He Should Go Big! Small! Deep! Long!

August 31st, 2011 at 12:22 am

The chatter of the day here is whether the President’s jobs plan should be big and ambitious or small and politically pragmatic.

As much as I care about this part of the administration’s agenda, I can’t get wound up about this type of late-August noodling.  The President and his team must weigh what the economy needs, what will work quickly, what the political market can bear, how the public will react, and, in this case, staying under the debt ceiling.

He cannot be wholly constrained by the political market—to craft a plan acceptable to House Republicans would be a waste of time, as demonstrated by their “jobs plan,” which Jon Cohn convincingly dispenses of here.

Nor should he let the fact that the R’s may block much of anything he proposes keep him from fighting for a plan that meets the moment.  He doesn’t have the budget room or popular support for another Recovery Act, but he does have the airspace for a set of targeted jobs ideas that will significantly move the needle on unemployment, while tapping some particular pressure points in the economy:

–renew the payroll tax holiday and UI extension;

–a fast-acting infrastructure program, hopefully something closer to FAST! than say, the infrastructure bank (the latter is a great idea, but it won’t move the needle in the near term);

–a tax credit for employers who expand their payrolls;

–some kind of on-the-job training for the long-term unemployed;

–something to incentivize more mortgage refis.

I suppose that’s more medium than big or small, and not everything in there will appeal to everyone.  Job training doesn’t create any jobs but targeting something at the long-term unemployed makes sense.  The average number of weeks spent unemployed just topped 40 for the first time in the history of a series going back the 1948, where the average for the whole series is 14 weeks.

Economists worry about the effectiveness of the new hires tax credit in a period of weak employer demand, but I suspect it will pull some hires forward, and if the timing is right—if growth picks up a bit when it comes on the scene—it could end up with a nice bang for the buck.

All told, were a program like this to become law, it could easily shave a couple of points off of the unemployment rate over the next couple of years.  Like I said, it may go nowhere in a Congress where too many members are drawn toward policies that inflict wounds rather than cures.  But it’s the right fight to undertake.


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3 comments in reply to "He Should Go Big! Small! Deep! Long!"

  1. Fr33d0m says:

    Seems like we’d be better off if he had thrown some long term in the stim with the short term.

  2. Geoff Freedman says:

    I agree that the plan should be about what he thinks the country needs, not what he can get passed in Congress. The Republicans are so intractable right now that he should be able to use that intractability to his advantage tactically, on both practical and political fronts.

    I can ‘t get over the feeling that Clinton would have eaten these guys for lunch, and then come back for seconds, because their very intracability leaves so many openings. I have the feeling that Barack Obama does not know how to play politics in Washington.

    Beyond all that though, we have huge problems in this financial recession that require very clear, precise, and lasar focused programs that strike at the heart of real problems we have. I don’t think generalized and generic stimulus plans OR generic tax cuts are going to get at the very real structural problems that are present, and are really a waste of money. So go with your heart, and develop a plan that you feel is really the right thing to do. I believe the plan must include some kind of significant debt restructure to be effective.

  3. urban legend says:

    He needs to make a case, something he has utterly been unable to do about anything. He needs to show the country he understands what the hell is wrong — why the economy no longer seems to be able to employ all the people who want to work, but seems permanently stuck with many millions facing long-term unemployment because they seem not to be needed anymore. He needs to acknowledge that manufacturing has been devastated (and really should, but he won’t, pull back from trade agreements that, second only to emphasizing austerity measures, from a political and policy standpoint are the stupidest things he could do right now). He needs to give people a picture of how what he is proposing will pull us out of our national gloom.

    In any case, he needs to go a lot deeper than saying we have a problem and here are a few little policy things that will make a small dent in fixing that problem. Acting as if the economy will right itself will be an insult to the American people, because in their bones they know better.