So, what will/should President Obama say in September on jobs?
–Given everything he’s been saying so far, he most likely starts out with a strong call to renew the payroll tax holiday and extend UI benefits.
–These are both essential—EPI estimates that to lose them next year would cost over one million jobs. But since they’re already in the system, they don’t add anything new, so it’s like keeping your foot where it is now on the accelerator. If they expire on schedule at years’ end, your foot comes off. But keeping them going only maintains current speed, such that it is.
–He then pushes an infrastructure plan.
–Two criteria I’d strongly recommend here: first, the plan needs to start creating jobs quickly, and second, it needs to create jobs for people, not machines.
–On the first point, the infrastructure bank, which I like very much, will take one-two years, I’d guess, before it starts creating jobs. On the second point, my experience with the Recovery Act (I’ve yet to see solid research on this, but I’ll bet I’m right) is that traditional infrastructure (e.g., roads and bridges) has gotten considerably more capital-intensive, and thus less labour intensive.
–Next, we could see the President to continue to push his clean energy agenda, which I think remains compelling on many levels. As he stressed from the advanced battery plant in MI last week, by targeting investment incentives toward industries in this space, we can help people move from contracting to potentially expanding industries.
–I like the 48c Clean Energy Manufacturing tax credit in this space—worked well during the Recovery Act incentivizing manufacturers not just to produce clean energy (e.g., using equipment from abroad) but to manufacture that equipment here in the US.
–Look for some more ideas on the tax credit/cut side. A new hires tax credit could help (meaning the employer only only gets the credit if they add to payroll) especially with smaller businesses. And if R’s are motivated to do anything in this space, it’s much more likely to be on the employER side than the employEE side.
–In fact, the endgame here could involve an expansion of the payroll tax holiday to the employer side (i.e., the current credit is 2% off of the employees’ 6.2% payroll tax—I could see something like this also applied to the employers’ side of the paycheck).
–I tend to think there’s more bang-for-buck on the workers’ side of the paycheck, just based on the family budget squeeze and the decline in real pay, but CBO scores the employer side as having a slightly larger multiplier (their model has the employer-side cut bleeding into lower prices, which boosts real growth, etc…I’m dubious, but maybe…).
–I suspect he won’t go there—the politics certainly make it a huge lift—but another round of state fiscal relief would really help. Over the past 12 months, we’ve seen the private sector adding jobs—1.8 million, in fact. That’s not nearly enough, but it’s movement in the right direction.
Cities and towns, meanwhile, have been shedding jobs—340,000 over the last 12 months. It’s because they still face budget gaps and they have to balance their budgets, so we’re going to keep seeing layoffs of teachers, police, sanitation workers, firefighters, etc.
While I don’t think POTUS will call for Recovery Act-style state fiscal aid, perhaps he can suggest specific ways to help preserve jobs in these areas, like the 2010 Education Jobs and Medicaid Assistance Act.
–I know…this all sounds pretty academic. House Rs will likely block most of the above, though I’d give the payroll credit extension a greater than 50% chance. But if the President constructs his jobs agenda on the basis of what the Rs will accept, we’re all toast.
So I look forward to a solid rollout next month followed by a defining fight. If things come down the way I think they will, let’s make sure everyone in this country knows exactly who’s standing between the 20+ million un- and underemployed Americans, and their jobs, paychecks, and living standards.
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