More on Obama's Jobs Plan

There's lots of commentary out there on Obama's jobs plan. 

One worth noting (published before the speech to Congress) is Dan Shaviro, What Would Nixon Do?, Start Making Sense (Sept. 7, 2011).   Shaviro makes the point that most progressives have been trying to make to Obama for months--that ceding to Republican talking points at the outset does nothing to advance good policy and in fact merely ensures that Obama takes the blame when the same old Republican policies fail once again!  Shaviro suggests that Obama pick up some of 'Tricky Dick' Nixon's political savvy about these things.  Go bold!  he says, so that when Republicans don't pass it, they can bear the blame for the failed economy.  

 Nixon was a big fan of proposing legislation that he knew couldn't be passed, specifically because if it wasn't passed he would get a campaign issue. E.g., supposedly in 1970 he was disappointed by his success in getting the Democratic Congress to pass a tough crime bill that contained provisions that, under the quaint standards of the time, were considered odious by civil libertarians. Nixon had deliberately put these things in the proposed legislation, although they were largely symbolic and expected to have little actual impact on crime, because he wanted the Democrats to refuse to pass the legislation, whereupon he would make it a campaign issue and blame rising crime levels on them. They took the issue away by acceding.

How would such a scenario play out today? If Nixon faced Obama's current political circumstances, he would not be trying actually to enact stimulus legislation. He would know that he had zero chance of getting anything that would make a significant difference. He would want to propose something that the opposition WOULDN'T pass, and that he could then campaign on. (And it is clear this time around, unlike with the 1970 crime legislation, that the Congress won't accede in order to take away the issue.)

We could use a bit of that thinking today. Why not propose something that is actually big, dramatic, and well-designed? And why not make reasonable, economically supportable arguments about why and how much it might actually help? Then Obama could rightly criticize the Republicans and blame the labor market on them when they fail to pass it.

This would not just be Nixon-style maneuvering. It would also help make the correct point that, since at least mid-2009, we have actually been following Republican budget policies and they haven't worked. As things stand, by repeatedly acceding to them, even in what he proposes, he accepts a state of affairs in which they actually set the policy yet he takes the blame.

Obama went a little bit closer to that strategy in his speech, since he claimed to be laying out a workable plan to create jobs and essentially dared the Republicans in Congress to bare the blame for blocking it.  The problem was that too many of the ideas were washed over Republican tax incentives like lower corporate rates and further extension of the useless and wasteful expensing provisions that the Republicans began pushing as part of the Bush tax breaks for business, rather than direct funding of programs that we know work.

While you are reading, pick up Ken Houghton's post over at Angry Bear: Private Sector Employment in Jobless Recoveries, Sept. 8, 2011, which notes that the place where people are hurting is in the loss of public-sector jobs at the state and local level.  Towards the end of the post, he tells us what Obama should have said in the Thursday night speech, reminding us that the US government can borrow at amazingly low rates right now, and could use that cheaply borrowed money to put Americans back to work in the states simply by increasing the grants to the states to make up for the hard hits they have taken. 

The latest few years have been difficult for you.  Almost every state in the Union has to balance their budgets, and with record levels of unemployment and job losses, that’s not easy to do.  So they made decisions that affected you, your children, and your friends.  ...  Your classrooms are more crowded, your property taxes are higher, and you’re getting less for your money while you have to put in more effort.

The Federal Government doesn’t have to balance its budget, and the bond market has given us a rare opportunity to borrow money for less than it will cost us.  I plan to take full advantage of that now, so that your children will have food, your streets will be safer, your opportunities for education will be greater, and the services for which you pay will be more available.

The private sector  ... cannot rebuild if there is no demand, and you cannot demand things if you cannot pay for them. So, along with $1T in infrastructure improvements to be made over the next 15 years, I will tomorrow send a bill to Congress to triple the total of the two previous grants-in-aid to the States that were made as part of the ARRA.

Now you have heard many people—and to my shame, I am one of them—who live in fear of deficits. They pretend that the government “has to be like a family”—a family that never takes out a mortgage, never borrows to buy a car, never needs a loan to pay for schooling or training, and never uses a credit card.  I’ve seen families like that. ...  They’re impoverished.

The United States is not impoverished,.... We will rebuild opportunity now and build our superhighways—information and otherwise—for life in the 21st and 22nd Centuries.  The bankers—grateful for the bailouts that have been heaped upon them by my predecessor and myself—are willing to loan us money for less than the cost of inflation. We would be foolish not to borrow.  ....

We have a unique opportunity. We have massive unemployment because the states do not have the money to employ and hire workers—workers who help keep our streets and homes safe, who keep our roads in good condition, who educate our children, who find us opportunities for work and ways to keep us healthy so that we can do that work.  And the bankers are telling us, “We will give you that money for free!”  And some people are telling you that we should not take that money.

We have given the bankers enough.  Now, they are willing to Pay It Forward, to give some small portion of that money back to us for less than it will cost them to do it. I intend to take that money and use it to make a better present—and the chance for a better future—for the American family.

Not surprisingly, 'centrists' like Len Burman (now a professor at Syracuse University and still affiliated with the Urban Institute/Brookings Institution's Tax Policy Center) think it was a good idea for Obama to say that workers' benefit programs need to be cut.  Len Burman, Very Quick Thoughts on President Obama's Jobs Speech, Forbes, Sept. 8, 2011.   Burman is probably correct that the employer-side payroll cut is a waste of money. 

But the idea that worker benefits have to be cut in order to balance a sovereign nation's budget in what is still the richest country in the world is, quite simply, hogwash. 

• First, remember that George W. Bush painted his attempt to privatize Social Security and reduce benefits as "saving" Social Security.  Back then, here's what I wrote in 2005 on this blog, More on Bush's Social Security Doublespeak, about that (beginning with a quote from Bush White House materials):

"President Bush has discussed the importance of Social Security and the need to fix the Social Security system for future generations of Americans. The President has assured Americans that he will not change the Social Security system in any way for those born before 1950.

• Social Security was one of the great moral successes of the 20th century by providing a critical foundation of income for retired and disabled workers.
• For one-third of Americans over 65, Social Security benefits constitute 90% of their total income."

Now isn't it interesting that the [Bush] White House acknowledges that Social Security ends up providing 90% of the income of one-third of our seniors, yet Republicans are proposing to "fix" Social Security by cutting those very benefits for seniors.   Funny, but it doesn't seem logical that anyone should claim to be saving Social Security, a benefit program, by cutting benefits.

• Second, we still have in place the unnecessary Bush tax cuts.  Allow them all to expire--including the many wasteful ones benefiting multinational corporations that are outsourcing jobs faster than we can say scat. 
• Third,  move to single payer and 'available to all' Medicare and Social Security, with full taxation on all working income (including 'carried interest' and any other 'profits interest' payment out of a partnership) for Social Security and on all economic income for Medicare.  (And that includes eliminating Congress's  exclusive system into which they pay zilch and for which they get cushier benefits than ordinary Americans.)  Moving to Medicare for all will put in place a national healthcare system like the rest of the civilized world that will permit the government to bargain on behalf of ordinary people who are taxpayers/citizens/patients/beneficiaries of that system so that hospitals, doctors and private insurance companies no longer get away with price-mugging:  they would have to accept more reasonable prices  than the insanely high salaries/charges and other perks that they now enjoy. 

[edited to expand]