Reports are that the president will unveil new proposals in September on jobs, and challenge the Congress to act. So what would a real jobs agenda look like?
Get the Challenge Right
Twenty-five million Americans are in need of full time work. One in four teenagers not in college can’t find a job. Wages aren’t keeping up with prices. Our trade deficit is rising, as more and more good jobs get shipped abroad. It’s projected that a staggering 48 percent of homes with mortgages could be underwater – worth less than the mortgage – by the end of the year.
Moreover, there is no recovery to an old, healthy economy. The old economy didn’t work for most Americans even when it was growing. The cancer was spreading before it metastasized in the financial panic. In the so-called Bush recovery years before the collapse, the few captured all the rewards of growth. The average income of the bottom 90% dropped. That economy was built on debt and bubbles. We were hemorrhaging manufacturing jobs and borrowing $2 billion a day from abroad. And we were in complete denial about global warming and the catastrophic climate changes that have already begun. We can’t recover to that old economy – and we wouldn’t want to.
So the task is not simply to give the economy a stimulus, like a dead car battery that just needs a booster cable and a charge to get it going again. We need to rebuild the engine and modernize the wiring, creating a new strategy for America in the global economy even as we put people back to work.
No one has made this case better than Barack Obama, most notably in his “Economic Sermon on the Mount” at Georgetown University in April 2009.
But that was then. At his Cannon Falls, Minn., gathering yesterday, Obama offered a very different perspective. His jobs-lite agenda was needed because we weren’t “growing as fast as we need to.” But his focus was not on a new foundation, but on deficits and debt, on cutting $4 trillion from projected deficits over the next 10 years.
“The key right now is to get a long-term plan for fiscal stability. And in the short term, we should actually make more investments that would put people to work and get the economy moving. (Applause.) And if you combine those two things, we can actually solve this problem and grow the economy at the same time.” Gone is any notion that we need a new strategy to generate an economy that will work for working people.
Get The Challenge Right
What would a new strategy look like? Consider the following:
• Revive Manufacturing in America
We must end the unsustainable global imbalances that drive us ever further into foreign indebtedness. That would best be done with global cooperation – the surplus nations like China exporting less; the deficit nations like the U.S. making more at home and selling more abroad. But we can gain that cooperation only by setting out an independent course to revive manufacturing in the U.S. and to balance our trade.
This requires a national plan for manufacturing – targeting industries, coordinating research, incentives, training, repealing tax laws that reward companies for shipping jobs abroad. It requires a new trade strategy, insisting that every major nation play by the same set of rules, taking direct action against mercantilist nations like China that protect their markets, rig their currencies and steal our technology. Buy America should be a mandate on all federal, state and local government purchases, consistent with our trade laws.
• Go Green
The green industrial revolution is sweeping a world that has no choice but to address catastrophic climate change. This will change how we live, travel, fuel our cars and light our homes. China, Germany, Spain are rushing to dominate growing markets in solar, wind, fast trains, electric cars and more. We need a coherent industrial strategy to compete, investing in research and innovation, providing investment incentives, building key infrastructure such as a smart grid. The Apollo Alliance, now merged with the Blue Green Alliance, has a comprehensive energy plan, as well as key initiatives on green manufacturing and transportation, that provides a good roadmap.
• Rebuild America
The president gets this right. At current interest rates, America can borrow money essentially for free. The construction industry collapsed with the bursting of the housing bubble. Our decrepit infrastructure cripples our competitiveness and increasingly endangers lives. There is no better time to launch a major initiative to rebuild America. Create a national investment bank, as the president suggests, leveraging private capital. But go big. Current timid plans are not close to meeting the need or grasping the opportunity.
• Save our Schools; Invest in People
The president correctly warned against debilitating cuts in our schools. But across the country, we see the carnage at all levels, from pre-K to college: teachers laid off, after school and advanced placement programs closed, music and arts and languages discontinued. We need to not simply staunch the layoffs of skilled teachers; we need to invest in creating the finest public education in the world, from universal preschool, to modernized public schools, to advanced training and affordable college. Expanded federal revenue sharing with the states in exchange for commitments to sustain state and local investment in schools is essential.
• Save Our Homes
By the end of the year, it is predicted that over 40% of homes with mortgages will be underwater, worth less than what is owed. Millions have lost their homes already. Millions more are struggling to sustain mortgages even as their jobs are lost, incomes decline, interest rates rise. Housing prices will not stabilize until the massive overhang of foreclosed homes is reduced. We need a serious program to restructure this debt. As a first step, Fannie Mae and Freddie Mac should invite all those whose mortgages they hold to refinance at the lower rates now available. Lower interest will help those still in their homes to afford to stay there. Those already facing foreclosure should have access to bankruptcy proceedings that can restructure their debts and, where appropriate, restructure their mortgages, providing them with a right to rent their own homes at market price.
• Put Veterans and the Young to Work
Veterans are 50% more likely to be homeless than other Americans. One in four teenagers is officially unemployed; nearly one in two young African Americans and Latinos are unemployed. We are breaking trust with those who risk their lives for us and abandoning the young at the beginning of their work lives. It is hard to think of anything more corrosive to the future of this nation. If veterans and young people cannot find employment in the private sector, then government should act as the employer of last resort. Rep. Jan Schakowsky has a sensible bill that would provide 2.2 million jobs, largely through direct employment in the public or non-profit sectors. It creates a new Green and Urban Corps and provides resources to nonprofits to hire the young. Work installs discipline and self-confidence. It provides hope. We should insure that every veteran and every young person has that opportunity.
These elements are only the beginning. America needs a raise, empowering workers to share the rewards of growth. We need to shackle finance and shut down the financial casino that undermines the real economy.
And then we need to be clear about how to put our books in order. The U.S. has a real long-term debt concern – but it is entirely driven by our broken health care system. Comprehensive health care reform is already beginning to create savings, both in Medicare and more broadly. More will be required to take on the private insurance and drug companies, the private hospital complexes that make our costs almost twice per capita those of any other industrial nation. Fixing health care isn’t about “shared sacrifice,” or putting a lid on Medicare and Medicaid. It is about getting costs under control, not shifting them to those least able to pay.
And as the economy recovers and people go back to work, our deficits won’t be much of a problem – other than health care costs. But paying for the new commitments above will require progressive taxes and new priorities, ending the wars abroad, reducing our commitment to policing the world, and cutting the Pentagon budget, even as we maintain the strongest military in the world.
Progressive tax reforms are long overdue. As Warren Buffett wrote, he pays a lower tax rate than anyone in his office, including his secretary. We should tax income from wealth at the same rate as income from work, to curb systematic tax avoidance schemes, crack down on offshore tax havens, and on companies parking profit abroad. And as Buffett argued, millionaires and multimillionaires can easily pay a higher tax rate than that now imposed.
Listen to the American Majority
We should listen to the American people. They understand the economy is in trouble. They are looking not for a short-term boost, but for a long-term strategy. They are appalled at Washington’s scorn for their priorities. They want a focus on jobs and reviving America’s economic strength. They want Social Security, Medicare and Medicaid protected. They think the banks should pay to help pay for the mess they have made. They want the rich to pay their fair share, and want an end to the money politics where predatory corporate lobbies rig the rules to benefit themselves.
The first step is a clear, bold agenda on jobs and American economic revival. It is time to present this to the American people, to introduce it in Congress, and to fight for it.
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