We’ve written a great deal about the jobs crisis and what Washington still hasn’t done to interrupt it. With overall unemployment still at 9 percent, and up to twice that in communities of color, we’ve started trying to answer the perplexing question of why elected officials have been so unresponsive to something so critical to their constituents. But we figured we should first review the most significant efforts at job creation that Washington has mustered thus far. It’s a timeline of stuttered, ambitiously conceived but conservatively created initiatives.
Economic Stimulus Act
This was the first stimulus bill, signed into law by President George W. Bush. At the time, politicians on both sides of the aisle and economists were worried about 7 percent unemployment, and sought to boost demand for goods with checks mailed out to taxpayers. Totaling more than $150 billion, the checks were still too small to stimulate consumption—most recipients used the money to pay off mounting bills or boost depleted savings.
The Emergency Economic Stabilization Act and Troubled Asset Relief Program
Not actually a job creation policy, this piece of legislation was dubbed the “bailout,” and its intention was twofold. On one hand, it was to shore up the financial sector by purchasing bad assets from financial institutions with taxpayer money. It was fundamentally a success in that goal—the majority of the $245 billion spent has been paid back by companies that received relief. On the other hand, it was also supposed to provide leverage for getting banks to adjust mortgages and provide some relief for homeowners caught in the bad loans banks sold them. The Treasury Department never tried meaningfully to reach that goal, and a wide range of economists argue that the economy can’t sustainably recover until it happens.
American Recovery and Reinvestment Act (ARRA)
At close to $800 billion, this stimulus bill included funds that would invest in infrastructure, create tax incentives, increase unemployment benefits, and bump up spending in social welfare programs. It had next to no Republican support, and when it failed to boost the economy, conservatives gloated that it hadn’t worked. Today, however, many economists say that it did pull the economy out of a tailspin, and would have been more effective if it had been larger, less dependent on tax credits and followed up by a second round. Unfortunately, says the Economic Policy Institute’s Lawrence Mishel, “[The Obama administration was] afraid of saying that if they wanted to do more, they were acknowledging that the stimulus doesn’t work.” Most of the job creation ideas of the last two years were tied up in ARRA, and fell victim to its inadequate size.
February 2009 to September 2010:
Temporary Assistance for Needy Families (TANF) Emergency Contingency Fund (ECF)
Don’t let the long name fool you, TANF-ECF was a simple program that put people to work. TANF, which is the current name for welfare, was enacted in 1996 under President Bill Clinton’s reforms. The Emergency Contingency Fund came into being under the 2009 stimulus bill. Its purpose was to help employers hire people who were receiving government assistance by subsidizing their salaries. Republicans refused to extend it last fall, conveniently right around the time that talk about the deficit started overtaking talk about job creation. TANF ECF had put 240,000 people to work; many of those jobs disappeared again when funding dried up.
Small Business Jobs Act
This bill did two things for small businesses: reduced their taxes and increased grants and loans for which they’re eligible. The purpose was to encourage small businesses to hire more workers—which is known as supply-side economics. This, however, has done little to increase consumer demand, which is what’s actually needed to encourage employers to hire more workers.
Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010
This bill was the result of a long standoff between President Obama and the GOP (seems like something of a theme when it comes to economic legislation). Republicans refused to extend unemployment insurance for the millions of jobless Americans unless the richest Americans also got $700 billion in tax cuts—which later, of course, allowed Republicans to steer the conversation to the deficit while ignoring jobs. While conservatives insisted that tax cuts lead to more job creation, as I reported last week, economists disagree.