President Barack Obama’s speech before Congress on September 8 regarding jobs may have been his most effective remarks since his speech on race in Philadelphia in April 2008, when he was still running for the Democratic nomination for president.

One word that he did not use in this speech was “stimulus,” but Republicans were quick and accurate to point out that his American Jobs Act has the look and feel of a stimulus. If that were true, and if the proposal were to pass intact (doubtful), then after a year’s lag, Stimulus I would be followed by a smaller Stimulus II.

What’s a shame is that may never have been a need for a Stimulus II, if the first stimulus had been the real thing. Granted, the $700 billion cost of Stimulus I was significant, but hardly excessive. Opponents stated that additional spending and debt would set off a spiral of inflation. An inflation rate of less than 2%, which is what we have had, hardly qualifies as out of control, or even significant.

The state of the American economy was dire in 2009 when President Obama asked for the stimulus, and a Democratic Congress passed it. The “fierce urgency of now” was very much in play as money needed to be pumped into the economy, and pumped in quickly. When President Obama indicated that the program would focus on shovel-ready jobs, many indicated that few projects would be shovel-ready upon passage of the bill. Big projects need planning and assessment, including important criteria such as environmental impact studies. So, the president was forced to go with relatively small tasks that were already in the works.

The Obama Administration hoped that a one-shot stimulus would jump-start the economy and generate massive hiring in the private sector. It helped, but not enough. Conservatives may have been correct in arguing that businesses would be reluctant to hire if uncertainty was what lay beyond this quick-fix stimulus.

As economists such as PBS’s Paul Salmon pointed out, the stimulus was not to be confused with a New Deal program. 1930s programs such as the CCC, WPA, CWA, NRA and TVA were designed to last as long as they were needed. That meant that a project could go through all the necessary steps of development with the agency in place. First there would be planning, then review, then construction, and finally evaluation.

The TVA (Tennessee Valley Authority) was a huge program that brought electric power to impacted areas of Appalachia. The TVA was primarily a series of dams that produced hydroelectric power. It now serves over 9 million customers. The Grand Coulee Dam on the Columbia River and the Hoover Dam on the Colorado River were two other massive water projects in the New Deal. Hundreds of courthouses, post offices, schools, hospitals and parks were built during the New Deal.

Even though America did not come out of the Great Depression until it entered World War II, Roosevelt was able to cut unemployment in half and instill renewed spirit in the American people. Perhaps most relevant to President Obama is that FDR satisfied the needs of his political base and was re-elected in 1936, 1940, and 1944.

As inspiring as President Obama’s September 8 speech was, it can be argued that it would have been unnecessary had he successfully promoted an initial stimulus that was similar in magnitude to the beginning of FDR’s New Deal. Such a program would have initially put hundreds of thousands or millions of unemployed people to work. It would have initiated the planning for a series of projects that would have been phased in for as long a period as was necessary to regenerate private hiring and also meet basic social needs of the country.

It is true that, when President Obama entered office, he had far less of a majority in Congress than FDR did. The House was solidly Democratic, but many of the “Blue” were “blue dogs” – Democrats who were leery of excessive federal spending. However, many of the “blue dogs” represented economically depressed areas, such as West Virginia and southern regions of Pennsylvania, Ohio and Indiana. Additional spending would have had a direct and positive impact on the constituents of these representatives. Additionally, Nancy Pelosi was a very savvy Speaker of the House who was eager to advance progressive policies.

With independents Bernie Sanders and Joe Lieberman, the Democrats theoretically held fifty-nine of the one hundred seats in the Senate. One more would have been needed to make their majority veto-proof. However, some of the Democrats were either DINOs (Democrats in Name Only) or more interested in pork for their states than good policy. The shenanigans of Sen. Ben Nelson of Nebraska and Sen. Mary Landrieu of Louisiana in the debate on the Patient Protection and Affordable Care Act were both cynical and deplorable.

However, had President Obama taken a page from Lyndon Johnson’s playbook, he may well have brought Nelson, Landrieu and others along without paying a heavy penalty. Johnson had been a master at getting both southern Democrat and Republican votes for the series of civil rights acts that were passed in the 1960s. President Obama needed one or two Republican votes as well, but one state, Maine, with Senators Susan Collins and Olympia Snowe, might have given him a veto-proof majority. Had the president traveled to Maine to explain to the voters how a state with aging industry would have benefited from full-scale stimulus, he may well have gained their votes.

