The 2013 Budget Debate -- A Second Chance At Job Creation

There's an important question not getting asked often enough about the President's 2013 budget proposal: How many jobs will it create?

Instead, the conversation is focusing primarily on the budget's impact on the deficit: this is frightening, because it signals a lapse in Washington's attention on the issues of unemployment and job creation that matter most for rebuilding the American middle class -- and indicates a diversion back to the single-lens focus on budget balancing that is only a priority for the most economically privileged Americans.

We've been at this point before -- last year at this time, unemployment was at the lowest rate it had been in two years, economic growth was steadily improving, and many economists anticipated the beginning of a turn-around. But rather than giving the budding recovery exactly what it needed -- a fiscally stimulative shot in the arm -- we spent the entire spring and summer debating how much to cut from the federal budget. Worse, as Brian Beutler explained looking at consumer credit, the obsessive focus on the national debt that culminated in the debt-ceiling showdown measurably impacted a struggling recovery:

Growth in consumer credit is "typically a sign that consumer confidence is up, banks are willing to lend, and demand is on the rise."

So how does the President's plan fare in terms of job creation? Basically, it reflects the same virtues of the American Jobs Act proposed last fall: there are some welcome direct spending initiatives, but not nearly enough. The proposed $30 billion in aid to states and municipalities pales in comparison to the $103 billion shortfalls states are estimated to face this year; hiring incentives for small businesses seem useful, but have historically rewarded hiring decisions that would have been made anyway; the $50 billion in upfront infrastructure investment would help bolster construction, but remains far less than the level of investment that many groups beleive is required to support our infrastructure needs -- between $134 and $262 billion every year for up to 25 years.

The strongest elements of the President's proposal are the long-term initiatives -- comprehensive education reform, aggressive support for research and development, and tax reforms that ensure the most advantaged members of society pay a fair share -- including closing many wasteful tax loopholes. These policies are important, but they do little to address the urgent problem of unemployment in the U.S. 

At the risk of sounding like a broken record, the policies needed to eliminate the jobs crisis in this country are the same we've been saying for a while -- aside from expanding funding for the direct-spending initiatives already proposed, the U.S. needs a public jobs program that can put people back to work right away, particularly those most hurt by mass layoffs, along with stronger collective bargaining rights and a higher minimum wage to ensure that news jobs are fair-paying and promote upward economy mobility. 

Budgets cuts and tax hikes are long-term issues and can wait until we are certain that the labor market has rebounded -- if we force them now, we risk turning unemployment into a long-term issue as well.