Fixing the Economy Has to Start With Jobs
The last thing we need is another “economic stimulus” package. What we need is a jobs package. And we ought to start calling it that.
Everyone knows the last stimulus plan was a tax rebate for most Americans. It was delivered during the spring and summer and was responsible, some economists say, for what amounted to a brief postponement of the worst of the worst — what is shaping up as perhaps the deepest recession in a generation.
This is the problem with tax cuts, especially the one-time-only, check-in-the-mail variety that already went out: You can buy whatever you want with the money. That includes cheap imports made with the cut-rate labor of exploited workers abroad. You might get yourself an inexpensive pair of jeans — even a necessary pair — but the purchase doesn’t create new American jobs.
You can pay down credit-card debt with the rebate check, a virtuous choice that puts your household on firmer financial footing but also doesn’t create a new job. If you are well-off, you can even save the money. This, too, is virtuous but it has no immediate benefit when it comes to creating new jobs.
And jobs, folks, are the only way out of this crisis.
Because job losses — as much as the credit squeeze that is partly responsible for them — are pushing us deeper and deeper into the hole. So far this year, the economy has shed almost 800,000 jobs, with September the ninth straight month of losses. About a fifth of the unemployed have been without work for at least six months, the kind of long-term joblessness that would lead families to lose their homes and their cars even if there were no credit crisis pushing them toward foreclosure or forfeiture.
So far, though, the two presidential candidates still try to entice us with a hodgepodge of economic stimulus proposals that are based largely on tax cuts that are, at best, inefficient, and at worst, continue to dole out money to the most affluent. The only tax proposal that makes sense is, surprisingly, the one that Democrat Barack Obama and Republican John McCain agree upon: temporarily suspending the taxation of unemployment benefits. This would at least help to sustain workers through what is supposed to be a temporary drop in their incomes.
But the larger point isn’t to keep food on the table of the jobless, though that is both a necessary and admirable governmental pursuit. It’s to get people back to work. And here is where the two candidates really fall into economic folderol.
Obama would create a two-year, $3,000 business tax credit for each new full-time employee a firm hires. But why do we want to subsidize fast-food chains for hiring more low-wage help? And what about the computer engineer who switches from IBM to Apple? The shift may well add a net job to Apple’s payroll — and thus be eligible for the credit. But it doesn’t produce a new job in the economy as a whole. McCain hews closely to traditional Republican proposals such as cutting capital gains taxes, an idea that is worse than inefficient, because it enhances the bottom line for those who already are among the best-off.
The economy needs fixes that are short-term and as close as possible to surefire. House Democrats are correctly pondering an immediate infusion of cash to the states, which are confronted with the requirement that they balance their budgets despite severe revenue downturns. Every state spending cut takes more money out of the economy — money that would ordinarily be spent on intangible goods such as education, but also on purchases of public vehicles or other equipment. Obama supports this, too, but he’s given no indication of whether he would make it a priority over, say, his proposed tax cuts.
The second-best expenditure is in public-works projects, such as road repair or expansion and mass transit. Not only does this direct spending produce high-wage jobs, the infrastructure improvements pay off later in greater efficiency and productivity for the whole work force.
The public is in the mood to get back to basics, an indisputably good idea when chaos is unfolding around us in part because finance got too exotic — and so, frankly, did consumers’ appetites. So the presidential candidates should stop trying to sell us on solutions that are so convoluted you need an accountant to decipher them.
Marie Cocco’s e-mail address is mariecocco(at)washpost.com.
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