The Right Prescription to Cure Economic Ills

by James Parks, Jan 17, 2008

Now that working families have forced the issue of the economy to the forefront of the presidential campaign, it’s time to make sure we keep the debate on real solutions that work for working people and not on “quack” remedies that will lead us down the road of economic disaster.

In a Point of View column on the AFL-CIO website, economist Lawrence Mishel says what’s missing from the debate is any meaningful discussion of how to create new jobs. Click here to read “Rx for Recession: An Economic Strategy that Works.”

Mishel, president of the nonprofit Economic Policy Institute (EPI), says the relationship between jobs and the impending recession is simple: 

The recession is about paycheck economics—jobs, wages and family budgets. When most Americans don’t have the cash or the confidence to continue the spending that keeps the economy running, demand for goods dries up, businesses lay off workers, corporate bottom lines flat-line and the economy plunges into a downward spiral.

But there is a blueprint for federal action to generate jobs, increase incomes and make our communities and our country a better place to live, work and raise kids, he says. It’s EPI’s Strategy for Economic Rebound.

This common-sense plan would preserve and produce jobs and help working families by pumping $140 billion into the economy to:

• Promote growth—thereby, creating more jobs.
• Take effect as soon as possible before the economy plunges into a deep downturn.
• Increase deficits in the immediate future but not for years to come.
• Create new jobs by investing in the nation’s unmet priorities, such as the huge backlog of necessary repairs in schools and bridges and new sewage treatment plants and energy-efficient public facilities of all kinds.
• Put more money in the pockets of those who need it most and are most likely to spend it on necessities of life, bolstering consumer demand, boosting business activity and preserving and producing more jobs.

The centerpiece of the strategy is creating jobs that match the country’s needs. Mishel points out that we need to invest at least $17 billion a year in maintenance and rehabilitation of the nation’s school buildings—and the U.S. Department of Transportation has found more than 6,000 major bridges that need to be repaired or replaced. At the same time, more than $4 billion in wastewater-treatment projects are ready to go to construction, if funding is made available.

So he proposes:

Let’s provide the money for all these needs—schools, bridges, sewage treatment plants and more. Every $1 billion of construction spending creates 14,000 to 47,000 new jobs—and these should be good-paying union jobs—and also generates up to $6 billion in additional economic activity.

Yet, instead of proposing a program that will work for working families, Mishel says, the Bush administration is “prescribing more of the quack remedies that weakened the economy and widened the federal deficit.”

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