The Democrats' Job Creation Challenge

After financial regulation, jobs, and jobs, and jobs. That seems to be the Democrats' plan for the last few weeks on Capitol Hill before everybody goes home to raise money and worry about November.

The New York Times reports:

The House, which in December narrowly passed a $154 billion stimulus package that hit a wall in the Senate, plans to debate a substitute of at least that size that Democratic Congressional leaders have negotiated; it would extend myriad popular business tax breaks and aid for the unemployed and hard-hit states.

This is good news, and the $154 billion economic package was chock full of increasing automatic stabilizers like unemployment benefits, which are as effective an economic stimulus as you can get in a recession (see the CBO graph above). The Senate would be wise to pass something similar.

But the important thing for people to understand about the next jobs bill and its impact on November is that there is no magic wand for job creation. It takes a lot of money and a lot of time to bring down unemployment from 10 percent, and it's practically impossible to make more than a one percentage point difference in six months -- especially with Republicans and moderate Democrats nervous about the deficit and demanding offsets under PAYGO rules for the entire bill. Both the White House and the Federal Reserve predict end-of-year unemployment at 9%.

Politically, it's savvy to go into the summer with a something called a "jobs bill." Practically, a "jobs bill" is an elusive concept. You can fill the legislation's pages with jobless insurance to juice demand for goods, and small business tax cuts to lower the barrier to hiring, and infrastructure money for shovel-ready projects (especially if they're green!), and even a school bailout fund to save teacher jobs, and all these things might be smart, but their relationship to jobs created is implicit and uneven.* Their relationship to the unemployment rate -- which might yet increase as more formerly discouraged workers re-enter the job force -- could be even more tenuous.

That said, here are 9 job creation strategies that might or might not work.

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*It's also politically complicated that the easiest jobs to keep are local government jobs. That's the aim of the the Local Jobs for America Act introduced by Rep. George Miller (D).