Thursday, September 23, 2010

Making Money Ideas


Late last week, I spoke with former SEIU president and current Georgetown fellow/fiscal commission member Andy Stern about hosting a series of pieces laying out different ideas to kick-start job creation. The idea here is not to see how many compromises can dance on the head of the congressional pin; it's to see what exactly different experts think needs to be done. In Ben Bernanke's memorable term: "blue sky thinking."



The first piece came, naturally enough, from Andy Stern; the second was from Dean Baker, and the third was from Mark Zandi. In the coming days, there'll also be pieces from Rep. Paul Ryan, Sonecon's Robert Shapiro, the Peter G. Peterson Foundation's David Walker and others. Today's comes from Heather Boushey.



Moving the U.S. economy out of first gear



Heather Boushey

Senior economist, Center for American Progress



We are now nearly a year into what economists call a recovery, but it doesn’t look like one to U.S. workers. A close look at the data shows that while the U.S. economy is no longer in reverse, it is having a hard time getting out of first gear.



The U.S. economy continues to have a significant output gap: Capacity utilization is at 75 percent -- meaning that a full quarter of our machines are sitting idle -- while 1 in 10 workers sits at home. We need to find a way to connect the workers who want to work with the idle machines, be those desktops or assembly lines. What we need is a continued injection of demand -- demand for goods and services that will put businesses into motion to start investing and hiring again.



The question now is what we should do to push demand out of first gear. There are two ways to think about the challenges ahead: what makes sense from an economic perspective and what may be politically possible. Ideally, we can find ideas that do both.

President Obama has encouraged Congress to vote on a set of growth-oriented tax cuts, which are in the “realm of the possible.” Policymakers should focus on putting money in the hands of people who will spend it given where our economy is. Extending the Bush tax cuts for the middle class, as Obama proposes, is a good idea. The middle class will continue to spend these extra funds and this will boost demand and spur economic growth. But Congress should allow the tax cuts for those earning above $250,000 to expire because they do relatively little to boost demand and our economy can ill afford ineffective economic policies.



Other good tax ideas include extending the full range of provisions in the American Recovery and Reinvestment Act that boost incomes for middle- and working-class families. These include the Making Work Pay tax cut, which gives a $400 tax cut for single filers and up to $800 for joint filers. It is implemented by reducing the amount of tax withheld from each paycheck. Other ARRA tax provisions include improvements to the Earned Income Tax Credit and expansion of the Child Tax Credit, including making it refundable.



The president also proposes allowing firms to deduct 100 percent of new equipment purchases in 2010 and 2011 rather than depreciate these expenses over time. These are the kind of policies that should garner Republican support, and pairing them with middle-class tax cuts makes good political sense. But it will probably not do much to boost demand. The fundamental problem facing firms (especially small businesses) is not enough customers. It is not the cost of investing, which is at historic lows.



These proposals are a good start. But if we want to bring unemployment down in the short to medium term, there are other bold steps we can focus on to boost demand. Andy Stern and Dean Baker have already outlined some good ideas. Here’s my “blue sky” contribution:



Invest in laying the foundation for economic growth. Congress should seriously consider Obama’s proposal to increase infrastructure spending by $50 billion to invest in roads, rails and runways (and let’s really think “blue sky” and wonder if maybe a new Congress could allocate even more).



There are two stark realities in front of us that make this a crucial step. First, the United States has been underinvesting in infrastructure, which threatens our economic competitiveness moving forward. Every U.S. business relies on our transportation networks and electricity grids to keep their operations humming. We need an upgrade. And second, it may be some time before we’re back to full employment; taking steps now to make long-term investments that will boost job creation in the years to come is smart policy.



Invest in ourselves. We should put our national service programs “on steroids” to give our youngest workers useful job experience and an opportunity to give back to their communities. Expanding our national service programs, as Stern suggested, is also an excellent way to meet pressing community needs and tap into the skills and expertise of older workers.



