Let's Push Congress for Massive Jobs Program

11/28/09

WE (YOU) MUST PUSH CONGRESS FOR

A MASSIVE JOBS PROGRAM

Without public action to create millions of good jobs, high unemployment will continue. The unemployment rate will not get below 7% by the end of 2012[i].

Effective government policies can turn our economy around, as they did during and after World War II, by making massive investments in pressing environmental, educational, technological, and other economic and social needs. We can do this again.

The current "stimulus" program (separate from the bank bailout) has helped, but not enough since it is too small. "Without the stimulus, [national economic output] would still be negative and unemployment would be firmly over 11 percent. - - there are - - over 1.1 million more jobs out there as of October 2009" [ii].

We can afford to restart the economy, partly because this will also bring down the federal debt. The World War II era investments in science, education, interstate highways, the G.I. Bill, safety net programs and other areas stimulated the creation of millions of jobs and a more prosperous economy. This, in turn, generated new tax revenue which enabled us to pay down the debt more easily[iii].

We can persuade reluctant Members of Congress to invest adequately in the renewal of our economy and democracy.

"Blue Dog" Democrats can be told that, without a bigger jobs/stimulus program, jobs numbers will not improve by the mid-term elections, and many "Blue Dogs" will lose their jobs too[iv].

WE (YOU) MUST TAKE ACTION

Call the White House (202-456-1111) to say:

A bold jobs program must be central to the upcoming State of the Union Address.
The Jobs Summit should include experts who understand the jobs policies we need[v],
The White House needs a new economic team[vi].

Contact your two U.S. Senators and Representative in the U.S. House.
Capitol Switchboard: (202) 224 - 3121. www.senate.gov, www.house.gov.

Tell them we need a jobs program as big as the United States of America.
(For examples of jobs proposals, see other side for references [vii].)

Please let us know who you contacted plus any suggestions on how this information can be improved and better circulated. Thank you.

www.FairPriorities.org, 617-379-0402, fairpriorities@yahoo.com, P.O. Box 391008, Cambridge, MA 02139

[i] Data from the most recent minutes of the Federal Reserve Board, reported by Paul Krugman, 11/25/09, http://krugman.blogs.nytimes.com/2009/11/25/no-exit/?emc=eta1. "the Fed expects unemployment to come down only very gradually - over 9 percent at the end of 2010, over 8 percent at the end of 2011, around 7 percent at the end of 2012. - - - Which raises the question, why is anyone talking about an ‘exit strategy' [i.e. the Fed would slow the recovery by raising interest rates]? On the Fed's own forecasts, the economy will remain seriously depressed three years from now - [and] - Inflation - is expected to remain consistently below the Fed's target" [2% or less]. (Question: Why should Americans tolerate this state of affairs?)

[ii] Mark Zandi, chief economist of Moody's Economy.com and occasional adviser to both Republican and Democratic lawmakers, quoted in "New Consensus Sees Stimulus Package as Worthy Step", Jackie Calmes and Michael Cooper, NY Times, 11/21/09, www.nytimes.com/2009/11/21/business/economy/21stimulus.html.

[iii] "Then World War II broke out. The US government borrowed huge sums to recapitalize US industry and re-employ and retrain US workers in war production, to employ 12 million men and women in the armed forces, and to invest massively in science and technology to develop advanced weapons and substitutes for materials in short supply. The unemployment rate dropped to 2 percent by 1943. Deficits were enormous, as high as 29 percent of GDP in 1942 (this year [2009] they will be about 10 percent) but the economy grew at 12 percent a year for the four years of the war, and the high unemployment of the 1930s never returned. - - -

" At the end of 1945, the debt was 122 percent of GDP, compared to about 55 percent today, but of course the end of 1945 was the beginning of the 25 year postwar boom -- the longest sustained boom in US history. GDP grew at 3.8 percent a year. The average deficit was about 1.1 percent, and with the economy growing much faster than the debt, the debt to GDP ratio declined to about 30 percent by the 1970s. So, we can grow our way out of debt -- but we need to get a real recovery going first." Robert Kuttner, Huffington Post, 11/15/09, http://www.huffingtonpost.com/robert-kuttner/a-wake-up-call-on-jobs_b_358582.html.

