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GUEST OPINION: Jobs crisis shows need for new deal

By MARTIN J. BENNETT and RICHARD WALKER

The nation is now experiencing the most severe jobs crisis since the Great Depression. President Barack Obama’s jobs plan will provide a much-needed extension of unemployment benefits and a payroll tax cut for working Americans. Nevertheless, only a federally funded jobs program, such as the Works Progress Administration, launched by President Franklin Roosevelt in the 1930s, can fully address the catastrophe.

A Works Progress Administration crew building a sidewalk in Perth Amboy, N.J. in 1938. (Associated Press)

The official unemployment rate in September was 9.1 percent, and the U.S. Department of Labor reports that the actual unemployment rate was 16.5 percent, if you count part-time workers who want full-time jobs and workers who have simply stopped looking.

The long-term unemployed, or those unemployed for more than six months, now make up a postwar record 45 percent of the unemployed.

What did Roosevelt do that Obama is not doing? In the winter of 1933, with unemployment reaching 25 percent, Roosevelt established the Civilian Works Administration, a temporary jobs program that by early 1934 put 4.2 million unemployed workers to work repairing and building schools, roads, sewer lines and playgrounds. Simultaneously, Roosevelt started the Public Works Administration, which funded long-term infrastructure projects such as highways, bridges, dams and public buildings.

Martin Bennett

In 1935, the administration launched the Works Progress Administration, which employed 6 million over the rest of the decade constructing public works projects such as highways, schools, parks and airports and operating arts, educational and media programs. By 1936, production doubled, the unemployment rate dropped by half, and the recovery began.

To tackle our current unemployment crisis, the federal government should spend $500 billion a year over the next three years on an emergency jobs program. The first step is to create immediate full-time jobs for the unemployed — at the median wage of $16.27 an hour — in human services (e.g., child care, health care, home care) and energy conservation (e.g., retrofitting homes and public buildings).

To this should be added a public works program to build schools, bridges, a “smart” electrical grid, zero emission buses, high-speed rail, wind farms and affordable housing.

Finally, federal assistance to the states is needed to reverse cutbacks of vital public services

Richard Walker

and public employment. The loss of 600,000 teaching, public safety, transit and other government jobs over the past three years has contributed measurably to the downturn.

How to pay for such a jobs program? First, the government can continue to run temporary deficits that are now relatively high at 10 percent of GDP in 2010 but still dramatically lower than the 30 percent of GDP peak during World War II. The key is public investment to create jobs for the unemployed, fund public works, rehire public employees and put money in the hands of ordinary people to bolster demand.

Second, we must heed investor Warren Buffett’s call to “stop coddling the rich” and raise taxes on the wealthy and close corporate loopholes.

The upper 1 percent’s share of income reported for tax purposes increased from 9 percent in 1976 to 24 percent in 2007, according to UC Berkeley economist Emmanuel Saez. Nearly half of total income went to the upper 10 percent in 2007 compared to 33 percent 30 years earlier. The top income tax rate on the highest income earners was 70 percent between 1940 and 1980. It is now just 35 percent.

Moreover, profits have reached post-World War II highs, exceeding 26 percent of corporate income in 2010. The Center for Tax Policy reports that federal revenue from corporate taxes has dropped by half over the past 60 years and corporations such as Verizon, Bank of America and General Electric pay essentially no taxes due to loopholes in the tax code.

Ending the Bush-era tax cuts for the upper 2 percent, set to expire in 2012, will generate more than $80 billion a year. A 0.5 percent transaction tax on the transfer of stocks and securities would yield $175 billion annually from the largest financial institutions and speculators. If corporate tax loopholes and subsidies are eliminated, federal tax revenue will increase by $365 billion a year.

Republicans oppose taxing the rich, just as they did in the 1930s. It will take popular mobilization by labor, faith, civil rights, women’s and youth organizations to overcome such resistance — just as it did then. Occupy Wall Street may be the beginning of a movement for a new New Deal. Collective action worked in the 1930s, and it could work again now.

Martin J. Bennett teaches American history at Santa Rosa Junior College and is co-chairman of the Living Wage Coalition of Sonoma County. Richard Walker is a professor of geography at UC Berkeley and co-director of the California Living New Deal Project.





10 Responses to “GUEST OPINION: Jobs crisis shows need for new deal”

  1. Commonsense says:

    As J.R. points out, this opinion piece is a little short on some of the very important facts. For instance, but not limited to the fact that taxes between 1933 and 1935 remained at 63% for top earners (million or more) and taxes weren’t raised until 1936, after all the spending hadn’t “cured” the depression, and fear of a recurrence of unemployment began, then taxes were raised to 79% on top earners (a million or more. There are so many other historical distinctions between now and then, that to take the position, of it worked then (which is in dispute) and will work now, is a little short sighted, in my humble opinion. Lets learn from history, but move forward with ideas and plans that apply to today.