But there are other ways to create jobs now. For instance, Congress should extend the Temporary Assistance to Needy Families Emergency Jobs Program, which as of the end of September will have created 250,000 jobs through public-private partnerships nationwide. The Local Jobs for America Act, introduced by Rep. George Miller (D-Calif.), would create approximately 1 million jobs by providing $100 billion in funds to be used over two years to protect state and local government jobs and create local government and nonprofit sector jobs.



Do the right thing: Boost demand through unemployment benefits. At the end of November, extended benefits for the long-term unemployed will expire. The U.S. economy continues to have more long-term unemployed -- those out of work and searching for a job for at least six months -- than at any time in more than half a century.



Unemployment benefits are targeted at these workers, and we know that this is one of the most effective ways to boost demand because recipients go out and spend these benefits. So later this fall Congress should extend long-term unemployment benefits until the unemployment rate comes back down -- no ifs, ands, or buts about it. Further, the Supplemental Nutrition Assistance Program, which provides food assistance, is also an effective way to boost demand as well as help families avoid hunger and continued funding is critical.



Wonk Room is covering the Clinton Global Initiative.  This is a cross-post by Brad Johnson.


President Bill Clinton believes the “number one thing” to restore the American economy is clean, efficient energy. In a blogger roundtable at the beginning of his Clinton Global Initiative in New York City, Clinton told us his “favorite ideas” for making the green economy a political and economic reality:



One: Federal loan guarantees for building energy efficiency retrofits


Two: Renewable energy initiatives in economically depressed cities


Three: Green jobs programs for poor Americans


Clinton, relaxed and slim, held court with a dazzling mastery of policy details, wit, and storytelling.


Citing a Center for American Progress report on the promise of energy efficiency, Clinton described his desire for the federal government to kickstart private financing of energy retrofits, much as the Clinton Foundation had done for the Empire State Building:


The Center for American Progress says we can get half the way home to an 80 percent reduction in greenhouse gases by 2010 by efficiency alone. Unemployment in construction is 25 percent. We can’t go out and build new houses. And there are very few office buildings that need to be built. So what I think we should do is to have a lot more Empire State Buildings. We should retrofit every public school, every college and university building every hospital, every auditorium in this country, and every office building unencumbered by debt.


Clinton believes the reason that this investment hasn’t already happened is that “spooked” banks don’t want to make loans that could collapse. His solution is to establish a federal loan guarantee program, which he believes could create one million jobs with only $15 billion in federal investment:


Give them a federal guarantee like the SBA guarantee, and you only have to set aside $1 for every $10 you loan. Still very conservative, because we know the historic failure rate is one percent, not ten percent. It might not cost the taxpayers anything.


Here’s the multiple: every billion-dollar investment in retrofits gives you 7000 jobs. Homes 8000. Wind energy 3300 if you build and assemble the windmills where you put them up. Solar 1900, coal 870, nuclear a little over 900. This is not close. If you want to put America back to work, give a loan guarantee, get banks start making loans.


Set aside $15 billion for guarantees, you get $150 billion in bank lending, you get a million jobs.


His other policy ideas are about making the clean energy economy real for the American people, rich and poor:


My second candidate: pick places that are both distressed and full of potential for energy independence. My number one candidate is Nevada, where the sun shine and the wind blows. And you’ve got all those real expensive hotels there with roofs that could be filled with solar panels. And you have all the hills around that could be filled with windmills.


I would say take a few places like that and go straight out and make them energy independent and document how many jobs have been created, and then everybody will want to do that.


My third candidate is prove it works for poor people. One of our best commitments is designed to provide after school jobs and summer jobs for poor kids in Harlem, upper Manhattan Washington heights by paying them to go in and retrofit a lot of these old buildings, whitewashing the black roofs.


If you did those three things so that every day you were proving over and over again to all the naysayers that it was good economics to build a clean energy future, you can build a consensus necessary to do what has to be done. You could beat the special interest groups.


