Paul Krugman and I seem to agree that the worst part of a recession is unemployment. Losing value in your 401(k) is terrible, but not, for most people, catastrophic. Losing your business or your job, on the other hand, is wretched, particularly when there are six job hunters for every job opening.
Where we differ is that Krugman doesn't understand why the administration has not made creating jobs a top priority.
He wants transfers to state and local governments, a tax credit for increasing payrolls, and a WPA-style jobs program. Other bloggers have attacked the first two; I'll just say that I'm skeptical that a temporary tax credit will induce strained businesses to take on significant new operating costs. But I want to talk about the jobs program, because it's a superficially compelling idea that just won't work.
I don't say this because I necessarily think it's a bad idea. During an employment slump as deep as ours, there are some compelling reasons to support the creation of temporary, low paid public jobs as an alternative to collecting unemployment. There are risks, since someone doing a low-paid temporary job has less time to seek more fitting permanent employment. But the risks are not so large that I would be unwilling to try such a program in the face of 10% unemployment. Unfortunately, all this is entirely academic, because the federal government cannot create something akin to the CCC or the WPA on the time frame that would help the people who are suffering now.
For one thing, there are powerful public sector unions, who are going to fiercely resist any attempt to create low paid temporary jobs that could be done by well paid government workers who have excellent benefits and job security. I doubt the Republicans would be willing to take this one on (or well disposed to a New WPA). But with Democrats in control, this is pretty much a fatal objection.
Even if you could surmount union opposition, the federal government has an ever-increasing thicket of red tape that makes such a thing impractical. It takes months to get hired for a job with the federal government. It takes months to ramp up a new program. By the time you'd gotten your NWPA through Congress over strenuous union objections, appointed someone to head it, set up the funding and hiring procedures, and actually hired people, it would be 2011. Maybe 2012. Perhaps you could waive all the civil service and associated procedure surrounding federal hiring, but I don't see how.
My father was the head of a trade association for the heavy construction industry, and most of my closest relatives either work for the government, or have done so in the past. As you can imagine, over my lifetime I've had a lot of conversations about government procedure and government projects. Every so often I'll read some description of a project out of the olden days--the battle against malaria in Panama, the handling of the Great Mississippi Flood, or the creation of the WPA--and just marvel at how fast everything used to be. The WPA was authorized in April of 1935. By December, it was employing 3.5 million people. The Hoover Dam took 16 years from the time it was first proposed, to completion; eight years, if you start counting from the time it passed Congress.
Contrast this with a current, comparatively trivial project: it has been seventeen years since the Southeast High Speed Rail Corridor was established by USDOT, and we should have a Record of Decision on the Tier II environmental impact statement no later than 2010. This for something that runs along existing rail rights of way, and in fact, uses currently operating track in many places.
I imagine this all sounds like a nattering nabob of negativity. If there are procedural hurdles to jobs programs and high speed rail, we should challenge them, not resign ourselves to subpar policy!
Look, I may be skeptical that health care reform will be a net positive, but I do concede there's some chance I'm wrong (and I will be glad if it is so). But this is not merely unlikely; is is the next nearest thing to impossible, short of armed revolution. Many of the procedural hurdles involve court rulings, concerning law which Congress cannot overturn in some cases (due process), or isn't going to (civil rights legislation, civil service protections). The obstacles arise out of things that individually, people, specifically Democrats, like: transparency, due process, environmental care, civil rights, unionism. Cumulatively, they are devastating to federal productivity. But it's hard to get much support for repealing or altering them individually--which is what you would have to do. Philip Howard has built a second career out of railing against the steady trend towards hyperproceduralism, of which this is a small part.
So in this case, I think we're better off looking for second best: things that the government can enact and implement relatively quickly. More generous unemployment benefits, and further temporary extensions of the period for which you can collect them. Other forms of cash and quasi-cash assistance to struggling families, like food stamps. Payroll tax holidays. These may not be optimal, but they are things that Congress can actually get going almost immediately, putting cash in the hands of people who are suffering.