A deficit-neutral jobs program
Yesterday's unemployment vote -- in which Democrats barely mustered the 60 votes necessary to pass a short, less-generous extension of unemployment benefits -- showed pretty decisively that there's going to be no further emergency jobs legislation coming out of the Senate. Anything further will require offsets -- and might not even pass in that case.
But at this point, it's worth trying. It's best to do jobs legislation using deficit dollars. That way you're not taking money out of one part of the economy to put it into another. But as Dylan Matthews wrote yesterday, money spent in different places does provide different levels of stimulus. It's plausible that you could move cash from, say, tax cuts for the wealthy, which tend to get saved, and use it instead for a payroll tax holiday, or infrastructure projects, or a tier of unemployment benefits for people in states with unemployment rates above 9 percent and who've been out of a job for more than 99 weeks.
As such, a proactive, deficit-neutral jobs agenda now involves two parts. First, deciding where the money should come from. Is it time to take a scalpel to military spending? Is it the Bush tax cuts? Is it the money Medicare spends on drugs that it could save if it bargained the prices centrally? In fact, the CBO said a strong public option would save about $120 billion over 10 years: That would give you $120 billion to spend next year, as short-term spending can be balanced over multiple years. This is an unusually good time to take on some bloated programs or bad decisions that there's not usually any reason or energy to revisit.
And second, it requires deciding what needs to be funded. The word "stimulus" is, unfortunately, a bad word. An unpopular word. It's too vague. So whether we're talking about money for teachers, or unemployment benefits, or bridges, or payroll tax holidays, politicians who want to do more for job creation need to decide what it is they want to do and speak about those things clearly. Policy is an endless series of choices, and the jobs situation is no different. If Democrats can't move Republicans on the choice between jobs and deficits, maybe they can move them -- or the public -- on the choice between specific jobs and relief programs and other ways the government spends money.
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