Memo to Congress: Pass a $200 billion jobs bill

By Money Matters Editors

Memo to Congress: What would be the best Christmas/ Hannukah present for the American people? Oh, 15 million or so new jobs.

U.S. House Majority Leader Steny Hoyer, D-Maryland, said he expects the U.S. House of Representatives to vote on legislation that would create more jobs by the year-end holiday recess.

“Clearly 10.2 percent unemployment is unacceptable and is causing great pain to literally millions of people around the country.” U.S. Rep. Hoyer said, CNN reported.

To be sure, early into the globalization era, there are many problems facing the United States, but a strong argument can be made that job creation ranks at the top, above universal health care, the Iraq/Afghanistan Wars, climate change / energy policy legislation, U.S. relations with key European allies, Middle East issues, and the budget deficit.

That’s because more than 7.6 million Americans have lost their jobs in the nearly 2-year recession – which many believe ended in Q3. Still, despite the now probably-expanding economy, excess industrial capacity will likely weigh on job growth, making it harder to reduce the nation’s 10.2% unemployment rate. (Broader measures of unemployment, including one that includes part-time workers seeking full-time work and discouraged workers, are above 15%).  

That means more demand has to be created, and one way to do that is a jobs bill, as Majority Leader Hoyer noted - one that increases and speed allocations for infrastructure projects and that expand tax credits that encourage companies to hire more employees.

In the best of all possible worlds, the package would be at least $200 billion in order to create as much demand as possible. The major problem with the 2009 stimulus package was that it was too small, given the depth of the recession. Even so, the stimulus is starting to take affect, from a GDP growth standpoint, in addition to saving jobs at the state level via direct aid to the states. If a $200 billion jobs bill is passed, that injection, combined with the stimulus package, should create enough demand to make the U.S. economic expansion self-sustaining. And the above is not an inconsequential issue for Congressional Democrats: as the party in power in Congress, they need to start creating jobs and reducing unemployment by June 2010, or they will face large losses in the 2010 Congressional election.

June 2010 is the cut-off period, from an electoral standpoint, to get ‘the great American job creation machine’ rolling again because, historically, voters make up their minds whom to vote for about 4-5 months before the election.

So in other words, President Obama and Congressional Democrats have about a half-year to start creating jobs or they will pay the price in many lost seats at election time.