Where are the jobs in the ‘recovery’?
Unemployment is at 9.2% according to the U.S. Labor Department, while real unemployment is actually closer to 20% if you count people that have given up looking for work, college kids working at Starbucks and part timers looking for full time jobs. The President talks about giving it more time for the economy to get out of this mess he inherited and his opponents (Republicans) blame the high taxes and regulations for this mess.
But what’s really missing are concrete solutions from both parties!
Let’s get a few things straight first. Both parties talk about cutting the federal budget deficit and hopefully paying off the national debt in the long run, but both parties vary on how to go about it.
Democrats want to cut some spending, but would rather see revenue/tax increases by closing loopholes and tax subsidies. Call it whatever you want, but in the end it closes the budget deficit. Republicans would rather cut spending and use that to cut the budget deficit. Republicans accuse Democrats that if taxes were increased it would hurt the economic recovery. Democrats on the other hand accuse Republicans of much the same by telling them that too much cutting will hurt the economy as well.
Guess what? Both are correct; if you cut spending by $4 trillion over 10 years (latest proposals floating around) you take $4 trillion out of the U.S. economy. That’s probably going to cost us about 2.8 million jobs in healthcare, education, state/federal workers, etc. On the other hand if you raise taxes by $1 trillion (suggested by some Democrats) you will also cut employment by roughly 600,000 workers. In either case, it’s a tough pill to swallow! We have to cut the budget deficit, I don’t think anyone is arguing about that, but how do we do it without destroying America’s economy?
Here’s the solution:
1) Cut spending by $600 billion per year (defense, healthcare, social security, debt and discretionary spending). It’s a very painful and austerity measure, but it needs to be done
2) Raise revenues by $500 billion per year (VAT at 7%, social security taxes for income $100k+, raise federal gasoline taxes by $0.80 over 4 years per gallon, etc.)
3) Put it all in a Balanced Budget Amendment so that government will have to stick regardless of what party is in power
The above will cost the economy about 3 million jobs and will dramatically change the landscape of the U.S. economy. However, to offset the massive job losses, the government will need to invest heavily in infrastructure projects. A proposal to spend about $300 billion per year directly into projects would put millions back to work.
It would offset the job losses from the austerity measures described above and America stands to benefit long-term by getting a first rate infrastructure in return, which in turn will help foster millions of jobs and set up America for a prosperous long term future. Infrastructure spending should be focused on massive job creation projects such as:
1) Upgrading the Eisenhower Interstate System. It was build for 1950s capacities in most cities and needs to be dramatically upgraded10,000+ miles of high-speed rail that for example can bring a passenger from New York City to Atlanta in 5 hours, with stops in Philadelphia, Baltimore and Washington
2) Expand the nation’s airports. They were also built for a different era, most of them before WWII and is in desperate need of expansion and modernization. Landing at LaGuardia in NYC feels like landing in Lagos, Nigeria…
3) Upgrade the power grid. More nuclear power-plants are needed and the grid needs to go underground so the power can stay on in Joplin, MO or in Galveston, TX next time mother nature strikes
4) Desalination plants in California and in Texas to feed the Southwest of America with much needed fresh water to expand the agriculture business, keep local economies growing (Phoenix, Las Vegas, etc.)
The travel industry would be very pleased with these upgrades as will the transportation industry, utilities, states, etc. It’s short term pain for long term gain, which is difficult to comprehend in D.C., but it’s the only sensible way to get us out of this recovery (if you can call it that way…).
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