Nelson Understands The Employment Problem, So Why Won’t He Push For The Solution?

AP091219119657Late last year, the House passed a $154 billion jobs bill, but at the moment Senate Majority Leader Harry Reid (D-NV) is having trouble rounding up the votes to even begin debate on a far more modest $15 billion effort that relies heavily on tax incentives for small businesses to hire.

Speaker of the House Nancy Pelosi (D-CA) as well as Sen. Sherrod Brown (D-OH) have cast doubt on whether or not these kind of hiring incentives can significantly reduce unemployment (and many economists think that they really can’t), but remarkably, it’s Sen. Ben Nelson (D-NE) who diagnosed the problem the best:

“There’s a question of whether that puts the cart before the horse,” said Nelson. “If I don’t have enough customers for my product, hiring more people is not going to help and tax credits are not going to be to my advantage.”

Nelson is exactly right. According to the latest National Federation of Independent Business (NFIB) small business survey, the biggest problem affecting small businesses is “shortage of customers.” And despite all the lip-service paid to boosting small business loans, only 5 percent of businesses cite “financing” as their top problem, while 31 percent point to “poor sales.” “Small business owners entered 2010 the same way they left 2009, depressed,” said William Dunkelberg, NFIB chief economist. “The biggest problem continues to be a shortage of customers. Don’t expect much spending or hiring until these trends reverse.”

So the logical step is to pursue policies that will boost demand, through immediately putting people back to work and getting funds to those most likely to spend them. As Heather Boushey wrote, “to create jobs today, we need to do much more to fill in demand by giving businesses more customers.” David Madland added that “employing more people doesn’t just get those workers back on the job; it affects the momentum of the economy, which ultimately creates the cycle of private sector job creation that we need.”

They (and many others) have advocated new job creation efforts including fiscal aid for states, directing federal money into national service programs, and ensuring that unemployment benefits and other social safety net mechanisms aren’t allowed to expire. Since Nelson seems to understand the problem, why isn’t he advocating for actions along those lines? And, for that matter, why was he one of the catalysts behind a bipartisan “compromise” that cut billions of dollars of this kind of funding from the economic stimulus package?

Unfortunately, the jobs proposals before the Senate are nowhere near ambitious enough to make a significant dent in an unemployment rate that the White House has estimated will still be at 9.8 percent at year’s end. And this is despite the preponderance of evidence pointing to the necessary steps.