President Obama appeared before Congress on Thursday and urged members to pass the American Jobs Act, a $447 billion package that includes more unemployment benefits, an extended payroll tax cut, money for repairing schools and crumbling infrastructure, rehiring teachers and first responders, job training for the long-term unemployed and tax breaks for companies that hire new workers.
Many of these measures would indeed help the ailing economy, and the speech was a success on several measures. Paul Krugman called the plan “significantly bolder and better” than he expected. As Ari Berman noted, Obama delivered a heartening defense of the government’s role that might start to steer the conversation away from tired Tea Party tropes about harmful stimulus and federal intervention. The president also made some modest political headway that slightly brightens hope for some actual progress: House Speaker John Boehner said some ideas in the package “merit consideration,” and Republican Governor Rick Snyder of Michigan voiced support for Obama’s plan.
But the American Jobs Act falls short in two paradoxical ways: the plan is still too ambitious for Congressional Republicans, and at the same time doesn’t go far enough. Despite Boehner’s kind words, it still probably won’t pass the Republican House of Representatives. And even if it did, many economists say it still wouldn’t be enough to spur a true economic recovery.
So what else is needed? Below I’ve gathered a list of jobs proposals from several economic thinkers and legislators. They range from things Obama can do right now without Congress, to things he perhaps should have included in the American Jobs Act, to pie-in-the-sky ideas that would never pass but are useful to bring into conversation.
Write down mortgage debt: As the editors point out in this week’s editorial, “Go Big, Mr. President,” debt forgiveness on home loans would be highly stimulative. Millions of Americans are underwater on their homes, and thus cannot save much money and don’t have much buying power. The New Bottom Line, a national campaign of labor/liberal groups and grassroots networks, estimates that writing down underwater mortgages to market value would pump $71 billion a year into the economy and create 1 million jobs. Banks would take a hit, but on loans that probably won’t be paid back anyhow—and since many toxic loans are now federally backed, the government can help engineer a massive write-down. (Obama may still favor some kind of refinancing push, though the details are still vague).