In a heartfelt piece lamenting the jobs crisis and Washington’s Hooverite response to it, Bob Herbert of the New York Times said:
There is no plan that I can see to get us out of this fix. Drastic cuts in government spending would only compound the crisis. State and local governments, for example, are shedding workers as we speak.
Actually, there is a simple plan that would get us out of this and its author says it would do it in 90 days. The author is Warren Mosler an International Consulting Economist who is running for the US Senate in Connecticut under the Independent Party Banner, and who is one of the leading figures in the approach to economic analysis that has come to be called Modern Monetary Theory (MMT).
The Mosler Economic Restoration Plan has three core proposals:
— Declare an Immediate ‘Payroll Tax Holiday’ — The U.S. Treasury will no longer deduct FICA, Medicare and other Federal payroll tax deductions from your paychecks, resulting in an immediate increase in take-home pay of roughly $650 per month for a couple with a combined income of $100,000 per year. That’s big money, and the extra cash will help you pay your mortgage and car payments, which helps the banks the right way, from the bottom up, and not through the top down bailouts of the recent past.
— Give U.S. States Revenue Share Money Based on Population — Provide each State government with an immediate, unrestricted $500 per capita of revenue to spend where they decide they need it most. This will amount to approximately $1.75 billion for Connecticut to help fill the holes created by the recession.
— Fund an $8/Hour National Service Job for Anyone Willing and Able to Work — This will provide transitional employment for the unemployed, preparing them to find new private-sector employment as businesses look to add millions of new jobs to meet the demand coming from a rise in spending due to the increased take-home pay from my first proposal.
Warren thinks this program will work in 90 days. I’m not so sure about that, because I don’t know how fast the Government will be able to move in getting people onto the program and into jobs. It seems like a bureaucracy without computers and much smaller in size in the 1930s under FDR moved a lot faster than ours does today. But if he’s right, and Congress could pass it by the end of July, it would certainly clarify the current clouded picture for incumbents in the coming Congressional elections, and probably could get us out of the recession in 12 months or may be a little less. (My own Wild Ass Guess)
I’ve discussed Warren’s program in a bit more detail here, and suggest some modifications to the FJG program, including cost of living wage adjustments by county. But with or without these modifications, I think this simple three-part program is the plan that can get us out this fix that Bob Herbert is looking for. Who knows? Maybe he’ll take a look.
(Cross-posted at Fiscal Sustainability and All Life Is Problem Solving)