Christina Romer, chair of the president's Council of Economic Advisers, has an op-ed in the Wall Street Journal today on the White House's upcoming jobs summit. It's a window into the administration's most recent thinking on how to build a jobs bill that can save jobs without getting killed on Capitol Hill. Here are the three crucial paragraphs:
Many ideas under discussion build on partnerships with the private sector. Given the budget deficits this administration inherited, it is critical to leverage scarce public funds. More fundamentally, when businesses seem hesitant to hire and productivity is surging, we need to harness the private sector, bringing large and small firms in off the sidelines to boost job creation.
One idea is to give direct incentives for homeowners to retrofit their homes to improve energy efficiency. This approach would be convenient and certain, and it could encourage millions of homeowners to make cost-effective investments they might not have done for years, if ever. It could help both stimulate the manufacture of retrofit products and increase construction employment. Others have suggested incentives to help small businesses invest, grow and create jobs. This could include measures to restore the flow of credit for small businesses and targeted tax cuts. In these types of ways, a moderate and targeted investment by the government might be leveraged into significant employment gains and purchasing power by small businesses.
Direct government investments can also play an important role. We've already seen from the Recovery Act that spending on infrastructure--everything from roads and bridges to schools and municipal buildings--is an effective way to put people back to work while creating lasting investments that raise future productivity.
The first paragraph seems to say, We're not going to go all 1930s on the economy and start building public works projects.
The second paragraph suggests that the bill will ultimately focus on tax credits -- for home owners to retrofit their homes to make them more eco-friendly (an idea the Times' David Leonhardt touched on here) and for employers to expand their payrolls. The use of the word targeted tells me that the White House is leaning away from broader strategies like a payroll tax cut or a job-sharing program toward a narrower tax cut that employers have to earn by demonstrating that they're keen on hiring, or have actually hired.
The last paragraph doubles down on the administration's effort to use stimulus funds to update our infrastructure. This is a smart move. Infrastructure spending has a high multiplier effect, and as this WSJ story indicates, there's a lot of excess capacity with construction companies afraid that their already running out of projects from the first round of stimulus.
All told, the common thread in this thinking seems to be that the
administration is looking long-term. They don't want to set up public
works projects that they'll later have to spin-off when the economy
picks up. They don't want to cut payroll taxes or institute job sharing
programs that will establish a new baseline going forward for payroll
tax levels or the role of government in employment. They want to use
the job creation bill to build programs that last, houses that last,
jobs that last, and infrastructure that lasts. This emphasis pushes
some good ideas for job creation off the table, but ultimately I think
it's a understandable approach.
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