He admitted that the key problem with this vision is that it requires a change from how the energy sector traditionally makes money:


If you make a deal for a nuclear power plant or a coal-fired power plant and you knowingly deprive all these jobs increase greenhouse gas emissions or you increase other risk or you increase huge costs — with nuclear, it’s always more expensive — the only real reason they do it is because they’ve always done it that way, and it is so much simpler. If you’re running the utility, there’s one contractor that’s going to build that plant, there’s one supplier of the fuel, and then you go to one PUC and they give you permission to make the ratepayers pay for it at a profit. It’s simple because it’s centralized.


The new energy economy is more decentralized, but it’s less expensive, more job intensive, and parenthetically will save the planet.


“That’s what I think we have to do,” Clinton concluded. “You’ve got to prove this is good economics. And it is! The number one thing we could do for America is change the way we produce and consume energy.”




Small Business <b>News</b>: The Times They Are A Changing

In the 60's it was a song of revolution when change was just not as common. Today, it reflects a fact of life, at least for small business owners and.

Official Google Blog: Google <b>News</b> turns eight

Today we celebrate the eighth birthday of Google News. Not long after the tragic events of September 11, 2001, we started building and testing Google News with the aim of helping you find current events from a wide variety of global and ...

Pentax announces price and availibilty for 645D camera: Digital <b>...</b>

Pentax announces price and availibilty for 645D camera: Photokina 2010: Pentax has announced its 645D medium format digital camera will start shipping globally from December 2010. The camera will sell at a retail price of $9999.99 for ...


robert shumake

Small Business <b>News</b>: The Times They Are A Changing

In the 60's it was a song of revolution when change was just not as common. Today, it reflects a fact of life, at least for small business owners and.

Official Google Blog: Google <b>News</b> turns eight

Today we celebrate the eighth birthday of Google News. Not long after the tragic events of September 11, 2001, we started building and testing Google News with the aim of helping you find current events from a wide variety of global and ...

Pentax announces price and availibilty for 645D camera: Digital <b>...</b>

Pentax announces price and availibilty for 645D camera: Photokina 2010: Pentax has announced its 645D medium format digital camera will start shipping globally from December 2010. The camera will sell at a retail price of $9999.99 for ...



Late last week, I spoke with former SEIU president and current Georgetown fellow/fiscal commission member Andy Stern about hosting a series of pieces laying out different ideas to kick-start job creation. The idea here is not to see how many compromises can dance on the head of the congressional pin; it's to see what exactly different experts think needs to be done. In Ben Bernanke's memorable term: "blue sky thinking."



The first piece came, naturally enough, from Andy Stern; the second was from Dean Baker, and the third was from Mark Zandi. In the coming days, there'll also be pieces from Rep. Paul Ryan, Sonecon's Robert Shapiro, the Peter G. Peterson Foundation's David Walker and others. Today's comes from Heather Boushey.



Moving the U.S. economy out of first gear



Heather Boushey

Senior economist, Center for American Progress



We are now nearly a year into what economists call a recovery, but it doesn’t look like one to U.S. workers. A close look at the data shows that while the U.S. economy is no longer in reverse, it is having a hard time getting out of first gear.



The U.S. economy continues to have a significant output gap: Capacity utilization is at 75 percent -- meaning that a full quarter of our machines are sitting idle -- while 1 in 10 workers sits at home. We need to find a way to connect the workers who want to work with the idle machines, be those desktops or assembly lines. What we need is a continued injection of demand -- demand for goods and services that will put businesses into motion to start investing and hiring again.



The question now is what we should do to push demand out of first gear. There are two ways to think about the challenges ahead: what makes sense from an economic perspective and what may be politically possible. Ideally, we can find ideas that do both.

President Obama has encouraged Congress to vote on a set of growth-oriented tax cuts, which are in the “realm of the possible.” Policymakers should focus on putting money in the hands of people who will spend it given where our economy is. Extending the Bush tax cuts for the middle class, as Obama proposes, is a good idea. The middle class will continue to spend these extra funds and this will boost demand and spur economic growth. But Congress should allow the tax cuts for those earning above $250,000 to expire because they do relatively little to boost demand and our economy can ill afford ineffective economic policies.