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  2. MOCKINGBIRD says:

    Brown Act Jack and others-you entirely forget that, yes, that building is built and we are done, WITH THAT PARTICULAR BUILDING. But infrastructure PROJECTS are NEVERENDING because there are more buildings to be built and repaired, and more bridges, roads, schools, sidewalks, playgrounds, sewage and water projects needing replacement and repair, and on, and on, and on. This doesn’t seem to clear to you.

    Eisenhower, during his administration, put people to work building the infrasture of this country that is now badly needing repair and replacement. Ike believed in families, the middleclass as the strength of this country, was pro union, and at that time pensions were the norm and unions (the protector of the middleclass) were strong. At the same time, CEO pay was at appropriate levels, corporations were PROUD AMERICAN COMPANIES who WERE JOB CREATORS (not like today where they create jobs in other countries to boost profits), and small businesses THRIVED because the business climate was more competitive without the big monopolistic multinational corporations and their business practices.

    Maybe you aren’t old enough to remember that time of strong middleclass families and where Republicans and Democrats worked together for the strength of this country, not for corporations’ bottom line. AND TAXES WERE HIGH YET THE RICH WERE STILL RICH.

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  3. Non Violent says:

    What a couple of fools these guys are.

    The corrupt government created the financial melt down and these clowns want to allow that same corrupt, liar government to steal more of OUR money and pass it to their buddies.

    Thumb up 3 Thumb down 1

  4. brown act Jack says:

    There are two or three types of jobs.First one is the building of public structures where the job terminates when the structure is finished

    The second is building a steel plant, where after the plant is built it provides jobs as long as it can be run profitably.

    The third in govenmental jobs , which provides people to run the government as necessary. This includes the military.

    The obvious solution is to expand the military and rearm it as necessary.

    the need for heavy goods would require the building of new heavy industry jobs, the military would have a continuing requirement for employees which would include lots of job openings,

    and the government jobs would expand to provide support for the military.

    This is what brought us out of Great depression, brought Germany out of their financial problems, etc.

    And the best part about it is that the arms production is wasteful spending where the goods are destroyed after usage and have to be replaced by remanufacture of the goods.

    Remember this, not one dollar spent buying bullets ever left the USA , it went into the pockets of the citizens, one way or the other.

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  5. Social Dis-Ease says:

    I got a ‘new deal’ for ya, stop letting an evil, fascist band of sociopaths run our country.
    I have a question for most of our current political figures.
    Do you think these evil elitists are SELECTIVE sociopaths?
    Does anyone smell that sour sme…hey
    is that socialism?

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  6. The Hammer says:

    What I like about Obama is that he is willing to work with the Republicans as long as they see it his way.

    Thumb up 2 Thumb down 2

  7. Skippy says:

    The authors display a well-practiced ignorance of how The New Deal utterly failed to reduce unemployment or spur authentic economic growth.
    Until giant war contracts(to arm our allies, then us)lit up dormant manufacturing capacity, even FDR’s advisors were privately concerned about the failure of Big Govt. to improve the economy.
    But hey, it failed before(like all socialist ventures)so let’s try it again!
    And I agree about the Panama hat.
    A sure sign of either self-importance or male-pattern baldness. Usually both.

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  8. Non Violent says:

    Government has LIED to the American people.

    Look at how they steal OUR money and then hand it to the Europeans through the International Monetary Fund / IMF.

    Government is GREED.

    Government LIES.

    The so called “jobs program” is another tactic to give government buddies and government employees OUR money while we lose our homes and our cars.

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  9. Juvenal says:

    If the worst criticism of this article is that one of the authors wears a panama hat, then I conclude that the argument presented is valid.

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  10. J.R. Wirth says:

    “By 1936, production doubled, the unemployment rate dropped by half, and the recovery began.”…YES….Until 1938, when unemployment roared back to historic levels.

    The authors seem to be playing fast and loose with the truth here.

    I found the following quote pretty funny:

    “The first step is to create immediate full-time jobs for the unemployed — at the median wage of $16.27 an hour — in human services (e.g., child care, health care, home care) and energy conservation (e.g., retrofitting homes and public buildings).”

    It’s as if these authors are doctors in crisp white lab coats dispensing prescriptions. The egos on these people. This is not how the economy works. If you want to solve the unemployment crisis talk to the bakery owner down the street, or the florist, or the salon owner. They will all describe in some way the same problem, a very large boot (called government) on their throats.

    Always be wary of people who wear panama hats.

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