Economists say unemployment still on rise, but no more stimulus money can be spent
I’m sure someone will call me out for hyper-liberalism for saying the following, but I find former Labor Secretary Robert Reich to be one of the more intelligent voices out there talking about the economy. He frequently blogs for Huffington Post and appears on ABC’s This Week with George Stephanopoulos, which I find to be a very smart show.
Apparently, Reich was not convinced by my argument that TV ratings are a leading economic indicator (well, not Trauma’s but maybe House’s). He’s more worried about the fact that jobs have not yet returned to this economy, and he’s right – it’s worrying. In fact, on Sunday former Federal Reserve Chairman Alan Greenspan told the above-mentioned Stephanopoulos that he expects official unemployment to reach 10% and “stay there for a while.”
Reich argues that the government can’t afford to spend any more stimulus money (thank God, really. Once we get out of this recession we’re going to be crushed by inflation if this keeps up) and offers four specific suggestions on what to do next:
Here they are:
1. Use existing authority under both the stimulus package enacted earlier this year and the nefarious TARP bailout fund — extending and combining them into a fund to make up for state and local cuts in public school budgets, childrens’ health, public health (we need workers to administer swine flu vaccine) and public transportation. Instead of bailing out banks and giant automakers, we should switch to bailing out public services that average people need.
2. Propose a one-year payroll tax holiday on the first $20,000 of income. Republicans as well as Blue Dog Dems could go along with this, and it would be a highly progressive tax cut since 80 percent of Americans pay more in payroll taxes than they do in income taxes.
3. Give small businesses a “new jobs tax credit” for every net new job created over the next year. Granted, under normal circumstances this sort of jobs credit doesn’t have much effect, and it’s difficult to separate hires that would have happened anyway from net new ones. But we’re not in normal circumstances; small businesses, which are responsible for most new jobs, still aren’t hiring. They need a boost.
4. Dramatically expand the Small Business Administration’s lending programs and have the Fed buy up the SBA’s debt. Big banks are not lending to small businesses. TARP has been an utter failure in this regard. The SBA and the Fed should circumvent them and help small businesses get the capital they need, so they can start hiring again.
In addition, Greenspan says the government should extend unemployment benefits for millions of Americans as well as offer tax credits so that unemployed people can keep their health insurance. For Greenspan, those moves would not be about stimulating the economy but keeping the bottom from falling out for so many American families.
What do you think of Reich’s suggestions? Would they help bring jobs back to this economy? Are they going far enough? Too far? As for Greenspan, is he correct that we’re in a recovery but that jobs aren’t due to return soon? And do you agree with him that provisions should be made for the long-term unemployed?