Other good tax ideas include extending the full range of provisions in the American Recovery and Reinvestment Act that boost incomes for middle- and working-class families. These include the Making Work Pay tax cut, which gives a $400 tax cut for single filers and up to $800 for joint filers. It is implemented by reducing the amount of tax withheld from each paycheck. Other ARRA tax provisions include improvements to the Earned Income Tax Credit and expansion of the Child Tax Credit, including making it refundable.



The president also proposes allowing firms to deduct 100 percent of new equipment purchases in 2010 and 2011 rather than depreciate these expenses over time. These are the kind of policies that should garner Republican support, and pairing them with middle-class tax cuts makes good political sense. But it will probably not do much to boost demand. The fundamental problem facing firms (especially small businesses) is not enough customers. It is not the cost of investing, which is at historic lows.



These proposals are a good start. But if we want to bring unemployment down in the short to medium term, there are other bold steps we can focus on to boost demand. Andy Stern and Dean Baker have already outlined some good ideas. Here’s my “blue sky” contribution:



Invest in laying the foundation for economic growth. Congress should seriously consider Obama’s proposal to increase infrastructure spending by $50 billion to invest in roads, rails and runways (and let’s really think “blue sky” and wonder if maybe a new Congress could allocate even more).



There are two stark realities in front of us that make this a crucial step. First, the United States has been underinvesting in infrastructure, which threatens our economic competitiveness moving forward. Every U.S. business relies on our transportation networks and electricity grids to keep their operations humming. We need an upgrade. And second, it may be some time before we’re back to full employment; taking steps now to make long-term investments that will boost job creation in the years to come is smart policy.



Invest in ourselves. We should put our national service programs “on steroids” to give our youngest workers useful job experience and an opportunity to give back to their communities. Expanding our national service programs, as Stern suggested, is also an excellent way to meet pressing community needs and tap into the skills and expertise of older workers.



But there are other ways to create jobs now. For instance, Congress should extend the Temporary Assistance to Needy Families Emergency Jobs Program, which as of the end of September will have created 250,000 jobs through public-private partnerships nationwide. The Local Jobs for America Act, introduced by Rep. George Miller (D-Calif.), would create approximately 1 million jobs by providing $100 billion in funds to be used over two years to protect state and local government jobs and create local government and nonprofit sector jobs.



Do the right thing: Boost demand through unemployment benefits. At the end of November, extended benefits for the long-term unemployed will expire. The U.S. economy continues to have more long-term unemployed -- those out of work and searching for a job for at least six months -- than at any time in more than half a century.



Unemployment benefits are targeted at these workers, and we know that this is one of the most effective ways to boost demand because recipients go out and spend these benefits. So later this fall Congress should extend long-term unemployment benefits until the unemployment rate comes back down -- no ifs, ands, or buts about it. Further, the Supplemental Nutrition Assistance Program, which provides food assistance, is also an effective way to boost demand as well as help families avoid hunger and continued funding is critical.



Wonk Room is covering the Clinton Global Initiative.  This is a cross-post by Brad Johnson.


President Bill Clinton believes the “number one thing” to restore the American economy is clean, efficient energy. In a blogger roundtable at the beginning of his Clinton Global Initiative in New York City, Clinton told us his “favorite ideas” for making the green economy a political and economic reality:



One: Federal loan guarantees for building energy efficiency retrofits


Two: Renewable energy initiatives in economically depressed cities


Three: Green jobs programs for poor Americans


Clinton, relaxed and slim, held court with a dazzling mastery of policy details, wit, and storytelling.


Citing a Center for American Progress report on the promise of energy efficiency, Clinton described his desire for the federal government to kickstart private financing of energy retrofits, much as the Clinton Foundation had done for the Empire State Building:


The Center for American Progress says we can get half the way home to an 80 percent reduction in greenhouse gases by 2010 by efficiency alone. Unemployment in construction is 25 percent. We can’t go out and build new houses. And there are very few office buildings that need to be built. So what I think we should do is to have a lot more Empire State Buildings. We should retrofit every public school, every college and university building every hospital, every auditorium in this country, and every office building unencumbered by debt.


