“Our Blue-Collar Great Depression”
http://www.offthechartsblog.org/%e2%80%9cour-blue-collar-great-depression%e2%80%9d/
Posted by: LaDonna Pavetti
Posted in: Economic Recovery Watch, Recession and Recovery, Unemployment, Welfare Reform / TANF
In an op-ed in today’s Wall Street Journal (“Our Blue-Collar Great Depression”), Rockefeller Foundation executive Janice Nittoli makes a compelling argument for extending the TANF Emergency Fund. I’ve written several times (see here and here) that Congress should extend this Recovery Act-created fund — which states and localities are using to help create some 240,000 subsidized jobs in the private and public sectors — beyond its September 30 expiration. As Nittoli explains:
- Job losses in this recession have been concentrated among workers who are under age 30 and less well-educated, with those in blue-collar industries suffering the most. Employment among this group has plummeted by nearly one-fifth, comparable to the decline in employment in the nation as a whole during the Great Depression.
- Long-term unemployment not only causes loss of income but also destroys marriages, weakens families, and devastates communities — problems that are costly and difficult to solve.
- To help young blue-collar workers potentially facing years of unemployment, we need to create work opportunities using a mix of older and newer strategies that have proven successful, including subsidized jobs created through the TANF Emergency Fund.
“If we want to write a history of that future that leaves many fewer behind, we must start now,” Nittoli concludes. Unfortunately, Congress’s failure to extend the fund before its summer recess has forced some states to begin shutting down their programs, despite growing concerns about unemployment. Congress needs to rectify this — and fast — when it returns in September.
More About LaDonna Pavetti
Dr. LaDonna Pavetti is the Vice President for Family Income Support Division at the Center on Budget and Policy Priorities.
Full bio | Blog Archive | Research archive at CBPP.org
How to stimulate the economy while sidestepping debt and budget problems.
When Hugh Dalton became the first socialist U.K. Chancellor of the Exchequer in 1947, pledged to nationalizing the “commanding heights of the economy”, he had a problem similar to the one we face today. His war torn economy was burdened by a huge debt. Where would he find the enormous amount of money needed to compensate the owners of the nationalized industries?
The answer was simple, revive the centuries old British tradition of consols… government debt obligations with a fixed 2 1/2 percent interest rate and no stated maturity.
Our Treasury could do the following:
1. Issue $100 billion of perpetual debt or consols at 2 1/2%.
2. Instead of burdening our banks with a special $100 billion bailout levy, impose the lighter burden of compulsory subscription to the $100 billion of Treasury consols, which amounts to a mild, stretched out, 50-100 year “inflation tax”.
3. Use the $100 billion, supplemented by $10 billion of equity contributions, to capitalize a “National Infrastructure and Advanced Technology Corporation” (NIATC).
4. Give the banks 40% of the board seats and voting shares, retain 40% in the Treasury, and place 20% with an independent group of experts appointed by the President.
5. Give the NIATC the mission of financing high priority national infrastructure projects and promising technological development, leveraged with the financial and managerial participation of American finance and industry.
Advantages:
1. Debt that can be repaid at our leisure, no increase in debt/GDP ratio, grandchildren and Moody’s can rest peacefully.
2. Minimal $2.5 billion annual budgetary cost.
3. An opportunity for banks to put their resources at work in the economy, creating jobs.
4. A good supply of Treasury obligations for banks to feed to deflation fearing, safe haven seeking investors.