Is There An Alternative To The Toxic Austerity Agenda The Ruling Elites Are Demanding?

Monday we took a look at what a real jobs agenda to put America back to work would look like and how this has to be handled politically by independent-minded progressives like Norman Solomon. Jan Schakowsky (D-IL) is a progressive but she's hardly independent-minded. When push comes to shove she's always a shill for the Democratic Establishment... but at least she pushes them in the right direction before taking one for the team. Her jobs bill is exactly what Obama should be embracing rather than the slightly-- ever so slightly-- kinder, gentler Austerity agenda the Republicans are clamoring for... you know, the one causing the collapse of social cohesion in England now.

Schakowsky sounds a toug note as though she were ready to take on Obama, something she's never done and never will. But it sounds good:

"If we want to create jobs, then create jobs. I’m not talking about “incentivizing” companies in the hopes they’ll hire someone, or cutting taxes for the so-called job creators who have done nothing of the sort. My plan creates actual new jobs. The worst deficit this country faces, isn’t the budget deficit. It’s the jobs deficit. We need to get our people and our economy moving again."

Her jobs bill would create over 2 million new jobs at a cost of $113.5 billion over each of two years, paid for entirely by creating a slightly higher tax bracket for millionaires and billionaires. These are the specifics:

• The School Improvement Corps would create 400,000 construction and 250,000 maintenance jobs by funding positions created by public school districts to do needed school rehabilitation improvements.

• The Park Improvement Corps would create 100,000 jobs for youth between the ages of 16 and 25 through new funding to the Department of the Interior and the USDA Forest Service’s Public Lands Corps Act. Young people would work on conservation projects on public lands include restoration and rehabilitation of natural, cultural, and historic resources.

• The Student Jobs Corps would creates 250,000 more part-time, work study jobs for eligible college students through new funding for the Federal Work Study Program.

• The Neighborhood Heroes Corps would hire 300,000 teachers, 40,000 new police officers, and 12,000 firefighters.

• The Health Corps would hire at least 40,000 health care providers, including physicians, nurse practitioners, physician assistants, nurses, and health care workers to expand access in underserved rural and urban areas.

• The Child Care Corps would create 100,000 jobs in early childhood care and education through additional funding for Early Head Start.

• The Community Corps would hire 750,000 individuals to do needed work in our communities, including housing rehab, weatherization, recycling, and rural conservation.

Not the profound policy sea-change in manufacturing and trade policies we were advocating Monday... but a decent step in the right direction, at least for the short run. And, lo and behold, the NY Times editorial board has taken note... approvingly.

In what can only be described as a triumph of bad policy and craven politics, Congress and the Obama administration have spent the year focused on budget cuts, as the economy has faltered and unemployment has worsened. Official unemployment is 9.1 percent, but it would be 16.1 percent, or 25.1 million people, if it included those who can only find part-time jobs and those who have given up looking for work.

...By a large margin, Americans have told pollsters that job creation is more important than budget cuts. Yet Republican leaders are wedded to austerity and appear to think that high unemployment will hurt President Obama politically more than it will hurt them, so they will likely resist efforts to create jobs, no matter how great the need.

...Mr. Obama has begun to talk more about jobs, but his agenda is thin. Its main components-- extending federal unemployment benefits and the payroll tax cut beyond their expiration at the end of this year-- are vitally important, but their extension will only maintain the status quo. His idea for an infrastructure bank to finance large-scale building projects is also good, but would take time, and would not address the immediate need for jobs. Ditto his push for patent reform and trade agreements.

There are other ideas worth fighting for. Take, for example, Fix America’s Schools Today, or FAST, an idea that has been incorporated into a House proposal to be introduced this fall by Jan Schakowsky, Democrat of Illinois. Public school buildings in the United States are on average over 40 years old and in need of an estimated $500 billion in repairs and upgrades. A $50 billion school renovation program would employ 500,000 workers (1.5 million construction workers are currently unemployed) and could be easily scaled up. The money could be disbursed through existing federal formulas to all 16,000 public school districts. The initial cost could be largely offset over 10 years by ending tax breaks for fossil fuels, as called for in Mr. Obama’s 2012 budget.

Other programs in the Schakowsky bill could employ an estimated one million young people for projects in federal parks, community centers and on college campuses, as well as 350,000 laid-off teachers, police officers, firefighters and health care providers.

Washington, in thrall to austerity, has abandoned one of the most immediate and powerful tools for supporting growth and jobs, namely, borrowing at today’s low rates to provide direct fiscal aid to states. But Mr. Obama can and should make the case for targeted new jobs today, to be paid for over time by closing tax loopholes.

Republicans are sure to howl that new programs will undo the debt ceiling deal, but it is surely possible over a 10-year period to tackle near-term action on jobs and long-term action on deficit reduction. The alternative is even slower growth and higher unemployment.

