White House adviser is open to additional economic stimulus
By Alec MacGillis
In a sign of the gathering momentum for additional economic stimulus, a top White House economic adviser on Thursday expressed openness to the possibility of additional aid to local governments to prevent layoffs or even to the creation of a new public jobs program to spur employment.
Jared Bernstein, Vice President Biden's chief economic adviser, said in a speech at a Brookings Institution conference that, with unemployment now at 10.2 percent, the administration is looking for new ways to assure that the apparent uptick in the economy -- the GDP rose by more than 3 percent last quarter -- translates into more hiring. In addressing the possibility of fiscal relief for cities and new public jobs programs, both of which were touted in a Brookings' paper for the conference, Bernstein emphasized that he was not expressing any official administration preferences about how to proceed.
But his comments showed far more openness to more direct approaches to hiring or retaining workers than he signaled just three weeks ago in a speech at American University, where he dismissed a question about direct government job creation by arguing that public works programs take longer to get going than people realize.
On Thursday, he said the administration is concerned about the employment picture and about the prospect that local governments might matters worse by laying workers off to close their budget gaps. "We've got to do more to translate economic growth and continue helping states and localities meet the deep fiscal challenges they face so as to avoid taking steps that make getting out of this mess that much harder," he said.
The administration has until now been cool to New Deal-style public jobs programs, which critics deride as make-work. In a recent interview, Larry Summers, Obama's top economic adviser, said that such programs may not produce enough lasting benefit.
But Bernstein noted Thursday that "a number of economists have provided support for [jobs programs] lately." He raised the question of which approach would better spur employment -- a temporary jobs program run by cities or more general fiscal relief to cities -- and suggested that the two could perhaps be combined in the form of fiscal relief targeted solely toward boosting employment. Much, he said, would depend on the capacity of local governments. "Can [jobs programs] be useful, not make-work, and up and running fairly quickly?" he said.
Perhaps most tellingly, he said that given the lag between economic growth and job growth, "it makes sense to target employment more than GDP right now." This was a shift from what Summers said two weeks ago, when he dismissed the idea of subsidizing private sector employers to prevent layoffs by arguing that it is better to focus on growing the overall output of the economy instead of increasing the number of people doing the work that now exists -- a comment that drew criticism from liberal economists.
Bernstein's comments come in the midst of a growing drumbeat for additional stimulus. The House is floating ideas for a new "jobs bill," while union leaders and the Economic Policy Institute, where Bernstein used to work, this week released recommendations for job creation, including direct jobs programs that would hire people to board up vacant buildings, assist in child-care classes and paint schools, among other work.
The four mayors assembled for the Brookings conference on the dire fiscal state of city governments had a mixed reaction to the talk of additional stimulus. San Jose's Chuck Reed, a Democrat, said what his city needs most is looser credit markets to get capital flowing to local businesses. Mesa, Ariz.'s Scott Smith, a Republican, said he worried that a jobs program or jolt of fiscal relief for cities might just be a "sugar high" that would help only in the short term. Much more enthusiastic was Philadephia's Michael Nutter, a Democrat, who said that the existing stimulus money has been trickling down very slowly to cities, and that most of it is reserved for specific initiatives and cannot be used to help the city budget generally, forcing him to lay people off even as the city hires others for stimulus initiatives.
"I do think it's important," Nutter told Bernstein, referring to a jobs program. "People do need to get to work. It's about restoring a sense of hope on the ground. Whether it's a job or a training program, people need something to do... Otherwise, it's the downward spiral to where I've got five guys on a street corner wondering, if the federal government is spending all this money, but the city is cutting services, what am I supposed to do?"
Hearing this, Bernstein seemed to side with Nutter, saying that he was not worried about additional stimulus causing a "sugar high."
"I view it more as a bridge over a big gap, and sometimes you need that," Bernstein said.
Afterward, Nutter said he was heartened by Bernstein's comments on direct job creation. "He was certainly open to it, and that's half the battle," he said. "When I get back to City Hall, I'm going to get out of the car and there's going to be someone there saying, 'Mayor, I need a job.' The real question is, what do I tell them? I can't tell them that the manufacturing index is up and that the GDP is up 3 percent. They don't want a macroeconomic answer. They want to know, where do I get a job?"
November 19, 2009; 3:55 PM ET
Categories: 44 The Obama Presidency , Economy
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