Even had President Obama not been able to persuade Congress in 2009 to pass a comprehensive stimulus bill, he would have put the arguments on the table, and it would have been much easier now to explain now how much more was needed.

All of that is history. What is important now is the future. President Obama’s proposed $450 billion stimulus (of which half is tax reductions) is short-range. If he is fortunate enough to get Congress to pass his current proposals (somewhat of a longshot), the stimulus will end in short order. The private sector knows that, and it will be reluctant to assume the risks of large-scale hiring if they are staring an uncertain future in the face.

It is not enough for us to take President Obama’s advice and urge our representatives to pass what he has proposed. We need them to pass the real thing – a stimulus that is of such a critical mass that it is powerful enough to overcome the horrible damage inflicted upon our economy by eight years of George W. Bush.

President Obama is now acting like a Democrat. It is incumbent upon us as citizens to let us know that that is not enough; we need a strong Democrat. He can be that person. It will be good for both his political and presidential legacy.

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America could put hundreds of thousands of people back to work by implementing a proposed stimulus program called F.A.S.T. The acronym stands for “Fix America’s Schools Today,” and it’s a plan that even the most hard-line budget hawk should have a tough time saying no to.

Released in August 2011 by the 21st Century School Fund and the Economic Policy Institute [EPI], FAST could immediately allocate $50 billion to repair and retrofit America’s schools, putting carpenters, electricians, construction workers, building technicians, boiler repairmen, electrical workers, roofers, plumbers, glaziers, painters, plasterers, laborers, and tile setters back to work.

Do we need it? See for yourself. Drive around any American city, eyeball some schools, go inside, and look at the floors, ceilings, walls, windows and lights. Or just ask your kids: Is their school cool enough in the summer and warm enough in the winter? What’s the quality of life in their school: Are there safety gaps? Do the bathrooms function? What’s broken, but never seems to get fixed?

Infrastructure problems in America’s schools are well documented, and repairs are long overdue. [A report card issued in 2010 by the American Society of Structural Engineers gave America’s school infrastructure a D.] The average age of America’s 100,000 schools is 40. School districts under financial pressure—and who isn’t?—often look to maintenance as a place to cut. The result of “chronic deferred maintenance,” according to to the General Accounting Office [GAO] and the American Society of Civil Engineers, can be  “energy inefficiencies, unsafe drinking water, water damage and moldy environments, poor air quality, inadequate fire alarms and fire safety, compromised building security, and structural dangers.”

Estimates of the cost of repairing the wide range of infrastructure problems in America’s schools range from $270 billion to $500 billion. EPI asserts that:

…construction and building repair generally create 9,000‒10,000 jobs per billion dollars spent. Eliminating even half of the entire backlog and improvements could eventually create more than two million jobs, over a period of years. Addressing even one-tenth of the needed improvements could immediately create half a million jobs.

Given the grim outlook for residential construction and the fact that 1.5 million construction workers are unemployed, a project of this magnitude would put hundreds of thousands of them back to work, which would have a large positive effect on the economy.

Specifically, FAST funds would be used for:

• improving air quality and thermal comfort with improvements to heating, ventilation, and air conditioning (HVAC) systems;

•  stopping interior damage, including mold, and reducing energy costs with roof replacement and repair;

• supporting technology, mechanical systems, and modern use of electricity with an electrical system modernization;

• reducing water consumption, eliminating lead in water, meeting ADA requirements with bathroom and plumbing upgrades;

• eliminating allergy and asthma triggers, making sure asbestos is contained or eliminated, and creating inviting classroom and school environments with plaster repair and painting;

• saving energy and increasing daylight with window replacement;

• improving the school grounds with improvements to outdoor learning and play areas, storm water management, landscaping, and environmental cleanup, when necessary;

• reducing ongoing heating costs with energy-efficient boiler replacement;

• installing solar panels, wind generators, and geothermal or other comparable clean energy generators; and

• planning the work outlined above and any similar modifications necessary to reduce the consumption of electricity and energy, especially fossil fuels, including natural gas, oil, water, or coal.

