Can Obama's Jobs Plan Overcome Senate Roadblocks - and Save the Unemployed?
Wednesday 09 December 2009
by: Art Levine, t r u t h o u t | News Analysis
From reading the headlines Tuesday on President Obama's jobs program, you might think that all the president has to do is to tap into the unexpected $200 billion in remaining TARP bailout funds in order to save American jobs. He supposedly could then just spend the money on infrastructure programs, "cash for caulkers" weatherization, aid to states and localities and small-business lending. As MSNBC summed up the big picture: "Obama Outlines Bailout for Main Street: Spending TARP Money to Help Small Businesses, Create Jobs, Build Bridges."
Sounds almost easy, doesn't it? But despite the public clamor for more jobs and continuing deep unemployment at 17 percent for those seeking full-time work, steep obstacles to meaningful job-promoting initiatives remain in this hyper-partisan Congress. As Robert Borosage, co-director of The Campaign for America's Future, told Truthout, "It will be very hard work to get it out of the Senate - on a whole range of things. It will be a real battle." Borosage points to the opposition of conservative Democrats and Republicans poised to weaken or oppose spending provisions as they did with the first $787 billion stimulus package in February.
Now, the president faces opposition from within his own party from some "deficit hawks" like Budget Committee Chairman Kent Conrad. They claim they can't support a new jobs package without an independent commission to drastically cut Medicare and other programs; these Democrats also join Republicans in expressing alarm over the growing Federal deficit (while also generally favoring more tax breaks for businesses). Back in February, they helped slash major programs from the recovery package, including about $14 billion in school construction that could have started this past summer.
As President Obama explained on Tuesday, the stimulus program was divided into three parts: tax relief for small businesses and working families; a third for emergency relief for the unemployed and revenue-starved states and localities, enabling them to keep hundreds of thousands of front-line workers on their payrolls; and a third was investments to put people to work in everything from developing renewable energy like wind and solar to upgrading roads and highways.
"Even as the Recovery Act has created jobs and spurred growth," Obama said, "we have not let up in our efforts to take every responsible action to get the economy growing and America working."
The president's new plan isn't called a stimulus in part due to the right-wing smear jobs that have conflated the wasteful TARP bailout with the economic stimulus legislation, helping fuel the faux populism of the Tea Baggers. No matter that liberal advocates and economists contend, as Robert Borosage does, "The first stimulus worked, but it wasn't big enough."
The conservative propaganda campaign has already had other worrisome effects. For instance, Hill and progressive sources have told Truthout that only one of the president's proposals is likely to draw broad enough support from centrists to be a near-sure bet for passage in both houses of Congress: the much-needed extension of unemployment and COBRA health benefits. True, this provision is especially important both for protecting laid-off workers and giving the economy a boost from the recipients' resulting new spending. As a new report by the Center for American Progress and National Employment Law Project points out, without extending those benefits immediately, a million workers will lose their lifelines in January, and a total of 3.2 million unemployed workers will become ineligible for benefits in March.
Other roadblocks have to be overcome as well, and if Republican obstructionism plays out on jobs programs as has it has with health reform, it could cause a political disaster for Democrats in November, even if anti-incumbent rage takes Republicans down with them, too. Admittedly, in the House, at least 17 Republicans are worried enough about their constituents' continuing joblessness (and potentially their own) to join in a bipartisan Jobs Now! Coalition headed by Rep. Bobby Rush (D-Illinois) As I reported in In These Times, when Rush launched the coalition in mid-November, he said, "The nation's jobless situation is, indeed, a national crisis, and we need to put politics aside to discuss solutions that will help put America back to work."
It's too bad that most Republican leaders aren't responding to the crisis in that good-faith spirit. Early signals from Republicans on the president's job program aren't promising, and that could spell trouble for any package, especially in the Senate, that doesn't mollify centrists by watering it down enough to win 60 filibuster-blocking votes. On the House side, Minority Leader John Boehner (R-Ohio) told reporters Tuesday about Obama's plans for the TARP funds: "First it was never intended that all this money was going to be spent. But any money that wasn't spent was going to go to the deficit. The idea of taking this money and spending it is repulsive." And Republican Sens. John McCain and Tom Coburn, the ranking Republicans on a Senate investigations committee, released their own report Tuesday excoriating alleged "waste" in the stimulus, including building a $5 million geothermal power source plant at a near-vacant mall and spending $100,000 on socially conscious puppet shows. As the Hill reported:
The Obama administration has spent $217 billion in economic stimulus funds as of the end of November. A new report issued Tuesday by Sens. John McCain (R-Arizona) and Tom Coburn (R-Oklahoma), the ranking Republican on the Senate's Permanent Subcommittee on Investigations, concluded that $7 billion was wasted or mismanaged.
