Progressives’ Memo To Obama: How To Create Jobs

David Moberg

President Obama, who is holding a White House jobs summit” Thursday, wants ideas about how to put the 17 million unemployed Americans back to work.

He won’t have to look far. The labor movement and progressive groups are already offering him an ambitious but still quite conventional set of policies that would help create millions of jobs next year. Bold action on a scale commensurate with the size of the problem is vital,” says Robert Borosage, Campaign for America’s Future co-director.

The problem is humanitarian: the record number of long-term unemployed and their children face lost earnings that will on average last a lifetime. It’s economic: high unemployment – possibly persisting for two years if nothing dramatic is done – would be a drag on the recovery and likely extend the housing foreclosure crisis.

And it’s political: Democrats – and with them the slim chances even now for progressive legislation – are likely to lose substantial ground next year if they aren’t seen as taking strong, effective action to create jobs.

The AFL-CIO has a five-point plan, worked out with the Economic Policy Institute (EPI), that is supported by many progressive groups. It proposes:

  • extending supplemental benefits for the unemployed that expire later this month;
  • rebuilding schools, as well as transportation and energy systems;
  • increasing aid to state and local governments to preserve services and avoid adding possibly 900,000 more workers to the jobless ranks next year;
  • funding direct decently-paid public service jobs to do important community work; 
  • using leftover TARP funds from the bank bailout to loan money to small businesses.

EPI proposes much the same, but instead of lending the TARP money, it recommends a job creation tax credit. But with demand still low, the AFL-CIO’s deputy chief of staff Thea Lee argues, such a credit would not generate many jobs, nor is it likely to be used to pay for jobs employers would have created anyway.

Across the board, progressives argue that the cost of a bold plan – $400 to $500 billion to produce 4.6 to 6 million jobs in the first year – should be added to the deficit, since overall the deficit generates jobs (but some deficit-generating programs yield more and better jobs). In this situation, you really cannot do too much,” says University of Texas economist James Galbraith, who calls the deficit life support” for the economy.

But EPI proposes – and the AFL-CIO agrees — that the best way to pay off that borrowing once the economy recovers is by imposing a small tax on all financial transactions.

The Service Employees (SEIU) embrace the AFL-CIO proposals but specifically argue for a green bank” to fund energy-efficiency and renewables projects and an infrastructure bank” to help rebuild schools and roads. SEIU’s secretary-treasurer Anna Burger also argues that health reform, the Employee Free Choice Act and job training will create new jobs.

Center for Economic and Policy Research co-director Dean Baker adds two more promising ideas. Germany has shown great success in stabilizing employment with its short work policies. In the same vein, Baker suggests giving tax credits to employers to shorten worktime and maintain pay instead of laying off workers. Baker also argues that giving homeowners facing foreclosure the right to rent at market rates would free up money to stimulate the economy and create jobs.

There, Obama has it — a menu of tested ideas that will not only create jobs but help the country through the work being done. Now it’s up to him to provide some leadership in pushing for new plans that match the challenges.

David Moberg, a senior editor of In These Times, has been on the staff of the magazine since it began publishing in 1976. Before joining In These Times, he completed his work for a Ph.D. in anthropology at the University of Chicago and worked for Newsweek. He has received fellowships from the John D. and Catherine T. MacArthur Foundation and the Nation Institute for research on the new global economy.

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