Clinton believes the reason that this investment hasn’t already happened is that “spooked” banks don’t want to make loans that could collapse. His solution is to establish a federal loan guarantee program, which he believes could create one million jobs with only $15 billion in federal investment:


Give them a federal guarantee like the SBA guarantee, and you only have to set aside $1 for every $10 you loan. Still very conservative, because we know the historic failure rate is one percent, not ten percent. It might not cost the taxpayers anything.


Here’s the multiple: every billion-dollar investment in retrofits gives you 7000 jobs. Homes 8000. Wind energy 3300 if you build and assemble the windmills where you put them up. Solar 1900, coal 870, nuclear a little over 900. This is not close. If you want to put America back to work, give a loan guarantee, get banks start making loans.


Set aside $15 billion for guarantees, you get $150 billion in bank lending, you get a million jobs.


His other policy ideas are about making the clean energy economy real for the American people, rich and poor:


My second candidate: pick places that are both distressed and full of potential for energy independence. My number one candidate is Nevada, where the sun shine and the wind blows. And you’ve got all those real expensive hotels there with roofs that could be filled with solar panels. And you have all the hills around that could be filled with windmills.


I would say take a few places like that and go straight out and make them energy independent and document how many jobs have been created, and then everybody will want to do that.


My third candidate is prove it works for poor people. One of our best commitments is designed to provide after school jobs and summer jobs for poor kids in Harlem, upper Manhattan Washington heights by paying them to go in and retrofit a lot of these old buildings, whitewashing the black roofs.


If you did those three things so that every day you were proving over and over again to all the naysayers that it was good economics to build a clean energy future, you can build a consensus necessary to do what has to be done. You could beat the special interest groups.


He admitted that the key problem with this vision is that it requires a change from how the energy sector traditionally makes money:


If you make a deal for a nuclear power plant or a coal-fired power plant and you knowingly deprive all these jobs increase greenhouse gas emissions or you increase other risk or you increase huge costs — with nuclear, it’s always more expensive — the only real reason they do it is because they’ve always done it that way, and it is so much simpler. If you’re running the utility, there’s one contractor that’s going to build that plant, there’s one supplier of the fuel, and then you go to one PUC and they give you permission to make the ratepayers pay for it at a profit. It’s simple because it’s centralized.


The new energy economy is more decentralized, but it’s less expensive, more job intensive, and parenthetically will save the planet.


“That’s what I think we have to do,” Clinton concluded. “You’ve got to prove this is good economics. And it is! The number one thing we could do for America is change the way we produce and consume energy.”





The perfect, pure money making idea! by theeric11711


robert shumake

Small Business <b>News</b>: The Times They Are A Changing

In the 60's it was a song of revolution when change was just not as common. Today, it reflects a fact of life, at least for small business owners and.

Official Google Blog: Google <b>News</b> turns eight

Today we celebrate the eighth birthday of Google News. Not long after the tragic events of September 11, 2001, we started building and testing Google News with the aim of helping you find current events from a wide variety of global and ...

Pentax announces price and availibilty for 645D camera: Digital <b>...</b>

Pentax announces price and availibilty for 645D camera: Photokina 2010: Pentax has announced its 645D medium format digital camera will start shipping globally from December 2010. The camera will sell at a retail price of $9999.99 for ...


robert shumake

Small Business <b>News</b>: The Times They Are A Changing

In the 60's it was a song of revolution when change was just not as common. Today, it reflects a fact of life, at least for small business owners and.

Official Google Blog: Google <b>News</b> turns eight

Today we celebrate the eighth birthday of Google News. Not long after the tragic events of September 11, 2001, we started building and testing Google News with the aim of helping you find current events from a wide variety of global and ...

Pentax announces price and availibilty for 645D camera: Digital <b>...</b>

Pentax announces price and availibilty for 645D camera: Photokina 2010: Pentax has announced its 645D medium format digital camera will start shipping globally from December 2010. The camera will sell at a retail price of $9999.99 for ...

















No comments:

Post a Comment