At the top of the GOP list of wasteful projects is a $5 million grant from the Department of Energy to create a geothermal energy system for the Oak Ridge City Center shopping mall in Oak Ridge, Tennessee. The main problem with the project, say Republicans, is the mall has been losing tenants for years and is mostly empty.
The senators also noted that researchers at Penn State University received $1.57 million to search for fossils in Argentina and that a liberal-leaning theater in Minnesota, In the Heart of the Beast, named after a famous quote by leftist leader Che Guevara, received $100,000 for socially conscious puppet shows.
Out of $217 billion already spent, the best the Republicans could come up with was a left-leaning puppet show and the notion that it wasn't worth spending money on a new energy system in a near-empty mall. Somehow, Republican leaders weren't nearly as exercised about the massive waste and fraud during the Iraq reconstruction program, when, for instance, over $50 million in cash was shipped on pallets to American officials in south-central Iraq and disappeared. The primary response by GOP leaders was to seek to abolish the office of the special inspector general for Iraq, Stuart Bowen, who reported the abuses.
While waste in the first stimulus package has been hyped for political purposes, the real waste of the Wall Street TARP bailouts has poisoned the political atmosphere on Capitol Hill and clouded the public perception of any major government spending, limiting Democrat's options.
The TARP funds also face limits on how they can be used now. Without new Congressional amendments, there are legal limitations on what programs the wildly unpopular TARP bailout funds can be spent on now. Congressional Oversight Panel Chair Elizabeth Warren explained on MSNBC Tuesday night that funds channeled through the financial sector could be used - such as giving community banks funds with explicit demands to lend the money to small businesses. (The TARP money was initially given out with no strings attached and virtually no federal oversight.) But the TARP bonanza can't just be spent on any job-creating program the administration deems worthwhile. As The Hill quoted a senior administration official, "Tim Geithner cannot spend TARP dollars on highways."
Moreover, without a firm price tag on the plans offered by the president, there are concerns from progressive economists, including former Labor Secretary Robert Reich and other experts, that there won't be the needed "bang for the buck" and widespread jobs creation in the president's program as it's now proposed. That's because of its generous tax breaks for small businesses that are unlikely to produce the expected job-creation impact, and what could be a relatively modest total of $70 billion in new spending.
Mother Jones, for instance, pointed out the criticism by progressive economists Dean Baker and Lawrence Mishel of Obama's tax credit proposals, ideas that are all too reminiscent of some tax nostrums that Truthout recently reported that are being pushed by Newt Gingrich and Sarah Palin:
Many of the ideas the president did outline were dubious policies that Republicans have been advocating. Baker and Mishel both question the value of the measures aimed at small businesses. "The constellation of tax cuts aimed at small business seems to be a roundabout way of addressing the very real problem of credit availability," Mishel wrote. Baker was more dismissive of GOP-appeasing provisions, noting that "90 percent of what is done for small businesses is pure politics and bad economics."
Still, by offering such benefits to small businesses, as The Washington Post's Harold Meyerson observes, Obama could either rally this core Republican constituency to his plan-- or at least mute their opposition.
Still, by offering such benefits to small businesses, as The Washington Post's Harold Meyerson observes, Obama could either rally this core Republican constituency to his plan - or at least mute their opposition.
Drawing on lessons about underspending from the first stimulus, one union advocate also told Truthout, "The reality is that if you want millions of jobs, you've got to spend real money." Robert Reich was equally skeptical: "We don't know exactly how much the President is proposing to spend, but sources tell me it's in the range of $70 billion, redirected from the $200 billion in TARP savings. The President's small, calibrated attempt to balance a stimulus with deficit reduction will in fact make the deficit worse over the long haul."
What's also missing from the president's program is a WPA-style public sector jobs program for hard-hit communities. For instance, Rep. Keith Ellison (D-Minnesota) has outlined a $40 billion jobs program that could create one million new jobs, a proposal in line with the AFL-CIO's five-point plan that served as a template for some of the president's proposals. House leaders, including Speaker Nancy Pelosi, are considered likely by most Hill observers to strengthen the president's plan and include a public sector jobs program.
Indeed, the AFL-CIO President Richard Trumka was generally positive about the president's plan, but also underscored where it fell short: "We must ensure that any plan is big and robust enough to meet the scale of the crisis we face ... We do not believe that tax credits are the most effective way to create jobs and should not be the main priority for spending public funds."
But by ignoring a direct jobs program for the hardest-hit unemployed, the Obama administration faced sharp criticism from some low-income citizens' advocacy groups. As Deepak Bhargava, the executive director of the Center for Community Change declared: It's simply not enough for government to take action by helping the private sector. For decades we've seen how this tactic has failed to meet the needs of every day Americans who need work to feed their families. We need a strong public sector in order to really come out of this economic crisis.
