The economy is stuck at 9.1 percent unemployment (and yep, it’s still nearly double that for people of color), and May was one of the worst months for adding jobs since the technical end of the recession. Only 54,000 jobs were added to the economy last month, while the number of people unemployed for more than six months increased by 361,000. In other words: the few people getting jobs aren’t the ones who have been unemployed the longest.
We’ve been asking Washington’s wonks why, despite this long crisis, Congress and the administration still haven’t produced real job creation initiatives. They point to the now-familiar deficit control vs. stimulus spending debate, which rages on. Meanwhile, a troubling conventional wisdom is settling in: that there aren’t any more real steps policy makers can take to create jobs.
But there are still concrete proposals for stimulus spending floating around Washington, they’re just not getting any attention on Capitol Hill. Right now, states are sitting on a slew of job-creating infrastructure projects, and Michael Darner, a spokesperson for Michigan Democrat Rep. John Conyers, says current federal infrastructure spending programs are virtually inaccessible for them. “The states are so cash-strapped that they can’t take advantage of the matching funds from federal dollars,” Darner explains.
Darner points, for instance, to a plan to build high-speed rail from Detroit to Chicago that’s ready to move but has no money behind it. “It would really invigorate the large, dead, green spaces,” he says, referring to the Detroit suburbs that emptied out after the housing crash. Darner also points to a plan to build a second bridge to Canada—currently there’s one, expensive, privately owned toll bridge from Detroit. Canada has even pledged money, if Detroit can find funding.
There are many more projects that could use a boost from the government. Amtrak is seeking $14 to $16 billion to convert its Northeast Corridor into high speed rail, and the U.S. Department of Transportation is being flooded with requests for credit assistance from the Transportation Infrastructure Finance and Innovation Act (TIFIA).
Overall, the Economic Policy Institute estimates, $100 billion in public transportation infrastructure spending—like high-speed rail—would lead to about 1.1 million new jobs, or about $160 billion in additional economic output.
Progressive economists are still trying to draw lawmakers’ attention to these “multipliers”—or, the measure of how much more money you get per dollar of deficit increase. An EPI report by Josh Bivens explains, for instance, that for every dollar added to the deficit because of tax cuts the economy gains only $0.20 on top of that dollar. For every dollar added to the deficit because of direct government spending, however, the economy gets back a whopping $1.75.
“Slashing the budget for 2012 makes no sense and will be incredibly counterproductive,” says Andrew Fieldhouse, a federal budget analyst for the liberal EPI. Fieldhouse warns that states are going to start feeling a serious pinch this summer as the last of the American Recovery and Reinvestment Act money (also known as the stimulus) runs out.
And it gets even more fundamental: Cuts to federal support for basic services at the state level will be deeply felt, because states don’t have much wiggle room to take care of citizens’ needs. “States are confined,” Fieldhouse says. “It’s much harder for a state to run a deficit.”
Rather than talking about cuts, Washington should be figuring out how to give states money to prevent them from firing police officers and consolidating (and subsequently overcrowding) classrooms, Fieldhouse says. Plus, the federal government could spend money on infrastructure, hiring construction workers who face very high levels of unemployment. “Right now is a really cheap time for the government to finance investment,” because interest rates are so low.