Jeering Section

“Two cheers, one jeer for American Jobs Act”, was how Robert Reich headed his syndicated September 18th article.

[Robert Reich is a former U. S. Secretary of Labor and is now Professor of Public Policy at the University of California at Berkeley.]

“Two cheers for the president and his American Jobs Act,” he began. “Cheer No. 1: In presenting it to a joint session of Congress, he sounded as passionate and determined as he’s ever sounded.

“Second cheer: He laid out the problem correctly and effectively. He explained why jobs and growth must be the nation’s first priority now – not the federal deficit. The economy is in crisis. People are hurting. So government must act, and act quickly. It’s irresponsible at a time like this to suggest that government should simply close down.

“But a jeer because the jobs plan he presented isn’t nearly large enough or bold enough to make a major dent in unemployment, or to restart the economy.

“Yes, $ 450 billion sounds like a lot – and is more than I expected – but some of this merely extends current spending (unemployment benefits) and tax cuts (in Social Security taxes), so it doesn’t add to aggregate demand.

“The net new boost to the economy is closer to $ 300 billion. That doesn’t approach even half the gap between what the economy is now producing and what it could produce at or near full employment.

“And much of that $ 300 billion is in the form of temporary tax cuts to individuals and companies. Some of these make sense – enlarging the Social Security cut, extending it to employers, and giving small businesses a tax holiday for new hires.

“But temporary tax cuts haven’t proven to be particularly effective in stimulating new spending in times of economic stress. People tend to use them to pay off debts or increase savings. Companies use them to reduce costs, but they won’t make additional hires unless they expect additional sales – which won’t occur unless consumers increase their spending.

“That leaves some $ 140 billion for infrastructure – improving outworn school buildings, roads, bridges, ports and so on. And $ 35 billion to help cash-starved states avoid more layoffs of teachers. Both good and important but still small relative to the overall need.

“Why did the president include so many tax cuts, and why didn’t he make his proposal sufficiently large to make a real impact on jobs and growth? Because he crafted it order to appeal to Republicans. To get it enacted, he needs their votes.

“I’m having a dizzying sense of deja vu. The first $ 800 billion stimulus (spread over two years) wasn’t nearly large enough given the drop in aggregate demand. And half of it was in the form of tax cuts. The reason it wasn’t bigger and contained so many tax cuts was to get Republican votes. But its apparent ineffectiveness – it saved around 3 million jobs, but that didn’t save it from appearing to fail – made it harder for the White House to do anything more to stimulate the economy, and ward off what’s likely to be a double dip.

“That’s been the heart of Obama’s dilemma. Big and bold enough to make difference, and Republicans are certain to reject it. Small and focused on tax cuts, and maybe Republicans will bite. But even if they sign on, what’s the point of the exercise if it won’t have a measurable effect on jobs and growth?

“And why would they sign on this time anyway?

“Republican Senate leader Mitch McConnell scoffs, ‘This isn’t a jobs plan. It’s a re-election plan.’ That’s precisely the problem. McConnell and company have stated publicly that their No. 1 objective is to unseat Obama and regain the presidency in 2012. They don’t want to give the president anything he can possibly claim as a victory. And they’re not terribly worried if the economy stays awful through Election Day because that’s the best way to fulfill their No. 1 objective.

“The president would have done better with a plan that was big enough to make a real difference. And then, when Republicans rejected it, campaign on it.

“So two cheers – for both the president’s style and his words. And one jeer: He failed on substance and strategy.” –

Professor Reich sees the failings in both political parties, but like almost everyone else he doesn’t know what to do about it. Politicians have been around for thousands of years and their real “No. 1 objective” has always been, “Hooray for me and to heck with the hoi polloi”.

Spending $ 140 billion on “infrastructure” won’t amount to a hill of beans. That’s what the WPA was set up to do in the 1930s. “Outworn school buildings, roads, bridges, ports …”, that’s just throwing bones to voters. There’s no “multiplier effect” there. Who needs country-club style schools, widened highways, expensive bridges and expanded (and dying) ports when there’s no one around with enough money to make use of such extraneous “infrastructure”? We need to revitalize our shipyards again. Yes, again. It’s how we extracted ourselves from the quagmire of the Great Depression, and it’s the only way we’ll ever get out of the mess handed to us by our crafty politicians.

“Infrastructure”? You want to see “infrastructure”? The greatest effort in this regard came about when it became necessary to accommodate the millions of newly-hired shipyard workers when FDR initiated our Emergency Shipbuilding Programs. New schools, roads, bridges, housing, hospitals and, in fact, entire communities had to be built – right after the WPA programs failed and had to be abandoned. [Did Professor Reich say something about deja vu?]