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Richard (RJ) Eskow / Op-Ed
Published: Sunday 8 April 2012
“Unchanged, or only slightly changed: Unemployment rate for adult men is 7.6 percent, for when it's 7.4 percent, for teenagers it's 25 percent, for white people it's 7.3 percent, and for Asian it's 6.2 percent. Hispanics are still suffering with 10.3 percent unemployment, and for African Americans the rate remains a stunningly high 14 percent.”

Want Jobs? Rescue Homeowners - and Spend, Baby, Spend

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It's time to start thinking about real solutions to this problem. There are two:

Spend Spend Spend

The stimulus worked, but it wasn't big enough. Far too much of the package was devoted to nonproductive tax cuts for the wealthy, and far too little on direct spending that creates jobs. So we need more direct spending on infrastructure - and, as Dave notes, we also need it if we don't want our country to keep falling apart at the seams.

The President recently observed that restoring jobs in construction and in state and local government at the same rate they experienced during previous recessions would reduce the overall unemployment rate to 6 percent, and some economists think that figure is low.

The CBO estimates that the last round of direct stimulus spending of $300 billion created 1.4 million jobs. We need to spend at least that much again, and we need to restore Federal support for state and local budgets.

Underwater Rescue

Another way to get the economy moving is to get financial relief to people who have been financially struggling and have put off needed spending - on vehicles, home improvements, and the like - as well as reasonable amenities.

Homeowners owe $800 billion in "negative equity" to banks for non-existent real estate value. That's an "invisible bailout" funded by the struggling middle class, and delivered by borrowers who were frequently hoodwinked into taking out a mortgage at inflated prices.

Principal relief of $300 billion or thereabouts would be just, fair -- and would create a lot of jobs.

Action Time

There you have it. So can we stop talking about government deficits until this problem is fixed? Some of us think Simon Johnson's emphasis on government debt is premature - let's get the economy moving and pivot to deficits afterwards - but he's certainly right when he says,  "Our modern debt surge is much more about declining federal government revenue than it is about runaway spending."

So let's tax the wealthy, help homeowners, and spend some money to put more people back to work. When that's done we can pivot to deficit reduction - with millions of additional workers able to contribute to that effort with their taxes.

If reports are true that the President's game plan is to make his re-election campaign "all about Republicans," I would respectfully suggest a change of direction. It should be "all about jobs."

So what's keeping you, Washington? Stop the silly talk about "Simpson/Bowles" and "Grand Bargains" and get to work. The nation's unemployed, underemployed, and underpaid have waited long enough.

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ABOUT Richard (RJ) Eskow

Richard (RJ) Eskow is a well-known blogger and writer, a former Wall Street executive, an experienced consultant, and a former musician. He has experience in health insurance and economics, occupational health, benefits, risk management, finance, and information technology.

inflation , baby inflation

inflation , baby inflation

Forgive student loans, well

Forgive student loans, well you are at it.

Dick Cheney said, "Deficits

Dick Cheney said, "Deficits don't matter."

You can bet if Republicans gain the White House and control the legislature there will be plenty of money to spend on new wars of choice and other pet projects that serve their wealthy cronies.

They only complain about spending when there is a Democrat in the White House then they squeal like a stuck hog.

OK, I agree in principle.

OK, I agree in principle. But the devil is in the details. First, unless 3 things happen in November none of your suggestions are likely. They are: the re-election of President Obama, the return to Democratic majority in the House of Representatives and the end to the 60 vote clouture rule in the Senate. Second, the country has lost more than 600,000 public sector jobs over the past 3 years. Unless state and local governments can be funded to restore a major portion of those jobs we will continue to limp along at 2% to 2.5% growth rate. Third, the extreme depressed conditions in the housing market are a huge drag on the economy. Housing produces not only large numbers of good paying jobs, it also produces a broad ripple effect throughout the economy. Infrastructure jobs are good and necessary but they do not have the depth of effect that a healthy housingh market produces. Think furniture, landscaping, home decor items, down market services such as resales, escrow, title, movers, remodelers, etc.. Without the housing industry participating the growth rate will continue to lag. It will be years until we can catch up. That is unless Congress is willing to act to pump up the housing market. Interest rates are near all time lows but credit is hard to come by. The market is flooded with foreclosures, short sales, and depressed properties. Millions are "under water" in their mortgages. To fix this situation will require that Congress open the purse strings and the regulatory rule book to force a turnaround. The GOP will fight this every step of the way. So the answer, I'm afraid, is we will need to work hard to get the voters to elect Democrats everywhere. A little luck couldn't hurt either.

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