What can Obama do about unemployment?

As Charles Lemos has recently written here, the U.S. could be entering a long period of structural unemployment, with enormous economic and social costs for this country (not to mention dire political consequences for President Barack Obama). Many of my friends and acquaintances have become unemployed or underemployed during the past year, and the Des Moines area has relatively low unemployment by national standards.

What can be done to create jobs in this environment?

Rinku Sen and Billy Parish are calling for a more aggressive "green jobs" initiative that would also take on the "structures that threaten to exclude people of color from taking part in the new, green economy."

Former Labor Secretary Robert Reich proposes four ideas that would be easier to implement than going back to Congress for another stimulus package:

(1) Use existing authority under both the stimulus package enacted earlier this year and the nefarious TARP bailout fund -- extending and combining them into a fund to make up for state and local cuts in public school budgets, children's health, public health (we need workers to administer swine flu vaccine) and public transportation. Instead of bailing out banks and giant automakers, we should switch to bailing out public services that average people need.

(2) Propose a one-year payroll tax holiday on the first $20,000 of income. Republicans as well as Blue Dog Dems could go along with this, and it would be a highly progressive tax cut since 80 percent of Americans pay more in payroll taxes than they do in income taxes.

(3) Give small businesses a "new jobs tax credit" for every net new job created over the next year. Granted, under normal circumstances this sort of jobs credit doesn't have much effect, and it's difficult to separate hires that would have happened anyway from net new ones. But we're not in normal circumstances; small businesses, which are responsible for most new jobs, still aren't hiring. They need a boost.

(4) Dramatically expand the Small Business Administration's lending programs and have the Fed buy up the SBA's debt. Big banks are not lending to small businesses. TARP has been an utter failure in this regard. The SBA and the Fed should circumvent them and help small businesses get the capital they need, so they can start hiring again.

Reich's ideas are probably easier to accomplish politically, but what Sen and Parish are promoting is probably more important for the long-term health of the economy.

Share any relevant thoughts in this thread.

Tags: Economy, jobs, unemployment (all tags)

Comments

12 Comments

Re: What can Obama do about unemployment?

Reich left the Clinton administration when Clinton left the Democratic party and its liberal-socialist goals for Republican ideology about the economy. He thus has the credentials to advise the present administration.

In a few words, Obama should take it.

by MainStreet 2009-10-06 05:19AM | 0 recs
doesn't that defund social security

I would hate to make the precedent that politicians muck with the SS income.  

Or is this some other payroll tax?

by John DE 2009-10-06 05:39AM | 0 recs
Re: doesn't that defund social security

Yes, this is a major concern. If this were done, it would be best to set the precedent that any changes must be revenue-neutral and a way to do that would be to eliminate the top limit on Social Security payroll taxes. If the tax cut happened this year (and lasted for 2 years) and the elimination of the top limit was delayed for 3 years, then there would be strong stimulus to overcome the recession when we need it, but a net gain to the Social Security Trust Fund.

by RandomNonviolence 2009-10-06 06:10AM | 0 recs
Re: doesn't that defund social security

Payroll taxes include both Social Security and Medicare. Not a good idea IMO.

Payroll taxes are the state and federal taxes that you, as an employer, are required to withhold and/or to pay on behalf of your employees. You are required to withhold state and federal income taxes as well as social security and Medicare taxes from your employees' wages. You are also required to pay a matching amount of social security and Medicare taxes for your employees and to pay State and Federal unemployment tax. http://www.alllaw.com/articles/tax/artic le5.asp

by MOBlue 2009-10-06 06:14AM | 0 recs
Re: What can Obama do about unemployment?

I have been callign for a payroll tax holiday for 2 years....and soem people hear said I was crazy. Now Robert Reich says the same thing, interesting. Fact is it could be budget neutral as if we woudl just stop wasting billions of dollars on unnecessary projects we coudl easily fund this, just as we could fund healthcare in that manner. The pork spending juist doesnt end becuase these crooks dont want it to end.....folks nothing will change until we demand they change it. How do we do that? Vote them out of office....vote their their opponents in a primary.....send those lifetime senators and congressman home...

by BuckeyeBlogger 2009-10-06 07:06AM | 0 recs
Robert Reich is crazy

also he points out his suggestions are only because it's political possible...not because it's the best solution.

The best solution would be another WPA, but people like you would find it to be a "waste of money"

by DTOzone 2009-10-06 08:02AM | 0 recs
a jobs program.

honestly, I know they don't want to go there, but there is probably going to have be some sort of jobs program- i.e., people, employed by a WPA type of program, that are involved in doing work that will last for a set period of time- and will be public investments in america's infrastructure and culture.

The private sector is probably not going to be able to deliver on the jobs front in a real way for the next 5 years.

by d 2009-10-06 07:42AM | 0 recs
Shared sacrifice/opportunity
Another idea is to promote a voluntary one hour per day shortening of work hours in industries that pay more than enough for employees to thrive on five hours less paid employment each week, and for jobs that would attract many applicants.  For every seven employees who agree to this voluntary work reduction, Obama could create one new job.
This idea of shared sacrifice might be welcomed by many people who prefer more time to more money.
by Georgeo57 2009-10-06 07:54AM | 0 recs
Re: Shared sacrifice/opportunity

Unfortunately, this is not generally the way that private business works.  To promote this, the government would need to provide funding to cover the cost of adding more full-time employees.

Or, of course, the government could pass a 35 hour work week and actually enforce the labor laws.

by d 2009-10-06 10:01AM | 0 recs
Re: Shared sacrifice/opportunity

Actually most private industries try to get as many employees as possible classified as "exempt" so that they make the same salary whether they work 30 hours, 40 hours, or 60 hours a week.  One of the all-time great scams that no one writes about - strongly imply that if you're not working 12 hour days your job is in jeopardy, yet not have to pay one cent more for all that extra work.

by LanceS 2009-10-07 12:45PM | 0 recs
Re: What can Obama do about unemployment?

The chief issue is regrowing the real economy.

a) One of the issues is addressing the credit concern because of Geithner's incompetence:

"The banking sector's assets shrunk by about $300 billion per quarter in the first half of 2009, a sign of banks hoarding cash in anticipation of additional future losses, according to Whalen. "The real economy is shrinking because of a lack of credit."

http://finance.yahoo.com/tech-ticker/art icle/348944/The-%22Real%22-Economy-Is-Dy ing-Q4-%22Going-to-Be-a-Bloodbath%22-Wha len-Says

Thus, the TARP idea is a good one. It also has the advantage of also potentially servicing green industrial policy in small business in its administration to growing that sector into the next boom.

b) Make investing in the real economy of the U.S. more attractive to investors rather than investing in speculation on the stock market as a means to draw in even more capital for growth domestically.

c) Provide low cost or free services to aid people into retraining and retooling including steering them to higher demand positions.

d) In manufacturing states, see what can be done to retool industries quickly.

e) Start now to negotiate trade policies in a different way, including revisiting some provisions of prior treaties.

f) Not only focus on investing in real economy, but focus on diversifying the U.S. economy so that future economic shocks like this are not as easy to occur.  Again industrial policy, but mixed with a kind of WPA program for creating new jobs. Maybe subsidize actual jobs during a training period. Etc.

by bruh3 2009-10-06 08:18AM | 0 recs
Re: What can Obama do about unemployment?
He should consider extending the current stimuli.
I emailed him this advice and expect a response shortly.
by QTG 2009-10-06 09:13AM | 0 recs

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