The economy (particularly unemployment and job creation) remains the No. 1 issue for voters in the presidential elections. Mitt Romney and President Obama have both put forth plans to spur job creation, and each has attacked the other's policies. The Labor Department reported Friday that the economy added 171,000 jobs in October, while unemployment rose to 7.9 percent.
As the eighth and final installment of our One Minute Debate series for election 2012, three writers give their brief take on the best way to create jobs in the United States. Heather Boushey of the Center for American Progress argues for the "demand side" approach where government invests in the public sector, infrastructure, and green jobs. Aparna Mathur of the American Enterprise Institute urges a "supply side" plan that stimulates the economy by extending the Bush tax cuts and cuts spending to curb debt. Bob Massie of the New Economics Institute suggests "another way:" Invest in community based, cooperatively owned businesses and a reduced workweek.
After coming into office in the depths of the Great Recession, President Obama has helped create more than a million jobs over his first term. The American Recovery and Reinvestment Act of 2009, support for the auto industry, and other policies implemented by the 111th Congress in 2009 and 2010 set the right path forward, fostering 31 months of private-sector job creation.
Deficit spending has been effective in boosting job creation. In 2008, the economy began losing jobs, and by the winter of 2008-09, the economy was shedding more than 20,000 jobs per day, more than at any point since the Bureau of Labor Statistics began tabulating these data in 1948. The Recovery Act led to a rapid reversal in the number of layoffs, and starting in March 2010, the economy saw jobs being added each month.
Though private-sector jobs have grown, the decline in public-sector employment is holding the US economy back. The economy has lost nearly 700,000 public-sector jobs since April 2009. Our unemployment rate would be at least a full point lower without those losses.
What we need is to continue along this path of success. The American Jobs Act, which Mr. Obama put forth more than a year ago, would put teachers back in schools and cops back on the beat and modernize classrooms across the United States.
There is an ongoing need to upgrade our aging infrastructure, and with interest rates at historic lows and millions unemployed, it is good economics to make these investments now. They will pay off over the long term both by improving economic growth, which will make paying back the debt easier, as well as by leaving a legacy of projects that will enhance US productivity for decades to come, also boosting long-term growth.
Moving to supply-side economic policies, as Republican presidential candidate Mitt Romney advocates, will not only stymie job creation, but also risk pulling the economy backward, as these were the very same policies that got us into this mess in the first place.
Heather Boushey is a senior economist at the Center for American Progress in Washington.
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