This week, the White House is convening a “jobs forum” to look at various job creating proposals, as Democrats in Congress prepare a jobs package that is slated for debate early next year. House Democrats are reportedly looking at a variety of measures to spur job growth, including “a tax credit for new hires, added incentives for credit to small businesses and at least a short-term extension of transportation construction spending.”
Already, the administration has “signaled that Mr. Obama’s willingness to back any expensive new government programs is limited” due to concerns over the deficit. And of course, the big business community (which will be well represented at the jobs forum) is weighing in with its list of favored policies, which are a plethora of tax cuts for corporations and the wealthy, including a tax holiday for multinationals to repatriate offshore earnings, eliminating the estate tax, and simply slashing the corporate tax rate.
Hopefully, these well-trodden items from the conservative wish list will be dismissed, particularly repatriation, which didn’t create any of the domestic investment that its proponents claimed, and eliminating the estate tax, which is a giveaway to the ultra-wealthy and will have very little impact on job creation. (For the deficit hawks, these proposals would also blow holes in the budget with almost nothing to show for it.)
That said, something needs to be done on the job creation front, as the economic damage from unemployment lingering at a high level is significant. As Paul Krugman pointed out, “failure to act on unemployment isn’t just cruel, it’s short-sighted”:
The long-term unemployed can lose their skills, and even when the economy recovers they tend to have difficulty finding a job, because they’re regarded as poor risks by potential employers. Meanwhile, students who graduate into a poor labor market start their careers at a huge disadvantage — and pay a price in lower earnings for their whole working lives.
The Economic Policy Institute (EPI) estimates that a $40 billion per year WPA-style public jobs program — continued for three years — will create about one million jobs, which it recommends pairing with investments in schools and transportation, a tax credit for new hires, and fiscal relief for state and local governments. While the tax credit is not the most efficient use of money — and can be easily gamed — something like it will likely have to be included to generate any interest in the new legislation.
Obviously, the human element here is paramount, but there is also a political angle. Unemployment hanging above ten percent is a political mess, deficits or no deficits. And seeing as deficit reduction goes hand in hand with job creation, it would behoove Democrats to get moving on the jobs front, sooner rather than later.