By investing in a large scale community jobs program, we can reduce unemployment faster than any proposals put forth thus far ...
The administration has put a firm figure on only one component of its proposal: $50 billion for transportation and infrastructure repair and construction. But because seemingly much of the hiring for "shovel-ready jobs" hasn't begun yet, even though projects have started, the pace of job creation has been criticized by some Democrats along with Republicans. In fact, spending so far has exceeded the job-creation goals the president set for the road projects back in March: 150,000 jobs by the end of next year. Indeed, 200,000 transportation jobs alone have already been created.
Surprisingly, if you've been listening to GOP talking points or reading lazy mainstream media coverage, you'd think that practically nobody has been put to work on stimulus-funded transportation projects yet, with billions sitting around in federal agencies doing nothing. One reason for that mistaken impression, ably fueled by the GOP, as a knowledgeable Democratic staffer told Truthout, was that some funds remain in the Department of Transportation until state and local governments submit requests for reimbursal after their contracts have been approved. "We don't drive the stimulus funds up to the state capitol in an armored truck and dump them on the steps," the aide observed. In fact, as the House Transportation Committee reported in a press release last week:
54 Percent of Recovery Act Highway and Transit Funds in Projects Under Way
Shovels are in the ground on projects accounting for more than half of the funds targeted to highway and transit investments under the American Recovery and Reinvestment Act, the Committee on Transportation and Infrastructure announced today.
In its latest monthly report on Recovery Act progress by states, metropolitan regions, and public transit agencies, the Committee's data show that, of the $34.3 billion provided for highway and transit formula programs, $24.5 billion, or 71 percent, has been put out to bid on 10,329 projects. Within this total, 8,871 projects, totaling $20.2 billion, are under contract. Work has begun on 7,886 projects totaling $18.6 billion, accounting for 54 percent of the total available.
These projects have created or sustained more than 210,000 direct, on-project jobs, as well as hundreds of thousands of indirect jobs in the past nine months, the Committee reports.
"There is no question that the Recovery Act is working," said Committee Chairman James L. Oberstar (Minn.). "We have created hundreds of thousands of direct and indirect jobs, and pumped billions into the economy. Those dollars will be spent many times over and will help us climb out of this recession."
Given this under-reported success, it's not surprising that infrastructure projects are being promoted by progressives in and out of Congress as a valuable job-creations tool, even if they sometimes take longer than on-the-spot hiring of a government public sector project. Sen. Sherrod Brown (D-Ohio), was among the two dozen senators underscoring the value of such spending in a letter to the president on Monday, according to a joint press release:
As the President and Congress continue to examine new ways to create jobs, a group of 24 U.S. Senators today urged President Obama to focus these efforts on rebuilding our nation's infrastructure. In a letter to the President, the Senators argued that their states have "significant, documented infrastructure repair needs" which present a prime opportunity for job creation ...
The president has listened to them, but the road ahead for gaining support for added infrastructure spending on top of a now-stalled $500 billion, six-year, transportation authorization bill won't be a straight one. Obama made his best case for it, but how Congress would pay for it if the administration needs a new law allowing such spending of TARP funds isn't at all clear. Transportation reporter Elana Schor noted: "President Obama today threw his weight behind significant new transportation spending as part of a broad jobs bill taking shape in Congress, with $50 billion slated for transit, roads, bridges, and ports and the administration endorsing 'merit-based infrastructure investment that leverages federal dollars.'"
Obama underscored the value of such projects, while also essentially urging patience as they're developed:
Already, more than 10,000 of these projects have been funded through the Recovery Act. And by design, Recovery Act work on roads, bridges, water systems, Superfund sites, broadband networks, and clean energy projects will all be ramping up in the months ahead. It was planned this way for two reasons: so the impact would be felt over a two-year period; and, more importantly, because we wanted to do this right.
While making the case for new spending for jobs, Obama also blasted Republicans in a more forceful way for creating the irresponsible spending and economic mess he's had to clean up. As highlighted at Daily Kos, this harsher partisan tone could potentially help fire up Democrats as the combat over jobs creation soon starts in earnest in Congress. Jed Lewison pointed out:
In a sober tone, President Obama portrayed the Republican Party as opportunistic, obstructionist, and deeply hypocritical, accusing them of both having created the economic crisis we face today and having done nothing to help solve it. He also slammed their hypocritical attacks on government spending, reminding them that they are the ones who created the deficit, and that the recovery act represents just a small portion of it.
It won't help win supporters among Republicans, but it could strengthen Democratic resolve in the jobs fight:
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