Any other uses of the funds would be prohibited.

How F.A.S.T. would be funded

Watching budget hawks weasel out of this plan will be interesting. Its proponents have worked out a funding strategy that makes a great deal of sense—plus, it conforms to the prevailing [and often heartless] dogma of “PAYGO,” which requires any new spending to be offset elsewhere in the Federal budget.

This part’s a bit wonky, but it’s a key component that helps makes this plan battle ready. According to EPI:

The fastest way to launch the program would be to add money to existing funding formulas, such as Title I of the Elementary and Secondary Education Act of 1965. All 16,000 public school districts, including public charter schools, receive funds under Title I. For example, $50 billion could be allocated among them.

The nitty gritty of implementation—such as how to prioritize which districts get money—is spelled out in much more detail in the full FAST proposal.

With regard to PAYGO, initial funds allocated for FAST could be offset by “eliminating fossil fuel preferences, as in President Obama’s FY2012 budget,” says EPI, clearly referring to tax breaks for already rich oil, gas and coal producers.  “Closing these loopholes raises $46 billion over 10 years.”

Jared Bernstein—a former economic adviser to Vice President Joe Biden, and one of the masterminds behind FAST, puts it this way:

“It’s a smart way to get a lot of people who really need jobs back to work, fix a critical part of our institutional infrastructure, save energy costs, provide kids with a better, healthier learning environment, and do so in way that everyone can see and feel good about each morning when they drop their kids at school.”

F.A.S.T. is logical, and it has a lot of hard-to-oppose, Mom-and-apple-pie appeal. The question is: Are those two attributes enough? Anyone who’s serious about a jobs program would be wise to get on board. [F.A.S.T. appears to dovetail nicely, by the way, with a jobs plan recently proposed by Illinois Congresswoman Jan Schakowski.] We await words and actions  from President Obama, Education Secretary Arne Duncan and enlightened lawmakers in support of this common-sense idea.

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The president’s Council of Economic Advisers recent report, The Economic Impact of the American Recovery and Reinvestment Act of 2009: Fourth Quarterly Report, July 14, 2010, is encouraging. By any measure, the $787 billion American Recovery and Reinvestment Act (ARRA) has been successful. Even though it was too small and included too many tax cuts as opposed to direct spending (See  progressive economists Paul Krugman, and  Joseph Stiglitz for more on these arguments) the Recovery Act has had an extremely positive impact on the welfare of the country. Its success underscores how impressive and effective it can be when taxpayer money is used for the common good, to help improve the lives of the majority of American citizens.

Hopefully, the solid successes of ARRA will encourage additional stimulus spending. As for the deficit, ending the misguided wars in Iraq and Afghanistan, and letting the tax cuts on the upper 5% expire, would free up a lot of money to help the American economy get on its feet. To track ARRA spending in your state or city, go to www.recovery.gov.

Here are some highlights from the report, which you can view in its entirety here:

• The magnitude of the fiscal stimulus increased from $80 billion in 2009:Q4, to $108 billion in 2010:Q1, to $116 billion in 2010:Q2.
• Government investment outlays in areas such as infrastructure, clean energy, and communications technology increased by roughly 50 percent between the first and second quarters of 2010.
• Real GDP began to grow steadily starting in the third quarter of 2009, and private payroll employment has increased by nearly 600,000 since its low point in December 2009.
• GDP, as of the second quarter of 2010, relative to what it otherwise would have been, rose by between 2.7 and 3.2 percent.
• Employment, relative to what it otherwise would have been, went up by between 2.5 and 3.6 million.
• Two thirds of the $319 billion of public investment spending on projects, ranging from roads and bridges to community health centers, to a smarter electrical grid, has been obligated and more than one-quarter has been spent.
• ARRA has already saved or created more than 800,000 jobs as of the second quarter of 2010, an increase of 30 percent over the first quarter.
• 14,000 projects have been awarded in areas ranging from highway improvements to new airport runways and public transit. Recovery Act transportation expenditures by state are positively correlated with private employment growth in heavy construction.
• Roughly $100 billion of ARRA funds have leverage provisions, which will ultimately support more than $380 billion of total investment spending. Every $1 of Recovery Act funds invested in these programs is partnered with about $3 of outside investment spending, the majority coming from the private sector.