Our friend Raúl Grijalva (D-AZ) explained how important government efforts can be in an OpEd he did yesterday for the Arizona Daily Star reminding his entrepreneurially-minded constituents that "no one creates jobs without investing upfront, and the federal government can help make that possible for many small businesses. Federally guaranteed loans, which cost taxpayers nothing and help businesses around the country expand and hire new employees, are a proven way for federal agencies to help our economy."

You may have heard recently about two large federally guaranteed loans for solar projects in Southern Arizona. Abengoa Solar recently finalized a $1.45 billion loan guaranteed by the Department of Energy to help build a new solar plant near Gila Bend, and Agua Caliente Solar finalized a similar $967 million DOE-backed loan on Aug. 5 to build a new plant in Yuma County. I was happy to support them both. These projects, made possible by the Recovery Act, don't cost taxpayers a dime, and they aren't alone.

How do these loans work? The DOE Loan Guarantee Program (LGP) was initially created by the Energy Policy Act of 2005 to make it possible for emerging technologies to help grow and create jobs. The Recovery Act temporarily expanded the LGP's authority to guarantee loans for certain renewable energy, power transmission and biofuel projects. In all, since the Recovery Act became law, Arizona has received approximately $2.8 billion in federally guaranteed loans, helping to create about 2,400 new jobs.

It bears repeating: None of this has cost taxpayers a dime. A loan guarantee is an agreement between a federal government agency, the borrower, and a private creditor-- usually a bank-- in which the agency will cover the borrower's debt in the highly unlikely event of default. This allows the federal government to reduce the financial risks of projects that employ new technologies by partnering with companies that have established their financial stability.

And this morning in Slate Eliot Spitzer calls for Obama to work up an inner FDR moment in terms of housing and unemployment-- starting with doing something. "President Obama should heed the famous wisdom of FDR: 'Above all, try something.' Being passive in the face of rising anxiety breeds discontent, doubt, and ultimately, contempt."

He should act dramatically to help the American homeowner. There is a continuing and incendiary crisis in the housing market, with about 20 percent of all homes underwater (that is, the mortgage owed on the house is greater than the value of the house). This is dragging down our economy, creating a downward spiral of foreclosures and abandonment. The lack of mortgage reform also reminds every homeowner of the unfairness attached to the bailouts: The banks, in their moment of insolvency and need, got hundreds of billions of direct cash payments, guarantees, and transfers in the form of artificially low interest rates, all of which have led to a massive transfer of wealth from taxpayers and savers to the banks. Yet homeowners who have seen their primary asset drop in value have been given nothing at all by the banks and nothing meaningful by the president.

The administration, in conjunction with the Federal Reserve, should insist that banks, in return for all the taxpayer subsidies they have gotten and continue to receive, reduce any mortgage that exceeds the value of the house. Once it is established that the homeowner is underwater, other variables can be considered to determine how much the mortgage should be reduced: the income of the borrower, the year the mortgage was issued, the behavior of the bank in recommending the mortgage, or the culpability of the borrower in misrepresenting income levels.

... Second, the president should do more to help the American worker. He should establish a jobs program. Do the simple math: We are spending more than $110 billion annually in Afghanistan. Stop it. Or scale it back to the sort of covert operations and drone war that is warranted. Savings? Perhaps about $100 billion-- per year. Use that money to create up to 5 million jobs at $20,000 each. With the unemployment among those aged 16 to 19 at anastonishing 25 percent, and unemployment among black people at 15.9 percent, there is no question that the crisis of unemployment is destroying the fabric of our nation. Those who refuse to work get denied all other benefits... Get the dollars flowing back into the economy to help pull us out of the Great Recession. And when the unemployment rate dips below an agreed upon number, indicating that the labor market is healthy again, phase out the program.

And for the practical-minded let me leave you with a prescription laid out today by the Alliance for American Manufacturing on how President Obama can jumpstart our nation's industrial sector and generate new jobs... And how to do it cost-effectively and NOW:

• Expedite small business loans through the Small Business Administration and Treasury Department to help firms expand, retool and hire.

• Convene a multilateral meeting to address global imbalances and in particular Chinese mercantilism. If China doesn't agree to participate, designate it a currency manipulator. (China ships fully one-third of its exports to the U.S. and finances less than 10 percent of our public debt, so we have more leverage than some might suggest.)

• On the heels of the landmark agreement with automakers on fuel economy standards, secure an additional agreement from all foreign and domestic car companies to increase their levels of domestic content by at least 10 percent over the next three years.

• Direct the Department of Defense to leverage existing procurement to contractors that commit to increasing their domestic content of our military equipment, technology and supplies.

• Approve additional applications for renewable and traditional energy projects, contingent on the use of American materials in construction.

• Kick any CEO off of federal advisory boards or jobs councils who has: (1) not created net new American jobs over the past five years, or (2) is expanding the company's foreign workforce at a faster rate than its domestic workforce. Replace them with CEOs who are committed to investing in America. Shame is a good motivator.