosi said.

"Today's legislation is ... one key element of our agenda to get Americans back to work and strengthen our economy," Pelosi said on the House floor...

The bill passed by the House includes a $13 billion payroll tax break for businesses that hire unemployed workers, along with subsidies for state and local construction bonds.

After that, Democrats could take up legislation to boost lending to small businesses, create incentives to weatherize buildings, or give states more aid to help them avoid layoffs of teachers, police and other public employees.

The Senate is debating a $107 billion measure that would extend jobless aid, help states pay spiraling healthcare costs and renew a package of expired tax breaks.

 

Yet even most of the more costly bills under consideration don't really create new jobs, but offer either tax cuts or needed jobless benefits relief that, while adding to the pool of money in the economy, don't directly save or create jobs.  Unfortunately for workers, even the labor-backed proposal to give more aid to states and localities to avoid layoffs faces a particularly uphill battle in the Senate.

And, of course, any jobs program that actually helps workers or the unemployed faces a firestorm of GOP criticism that it's adding to the deficit. As for GOP-favored tax cuts in proposed and pending jobs legislation, "They have nothing to do with jobs in any near-term time frame," Dean Baker points out. He adds, ironically, "Republicans have this bizarre view that tax cuts putting money in people's pockets to spend creates jobs, but unemployment insurance that puts money in people's pockets and they spend it, and somehow that doesn't create jobs?"

More tax cuts are on the way, of course, in the search for those elusive Republican votes needed to thwart a filibuster.

On Monday, Senate Finance Committee Chairman Max Baucus (D-Mont.) and Senate Majority Leader Harry Reid (D-Nev.) introduced legislation to extend unemployment insurance benefits and eligibility for unemployment health care benefits through the end of 2010, including extending benefits retroactively so families will receive the benefits that were suspended when these programs expired on February 28. A Senate Democratic press release also declared, "The legislation extends loan programs for small businesses and tax cuts that provide the tax certainty families and businesses need to create jobs, along with other important safety-net programs that families and communities depend on in the tough economic climate."

Sen. Baucus, while giving a nod to the importance of providing a safety net to workers, also offered the rhetoric that's supposed to win over Republicans. "Too many hard-working Montanans and Americans lost their jobs in this recession, and even those with a paycheck are struggling to make ends meet. The tax cuts and small business assistance in this bill support the creation of new jobs across the country. This legislation extends tax cuts that businesses count on, giving employers the certainty they need to open a new store or hire a new worker. Extending these tax cuts creates the right environment for job creation," Baucus said.

It's excessive tax cuts, though, that weakened the economic impact of the original $786 billion dollar stimulus package.

A more promising approach -- promoting work-sharing with unemployment funds that allows people to stay in their jobs -- is gaining support in Congress, even if it's not yet part of a leadership package.

As the Washington Independent reported this week:

Seventeen states have already adopted so-called "job-sharing" programs, which encourage employers to reduce workers' hours in lieu of firing them outright. The state government, in these cases, then steps in to make up a portion of the lost wages. Between 300,000 and 350,000 workers are participating nationwide, saving roughly 100,000 jobs that would have otherwise been scrapped, according to Dean Baker, co-director of the liberal Center for Economic and Policy Research and a long-time supporter of the concept....

Kevin A. Hassett, director of economic policy studies at the conservative American Enterprise Institute, told lawmakers this week that such programs are among the most targeted and cost-effective ways to tackle the nation's jobs crisis, which has left nearly one in five workers without a job or underemployed.

The concept is simple: Rather than laying off a few workers during lean times, businesses instead could spread the pain by reducing work hours for many. In Hassett's example, if five workers had their hours cut by 20 percent it would prevent one worker from being fired at no cost to the company. And if Congress were to alter its policies surrounding emergency unemployment insurance, those workers could then access a portion of those benefits -- in this case, 20 percent.

In addition, employers are given reimbursement to pay workers part of their lost pay for working fewer hours

It's a common-sense approach that might catch on, but it, too, faces concern from Republicans, like Senator Bunning, who are dead-set against adding to the deficit with any big-spending programs—unless they involve either tax cuts for the wealthy or Republican-led wars.

Nothing being considered now on Capitol Hill reflects the magnitude of the crisis and the need for what progressives say is far bolder action.

UPDATE: The Economic Policy Institute and its president Lawrence Mishel have issued a new brief analysis of the limitations of the Congress's $15 billion bill, which passed the House this Thursday:

$15 billion jobs bill not nearly enough

Congress has finally taken action to address the jobs crisis, but the $15 billion jobs bill passed by the Senate and the House is not nearly enough. The bill, which would give employers tax breaks for new hires, is likely to create only a couple of hundred thousand jobs at a time that the country needs 11 million jobs just to return to pre-recession levels of employment.

High unemployment could last for years
EPI President Lawrence Mishel emphasized the magnitude of the jobs crisis and the size of the response needed during a February 23 testimony to the House Committee on Financial Services. Mishel warned that unless Congress acted quickly and at a sufficient scale, "high and damaging unemployment will continue for years."

The $15 billion Senate bill is less than one-tenth the size of an alternate $174 billion jobs bill that the House of Representatives passed last year, which itself fell far short of President Obama's proposal to invest $267 billion to put people back to work. EPI's American Jobs Plan proposes spending $400 billion to create 4.6 million jobs in one year.

One key problem with Congress' response to the jobs crisis is that its last-minute extension of unemployment benefits for millions of long-term unemployed is only a 30-day extension. By the end of March, 200,000 workers will begin losing benefits each week. EPI Vice President Ross Eisenbrey issued a statement criticizing the Senate for failing to extend these badly needed benefits for the rest of 2010. The unemployed workers waiting on Congress, Eisenbrey said, had "lost their jobs not through any fault of their own, but because of the worst economic crisis in 70 years. Now they are unable to work because there are more than six job seekers for every job opening."

Art Levine, a contributing editor of The Washington Monthly, has written for Mother Jones, The American Prospect, The New Republic, The Atlantic, Slate.com, Salon.com and numerous other publications.

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