The Government Response On Jobs As the country has struggled with joblessness, politicians in Washington DC have been debating about how government should respond. Conservatives argue that the most important thing the government can do is cut taxes. Conservatives argue that the dollars entrepreneurs and corporations save on taxes will allow them to begin hiring again. And consumers will spend those extra dollars on goods and services, boosting the economy. While conservatives see "small government" as a positive, cutbacks in government funding have already caused steep cuts in social services. Many states have scaled back funding for higher education and early childhood programs, among other services, and cutting government employment, including teachers. This summer, Republicans resisted raising the country's debt ceiling (risking government default) unless Democrats agreed to a deal to dramatically cut government spending over time. The deal they agreed to, and President Obama signed, calls for $917 billion in spending cuts over the next decade in return for a twostage increase in the debt ceiling. A 12member congressional committee made up of six Republicans and six Democrats was charged with finding $1.5 trillion in further deficit reductions, which Congress must approve by December 23, 2011. Many economists argue that such cuts especially at a time of economic distress only make the problem worse, and drive unemployment higher. In fact, they maintain, increased government spending could actually boost the economy, which would in turn lead to higher revenues and a drop in the deficit. Economist and author Robert Reich, the Secretary of Labor during the first Clinton administration states, the government should spend more to spur the economy and stimulate job creation: The only way out of the vicious economic cycle is for government to adopt an expansionary fiscal policy spending more in the short term in order to make up for the shortfall in consumer demand. This would create jobs, which will put money in peoples' pockets, which they'd then spend, thereby persuading employers to do more hiring. Yet Washington is moving in exactly the opposite direction. Republicans are proposing to cut the budget deficit this year and next, which will result in more job losses. And Democrats, from the President on down, seem unable or unwilling to present a bold jobs plan to reverse the vicious cycle of unemployment. Instead, they're busily playing "I can cut the deficit more than you." (http://www.commondreams.org/view/2011/07/257) On September 8, 2011, President Obama stood before a joint session of Congress to propose a new bill designed to address the unemployment crisis. Called the "American Jobs Act," the bill includes $200 billion in spending on things such as school repair, transportation networks, and preventing teacher layoffs, as well as $240 billion in tax cuts to small businesses and a temporary payroll tax cut. The president later outlined a plan to reduce government spending in other areas, including cuts to Medicaid (a healthcare program for the poor), Medicare (for the elderly and disabled), and cuts in military spending. He also proposed raising revenue by raising taxes on the very wealthy.
Republicans responded that the president was engaging in "class warfare" against the rich. "Veto threats, a massive tax hike, phantom savings and punting on entitlement reform is not a recipe for economic or job growth or even meaningful deficit reduction," charged Senate Republican leader Mitch McConnell. However, the liberal tax analysis group Citizens for Tax Justice pointed out that Obama's plan would cut taxes overall, not raise them. In particular, the plan allows most of the huge tax cuts to the rich passed under the Bush administration to continue, costing the government some $3 trillion in lost revenues over the next ten years. (http://www.ctj.org/taxjusticedigest/archive/2011/09/ctjs_statement_on_president_ob.php)
In any event, it is unlikely that the president's bill will pass, considering the strong opposition of Republicans in Congress to any new spending measures. Meanwhile, grassroots groups around the country representing the political spectrum from left to right are organizing for the reforms they believe will restore America's troubled economy.
QUESTIONS FOR NOTES 1. What do conservatives advocate as a response to financial difficulties being faced at the state and federal levels? 2. Why do some economists argue that this will make the situation worse? 3. What response has President Obama proposed? Do you think it will be effective? 4. Do you think that government should take an active role in fighting unemployment, or do you think that this should be left to the private sector? 5. What do you think average citizens can do to influence the policies in Washington?