After 1945, in addition to financing such programs as the G.I. Bill for higher education and cheap Federal Housing loans, the federal government invested heavily in scientific research and development (R&D). It was paying for 64% of all R&D spending by 1961, including 85% of all electronics R&D, and nearly half of all semiconductor research from the late 50's to early 70's. (Thomas K. McCraw, ed., Creating Modern Capitalism, Harvard U., Cambridge, MA, 1997, pp. 352-353)

"the [U.S.] deficit level is still not coming close to the levels hit in World War II. Nor is the debt level projected to reach post-war peaks or the levels sustained by countries like Italy and Japan." Dean Baker, http://www.huffingtonpost.com/dean-baker/the-budget-deficit-crisis_b_367867.html, 11/23/09.

Some critics say the federal debt will rise to unsustainable levels due partly to increases in the interest rate the U.S. government will be required to pay on its debt (e.g. "Federal Government Faces Balloon in Debt Payments", NY Times, 11/23/09, p.1). Dean Baker rebuts this argument, saying "investors are willing to hold ten-year Japanese government bonds at just a 1.5 percent interest rate - [despite the fact that] - Japan already has a debt to GDP level that is far larger than we are projected to have by the end of the next decade. - - - According to the deficit fear mongers, the dollar has been falling in recent months because investors are becoming increasingly worried about the U.S. government's ability to pay off its debt. But one of the currencies that the dollar has fallen against is the yen. Are investors who are worried about the U.S. government's ability to pay off its debt selling dollars to buy the bonds of the Japanese government, which has an even higher debt burden? " (Ibid.)

Ann Pettifor also argues the federal government will not need to pay unsustainable rates on debt. That is, the government, itself, "can and must adopt policies to force down rates across the spectrum, for government and the private sector; for the commercial and household sector as well as banks" Why? Partly because the Federal Reserve Board and Treasury are providing banks with money at near-zero interest rates, which banks then lend back to consumers, businesses and the government at much higher rates. (What is wrong with this picture?) http://www.huffingtonpost.com/ann-pettifor/strengthening-the-levees_b_369981.html.

[iv] Robert Reich, 11/3/09, http://robertreich.blogspot.com/2009/11/how-obama-can-convince-congress-to.html. ("Blue Dogs" are those who claim, among other things, that we cannot afford health care reform or sufficient funding for other significant economic and social needs because the federal debt is too high.)

[v] such as economists Paul Krugman, George Stiglitz (both Nobel Prize winners), Robert Reich and columnist Robert Kuttner.

[vi] "Obama's top economic advisers, such as Larry Summers, don't seem to get it. They continue to resist the idea of a second stimulus package. ‘ I think we got the Recovery Act [stimulus] right,' Summers recently told the Washington Post's Alec MacGillis, adding, ‘We always recognized that America's problems were not created in a week or a month or a year and that they were not going to be solved quickly. - - - .' " Other senior Obama officials such as "Chief of Staff Rahm Emanuel and Office of Management and Budget Chief Peter Orszag are more concerned with cutting the deficit than spending more money to reduce joblessness. According to the Wall Street Journal, Orszag is sympathetic to the idea of a commission to cap government spending and Emanuel is floating the idea of spending some of the money that has been repaid from TARP bank bailouts on deficit reduction. But this is putting the cart before the horse. We need larger deficits now, in order to get a real recovery going, so that a healthy economy will allow us to pay down public debt later." Robert Kuttner, ibid.

[vii] For examples of jobs proposals, see Ross Eisenbrey, Economic Policy Institute, www.epi.org/publications/entry/pm152/ , 10/20/09; Robert Borosage, www.ourfuture.org/blog-entry/2009114718/jobs-jobs-jobs-finally, 11/18/09.