After health care reform, what's next for Congress? Jobs, jobs, jobs

By Money Matters Editors

After health care reform, what’s next for the U.S. Congress? Jobs, Jobs, Jobs.

Can there be any issue that’s more important than job growth? To cite a phrase often-used by a graduate school mentor of a Money Matters Editor, ‘We don’t think so.’

The nation has lost more than 7.2 million jobs in the recession that started in December 2007, and the unemployment rate has basically doubled to 9.8 percent. In a nutshell, the U.S. economy is operating well below potential – what economists call an ‘output gap.’

Accordingly, once health care reform is headed toward that great bargaining and deal-making forum called a House/Senate conference committee, Congress needs to get going on initiatives that will jump-start job growth. Here are some ideas:

-Lower the capital gains tax to encourage more investment.

-Pass a series of targeted investment tax credits for high-value-added sectors that are likely to be star performers in the economy of the next decade. The tax credits should stipulate that the company must retain most jobs in the United States.

-Temporarily suspend the payroll tax, or at least consider giving small businesses more time to pay the tax on new hires, as a way of providing an incentive to hire.

-Accelerate federal infrastructure programs and grants to states, where possible, to get as many infrastructure/construction workers employed as is reasonably possible during the next 15 months. The goal is to increase demand from all pressure points to give the U.S. economic recovery more momentum. 

-Extend both existing unemployment and food stamp programs: numerous studies have shown that dollars from both of these programs are spent quickly – i.e. they create demand for goods quickly– and demand for goods leads to jobs.

-Increase both student loan guarantees and grants for undergraduate / graduate study. Now is not the time to cut federal aid to higher education. On the contrary, Congress should be increasing aid to higher education because millions more Americans will be returning to school. Further, with that return to campus, the United States can make the best (new skills) out of a negative (lack of jobs): now is a great time for millions of adult Americans to learn new skills, and, in some cases, to train for an entirely new career. Or as one former, six-figure mortgage bank executive told a Money Matters Editor recently, “The demand for $500,000 per year mortgage bank executives is weak now. Very weak.” He’s now re-training to be a mechanical engineer: in two years, he will be one. Congress should encourage re-training via increased grants and loan guarantees to train a whole new generation of mechanical engineers, electrical engineers, architects, scientists, chemists, physicists and teachers. And did we mention health care reform? We’re going to need many more general practice physicians to treat those 30-45 million additional citizens regularly accessing health care services. That goes for nurses and surgeons, as well.

To review: Lower the capital gains. Pass investment tax credits for promising, next-generation sectors. Suspend the payroll tax. Increase aid to education to turn this down-time for some into the period of most-beneficial training they’ve ever had in their life. All of the above will help put the nation back to work.

Now it’s now for Congress to get to work, on all of the above.