The Kroog Versus The Jobless Numbers

Paul Krugman is once again prescribing a jobs program for our sick economy, stat.

How is a jobs program different from a second stimulus? It’s a matter of priorities. The 2009 Obama stimulus bill was focused on restoring economic growth. It was, in effect, based on the belief that if you build G.D.P., the jobs will come. That strategy might have worked if the stimulus had been big enough — but it wasn’t. And as a matter of political reality, it’s hard to see how the administration could pass a second stimulus big enough to make up for the original shortfall.

So our best hope now is for a somewhat cheaper program that generates more jobs for the buck. Such a program should shy away from measures, like general tax cuts, that at best lead only indirectly to job creation, with many possible disconnects along the way. Instead, it should consist of measures that more or less directly save or add jobs.

One such measure would be another round of aid to beleaguered state and local governments, which have seen their tax receipts plunge and which, unlike the federal government, can’t borrow to cover a temporary shortfall. More aid would help avoid both a drastic worsening of public services (especially education) and the elimination of hundreds of thousands of jobs.

Meanwhile, the federal government could provide jobs by ... providing jobs. It’s time for at least a small-scale version of the New Deal’s Works Progress Administration, one that would offer relatively low-paying (but much better than nothing) public-service employment. There would be accusations that the government was creating make-work jobs, but the W.P.A. left many solid achievements in its wake. And the key point is that direct public employment can create a lot of jobs at relatively low cost. In a proposal to be released today, the Economic Policy Institute, a progressive think tank, argues that spending $40 billion a year for three years on public-service employment would create a million jobs, which sounds about right.

Finally, we can offer businesses direct incentives for employment. It’s probably too late for a job-conserving program, like the highly successful subsidy Germany offered to employers who maintained their work forces. But employers could be encouraged to add workers as the economy expands. The Economic Policy Institute proposes a tax credit for employers who increase their payrolls, which is certainly worth trying.

All of this would cost money, probably several hundred billion dollars, and raise the budget deficit in the short run. But this has to be weighed against the high cost of inaction in the face of a social and economic emergency.

(More after the jump...)
 Given the noises coming out of the Obama White House, the ConservaDems in the Senate, and the Blue Dogs in the House about doing this without raising the deficit, the odds of this happening are close enough to zero to actually be nil.

With joblessness, which stood at 10.2 percent in October, likely to remain high through 2010 even as the economy recovers, the stage is set for what could be a yearlong tussle between deficit reduction and government incentives for job creation, and between the politics of Wall Street and Main Street.

“There’s sort of an anomaly here — people want us to do stuff on jobs but they don’t want to see a lot of government spending,” said Senator Charles E. Schumer, Democrat of New York.

It's not an anomaly at all.  People without jobs want a jobs program.  People with jobs are increasingly being told the problem is all the people without jobs, and they don't want to pay a dime for them.  Sure, deficit spending doesn't work like that, but that's not what Republicans are saying (especially after creating 5 trillion plus of that 6 trillion in additional debt since 2000).  Republicans can spend all they want to.  Democrats can't.

Republicans in other words have convinced America that doing nothing is the solution.  They will then blame the Democrats when nothing happens to improve the jobless rate.  Democrats should then listen to the Kroog on this one, especially after the lesson of the Centrists putting America in this situation in the first place by shaving off tens of billions from the first stimulus package.

We need that jobs program ASAP.  A million local and state government jobs are at risk next year.  Another million could be created with a public works program.  Let's see both.