The 2009 stimulus bill that was supposed to spur job creation at a sufficient rate to prevent double-digit unemployment might have done so if it had been approved at the level and with the focus intended by the serious players in the U.S. House who initially crafted a real response to the recession.
Unfortunately, under pressure from the Obama administration, which wanted to keep the price tag below $900 billion for reasons of spin, the better part of $100 billion in spending for jobs was squeezed out of the legislation. Then, in order to win the votes of three supposedly moderate Republican senators, the measure was rewritten in order to divert $326 billion from job creation to tax cuts.
As Oregon Democratic Congressman Pete DeFazio, the steadiest congressional advocate for infrastructure investment and tangible efforts to create and retain jobs, said when he cast a lonely vote against the final version of last year's stimulus bill:
I supported the original objective to have a bill that was timely, targeted and temporary. Instead, we ended up with a huge grab bag, some of which is good like the $80 billion to fix our crumbling infrastructure or the money to educate our children, but there are hundreds of billions of dollars in excessive tax cuts that will do little to stimulate our economy or put our nation on the road to recovery. I could support borrowing money for infrastructure investments that will produce a product for generations to come but not $326 billion for tax cuts which will provide limited relief for working families and little economic stimulus. Infrastructure funding is a proven way to put thousands of people in the hard hit construction industry back to work and yet, infrastructure spending doesn't even account for 10 percent of the funds in the bill.
DeFazio was right.
The result of White House caution and Senate compromise was a stimulus measure that provided too little money to avert a spike in unemployment that has given the United States the highest official jobless rate in a quarter century and an unofficial rate (including those who have given up seeking work and those who are severely under-employed) that rivals the figure for some years of the Great Depression era.
Despite claims by the Obama administration and its congressional allies that last year's stimulus was a success, they are effectively acknowledging its failure with the decision to propose significant new spending for job creation. Unfortunately, the $100 billion initiative that the White House is advancing as part of its $3.8 trillion budget still falls far short of what Congress and the administration could have, and should have, allocated last year for job creation.
In other words, the White House continues to cut corners when it comes to job creation.
The new commitment by the administration is well-intended.
It could do some good.
But it will not do enough good because it is not focused enough on stimulating private and public-sector jobs creation and in stabilizing the budgets of hard-pressed states and cities. Even if Congress approves all of the new spending that the administration has proposed, the U.S. will still be spending less on stimulating genuine job growth than was proposed by serious economists and key members of the House in 2009.
That's a failure of vision – and of commitment – that will haunt not just the president but congressional Democrats if unemployment remains in double digits as the 2010 congressional elections approach.
Senator Sherrod Brown, D-Ohio, is not up for reelection this year. But the savvy senator is right – for economic, social and political reasons when he frets that the administration is more focused on spending freezes than making a sufficient investment to spur real growth in employment and the renewal of hard-hit communities across the country.
"I'm just concerned that in a recessionary time, you don't pull back government," says Brown. "What does that mean for job growth?"
The answer, unfortunately, is that that the president and his aides still do not get it. This is a Groundhog's Day budget – it repeats the mistakes of 2009 in 2010 – and the consequences could be severe for workers, for their communities and for a party that seems to have forgotten then lessons of the New Deal era that yielded its greatest electoral triumphs.