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What’s the correct way to put people back to work? Republicans say that cutting federal spending and reducing taxes is the way to create jobs, and many have rejected the notion of government stimulus spending [while often taking the money anyway.] Many progressive Democrats think that the federal government should be the “employer of last resort,” channeling New Deal policies that put people to work in the Civilian Conservation Corps and other national programs. But there may be another way. A relatively unknown part of the stimulus package that helps private employers hire new workers is showing promise, and even a southern, Republican governor likes it.  An Op-Ed by Bob Herbert in the New York Times explains it all. Here’s the entire article:

Is it possible that there is a federal stimulus program that is putting many thousands of struggling individuals to work and is getting rave reviews not only from Democrats but from officials in conservative states like South Carolina and Mississippi?

It may be hard to believe, but it’s true. The program, part of the American Recovery and Reinvestment Act, allows states to use federal dollars to temporarily subsidize the salaries of individuals placed in private- and public-sector jobs. More than 30 states are participating.

The program, though small, appears to be working exceptionally well. States expect to have placed more than 200,000 individuals by this coming autumn. Some of those workers would otherwise have landed on welfare.

The catch — there is always a catch — is that the program will expire at the end of September if Congress does not act to extend it.

The U.S. is trapped in an agonizing period of sky-high unemployment and the latest data from the Department of Labor offers no cause for optimism. A program that is actually putting people to work, and thus helping families fend off destitution, ought to be looked at closely for what it can teach us about employment expansion. It makes no sense to simply let it die.

States have embraced the subsidy program with tremendous enthusiasm. “It has been amazing,” said Linda Martin, director of South Carolina’s Division of Family Assistance. “I think at this point we’re kind of astounded at how well it’s working.”

The federal money is made available through the $5 billion TANF (Temporary Assistance for Needy Families) Emergency Fund. States can use the money in a variety of ways, and many have found the subsidized employment approach to be the most efficient and effective.

South Carolina uses the money to cover 20 hours a week of employment at the minimum wage for each individual who is placed in a job. The subsidy lasts for six months.

To the surprise of state officials, private employers across a wide front have welcomed the program. The employers sign an agreement to keep the workers on after the subsidy runs out if there are no serious problems with the workers.

“We are placing people in the kinds of jobs we were never able to crack before,” Ms. Martin told me. “They’re getting jobs with a large grocery chain, and with McDonald’s, Wal-Mart, CVS pharmacy. We actually have more employers asking for placements than we have eligible folks to be in those jobs.”

This is not the kind of job creation that will break the back of the nation’s employment crisis, but it has succeeded in bringing down the welfare rolls in South Carolina, which were heading straight up at the height of the recession. It is keeping food on the tables of seriously strapped families. And it is offering work experience to some people who have not had a lot of it.

Other states have adopted a different approach. Mississippi has made it a priority to find jobs at small businesses. The subsidy there covers the full salary for the first two months and then gradually declines to one-fourth of the worker’s salary in the sixth and final subsidized month.

Gov. Haley Barbour has called for an extension of the program, which he said has provided “much-needed aid during this recession.”

LaDonna Pavetti, who monitors the program for the Center on Budget and Policy Priorities, described it as the “best-kept secret” of the federal stimulus effort. Illinois, she said, is placing 500 people a day in jobs under the program. The crush of job-seekers trying to get in has been so great that state officials have had to stop taking applications.

In Los Angeles alone, 10,000 people have been placed. There have even been 600 job placements in Montana.

Ms. Pavetti’s worry is that without more attention being paid to this effort, it will vanish at the end of September. That, said Mark Zandi, chief economist at Moody’s Analytics, would be “particularly inopportune given that unemployment will likely still be in or near double digits, and more workers will have exhausted their benefits.”

He recommended extending the program for another year.

There has been a peculiar reluctance in this country to move full speed ahead on all feasible ways to increase employment, which is what is needed to get the economy back in shape, to begin reducing budget deficits, and, most important, to alleviate the suffering that so many individuals and families are enduring.

I asked Ms. Martin of the Division of Family Assistance in South Carolina what would happen in her state if the job subsidy effort were allowed to lapse. She didn’t hesitate: “It would really just kill us if we had to shut this down,” she said.

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