President Barack Obama unveiled, this week, a package of new enhancements to his administration’s efforts to revive the U.S. economy and spur job growth. The proposal seeks to put the dent in the unemployment figures, which now stand at more than 10%. The plan pledges tax cuts and other credits to businesses that increase hiring, rebates to homeowners who retrofit their homes to be more energy efficient, and additional monies to states and local governments for infrastructure projects to improve highways, bridges, airports, and other public projects.
White House economist and executive director of the White House Task Force on the Middle Class, Jared Bernstein, talked to Black Enterprise about the new effort and its intended outcome.
How do the White House’s new job creation proposals fit into the broader plan to revive the economy? Is this the “second stimulus†people in Washington have been talking about?
By no means would I characterize this as a second stimulus. This is not a broad and diverse package like the $787 billion recovery act. These are three targeted ideas, some of which build off of some successful programs in the Recovery Act, and others of which are targeted at getting the quickest and the biggest bang for the buck in terms of job creation. The Recovery Act in tandem with financial stabilization and housing programs, the work of the Federal Reserve–and in tandem with a whole set of other financial interventions have really pulled the economy back from the abyss and helped to generate as many as 1.6 million jobs saved or created thus far, according to the Congressional Budget Office. They’ve also helped to create the conditions for more job creation, but we need to do a lot more to hasten the arrival of that virtuous cycle where the private sector itself helps to create enough demand and jobs to meet the needs of American families. We’re not there yet, and until we’re there we’ve got to do everything we can to pull that moment forward.
What do you say to those who worry that the U.S. economy is seeing a real structural change here and that some of the jobs–in manufacturing and service sectors–that people expect to come back are not ever going to return?
First of all, the structural dynamics you mention are very much part of the permanent landscape of the American economy. Sectors rise and fall. That doesn’t mean you
just sit on the sidelines and just watch them. In most cases the free market mechanisms generate the best answers to the question of what’s the right sector to invest in, but not always. There are times when markets fail to generate enough investment in key sectors. Right now the answer is small businesses where credit markets have been simply too blocked when it comes to providing the capital for credit-worthy businesses to expand. Part of this idea to build green jobs is to expand a tax credit program in the Recovery Act that provides a very substantive incentive to invest in green manufacturing–not just producing and consuming renewable energy, but actually producing the machinery here in the U.S.A. to generate renewables, whether it’s wind, solar, or geothermal. The Department of Energy has a program that offers a 30% tax credit to build that kind of manufacturing here in the U.S. That’s part of the idea that the president was talking about.These are fears that a lot people have about the economy: some industries are not going to generate the jobs they once did. Do you see the green economy replacing some of the old-line manufacturing jobs that may have permanently gone?
Sure,
that’s right. The president has consistently supported the building of a domestic manufacturing base to produce the machinery of the green economy. That kind of support is necessary right now to plant the seed of investment in those industries. That’s ultimately a job for private sector capital and I think our programs, right now at this time of difficulty in the financial markets can help bring that capital off the sidelines.How long do you project that the economy will need these government stimulus efforts? At what point do you think the natural flow of private investment will begin generating jobs?
No one can give you a precise date. What I can emphasize is that stimulus by its nature is temporary. The Recovery Act is a large and diverse program, a two-year program that gets into the system, ramps up. The measures the president announced today are temporary measures to help bridge the gap you’re talking about. Exactly how long does that bridge over that recessionary river need to be? That’s unknowable. But our best move is to do precisely what this president does, which is to track the economy very carefully, to implement accountability and transparency into programs so we gauge their effect, and
keep them going while they’re needed and put them to bed when they’re not. And that’s an important component of fiscal responsibility. You don’t want these programs to go on longer than they need to in the interest of achieving sustainable budgets.Unemployment among African-Americans continues to be an even deeper problem than it is in the broader U.S. population–even for college-educated, skilled workers. Are there any specific White House efforts focused on this problem–or do you believe these issues are addressed by the wider push to create jobs?
When a recession takes hold, it is unfortunately the case that minority workers are harder hit. You certainly see that with a black unemployment rate that’s been hovering at around 16%. Therefore when you attack the recession typically you’re going to disproportionately help folks who are hurt most. If you look at some of our safety net programs–unemployment insurance, food stamps, health insurance subsidies–those programs likely help minority workers more. But at the same time, we need to do more. Our summer youth employment piece of the Recovery Act was a very effective program this past summer, and its something I think we should continue to look carefully at in this context.