A good friend of mine suggested that the outcome of the debt debate set the table for the president to push for a job creation agenda. By getting the issue out of the way and compromising on the need for debt reduction, the president now can assert some moral authority to demand Congress act to address the most pressing need in many American families right now – jobs. And there is polling to suggest that tax cuts for the rich and deregulation will not fly with a lot of independent voters as legitimate, good-faith proposals to create jobs.
So, the room has been made in American politics to debate a job creation agenda. I assume most people, who aren’t already exasperated, would say, “It’s about time.” Of course, that is a little unfair since there have been job creation proposals out there, but the tea party element has successfully captured the debate on shredding the safety net in favor of cutting taxes for the rich and deregulating occupational and consumer safety and health policies for their corporate patrons. It is difficult to argue for new spending in such an environment, but as any sane economist will tell you that is what is needed to spark job creation in a depression like this one.
The push from the left has had some impression on the president. His base, by wide margins, favors bold action. And, critically, there is a majority of independent voters that seem to support this as well. Despite my lack of optimism last week about the contents of his upcoming speech, there are now signs that the president may propose some much needed stimulus into the economy. It appears that infrastructure will be the focus of this week’s job creation plan. And perhaps tax cuts targeted to middle income workers. The former is an attempt to put people to work. The latter seems to be an attempt to call out the Republicans on their hypocritical tax policy positions.
The proposal on infrastructure seems like it will be composed of at least two components. First, there will be a call for increased spending on transportation projects, including airport-related construction. Second, there will be a call to create a national infrastructure bank. The immediate stimulus into projects is needed to create jobs now and maintain and rebuild our crumbling and antiquated infrastructure. However, it is the infrastructure bank that may provide a durable institutional support for infrastructure projects over the long-term.
The infrastructure bank is proven vehicle for funding infrastructure projects. The Bank of North Dakota is probably the most famous example at the moment. It is state-owned and has helped North Dakota through this depression to maintain a relatively low unemployment rate. It is an institution that can fund infrastructure projects in the state and then funnel that return on investment back into new projects as necessary. As a state-owned bank with a mission to create jobs, it will invest money in projects when private banks won’t. The idea of an infrastructure bank is an old one in North Dakota, but Michael Dukakis supported in back in the 1970s and 1980s (and created one that existed briefly in Massachusetts) and John Kerry has been arguing for one recently. Massachusetts folks know what they are doing ... just like the good people of North Dakota.
An infrastructure bank can do a number of things, including:
1. Take better risks on infrastructure investment because it has the expertise to understand them better and work with the range of stakeholders that are typically involved.
2. Invest money on projects when private banks will not because its mission is to do exactly that.
3. Invest in infrastructure projects in an environment removed from political horseplay.
4. Offer tax-exempt bonding.
5. Offer credit union services to members so that the general public can participate in the investment and return on it, as well as avoid the predatory services and practices of many private banks.
The AFL-CIO has already offered to capitalize a national infrastructure bank with $10 billion of pension funds. Pension funds have been used wisely to fund projects in California and get a decent return on them. Despite the right-wing attacks on public pensions, California’s public employees’ unions and former State Treasurer Phil Angelides did a lot of good work through investing those funds. In Massachusetts, the Hotel Workers union created a housing investment trust, which operated to similar effect. The AFL-CIO is now waiting on the U.S. Chamber of Commerce to join them in capitalizing the bank and, of course, for Congress to create the bank.
So far, only Labor has stepped up. This means that, at the very least, the president can point to the $10 billion investment offered by Labor as evidence that the bank can be capitalized. Can’t the federal government at least match what Labor has offered? Labor represents a small portion of the workforce these days, but it is willing to put its money into job creation and Congress is not? Well, I imagine the president will want Republicans to explain why this "enemy of the people" – organized labor – is willing to invest its future into creating jobs today and rebuilding our country, but they are not.
I am now looking forward to the president’s speech and expect to hear an actual plan that will create jobs and provide some relief to middle income families.
Originally published by this author at The Big Idea.