Back to Work - Bill Clinton [47]
I think that’s the right thing to do, because the Tea Party bloc and their allies in Congress are convinced that you, the American voters, will reward them for continuing to be against everything. They’re even against the payroll tax cuts for employers and employees that President Obama has proposed to spur hiring. It’s not complicated. Saying NO keeps their contributors and base voters happy and keeps the economy weak, which advances what the Senate Republican leader, Mitch McConnell, says is their number-one priority: defeating the president in 2012. They’re convinced that you’ll punish him for what they do, or don’t do, to keep unemployment high, wages low, and poverty rising. If they’re right, they get the White House and Congress and the chance to finish what they started thirty years ago.
Of course, it doesn’t have to be that way. If the fever breaks over the next few months, Republicans and Democrats could decide, as they did in 1996, to work together on our big challenges and let the American people decide in 2012 which parties and candidates have the best ideas for the future.
Meanwhile, we need to put a lot of people to work now. I think we should start with a three-part strategy: (1) put as much of the $4 trillion now held in banks and corporate treasuries back into the economy as fast as we can; (2) concentrate on the areas most likely to produce good jobs that have a positive ripple effect, jobs in modern infrastructure building, high-end manufacturing, green technologies, and exported goods and services; and (3) do literally dozens of other things that, when combined, can make a real impact now and also increase our long-term economic growth.
In early September 2011, President Obama outlined the proposals in his American Jobs Act. It contains about $250 billion in payroll tax cuts and hiring tax credits, and $200 billion in spending to employ construction workers in modernizing schools, rehabilitating buildings, and upgrading roads, railways, and bridges; to prevent layoffs of teachers, police officers, and firefighters; and to improve unemployment and training programs. If passed, it will give the economy a needed boost. Independent economists, including Mark Zandi, chief economist of Moody’s Analytics and an adviser to Senator John McCain’s 2008 presidential campaign, say the American Jobs Act will increase GDP between 1.3 and 2 percent in 2012 and create one to two million jobs.
To do better than that, we’ll need more private-sector activity.
First, we have to get money flowing. Recessions created by financial crashes usually take much longer to get over, five to ten years or more, than business-cycle recessions, because banks are reluctant to lend, businesses are reluctant to borrow, corporations are reluctant to hire, and consumers are reluctant to spend. The good news is that, like Willie Sutton, we know where the money is in our distressed economy. And there’s lots of it. Banks have more than $2 trillion in cash reserves uncommitted to loans. And businesses of all sizes have about that much uncommitted to investment. Just three big banks, Citigroup, JPMorgan Chase, and Wells Fargo, have in total more than $1 trillion in cash. The top twenty nonbank corporations, companies like GE, Microsoft, Google, Apple, Johnson & Johnson, Coca-Cola, ExxonMobil, Walmart, and Procter & Gamble, have about $350 billion.
Since banks can lend, conservatively, $10 for every dollar they hold in reserves, U.S. banks have the capacity, in theory, to end the entire global recession. Companies could invest their cash in new products that would increase hiring today or in research and development that would increase employment today and even more in the future. Unfortunately, banks are reluctant to lend, and loan demand is weak. As for the big companies, many executives have decided, at least for now, not to invest in future growth but to buy back their stock instead, increasing earnings per share and, in the process, earning bigger bonuses for top management, once again widening the gap between themselves and their own