Democrats Considering Direct Jobs Program — Will Deficit Fearmongering Prevent It?

AP090316031054Ryan Grim at the Huffington Post reported today that “as desperate Democratic lawmakers cast about for ways to create jobs from Capitol Hill, a 1970s-era jobs program is getting a fresh look”:

Known as CETA — the Comprehensive Employment and Training Act — the program provided direct government funding to hire temporary workers. At its peak in 1978, it had created 725,000 public service jobs and shaved roughly one point off the unemployment figure…The version of CETA being discussed by Democrats would be some type of public-private partnership through which the government would pay part of an employee’s salary, while he or she would train under and work for a private firm.

Of course, as in most other issues, Republicans automatically voiced their displeasure with the idea, as Michael Steel, a spokesman for Minority Leader John Boehner (R-OH) “gave CETA the instant thumbs down.”

While I would prefer a straight, WPA-style program (both for efficiency and accountability purposes), instead of a public-private partnership, it’s encouraging to see that Congress is finally willing to put such a plan on the table, albeit far later than it should have. There’s no reason that direct job creation — particularly for young people — has been avoided for so long.

However, the Wall Street Journal reported this morning that the administration is “lukewarm about proposals by congressional Democrats to introduce broad legislation to create jobs, instead favoring targeted measures that would be less likely to inflate the deficit.” “Hamstrung by the nation’s $1.4 trillion deficit and his pledge not to raise taxes on middle-class Americans, Mr. Obama is keen to avoid any measures suggestive of a second, big-ticket stimulus,” the Journal said.

As Paul Krugman noted today, deficit hysteria amounts to “scaring the government into inaction on unemployment.” That, combined with Republican insistence that repealing the stimulus is a sound jobs policy, are going to make serious job-creation proposals difficult to engineer. But as former Federal Reserve Vice Chairman Alan Blinder wrote:

Direct public-service employment is straightforward. As long as the new government jobs do not compete with the private sector, the net job creation should be one-for-one. So hire people to repair parks, not shopping malls. And if we restrict ourselves to low-wage jobs, the cost will not do grievous harm to the budget. For example, at an average all-in cost of $30,000 a year, one million new jobs would cost $30 billion.

As James Galbraith noted, in the absence of additional steps (including fiscal aid to states, which are seeing tax revenues plummet) “double-digit joblessness will linger on, breeding frustration and anger — perhaps all the way through to the mid-term elections.”

Of course, much like the brouhaha over stimulus accounting errors, a direct-jobs program opens its advocates up to criticism when, as Dean Baker put it, “reporters inevitably find some chump claiming to be employing his brother while splitting the government paycheck.” Does that making taking such a step not worth it? I don’t think so.