1 Feb 2009
by Colin Greer
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Eyes on the Prize

The goal of public policy post-Bush is, I hope, to advance the general welfare and thereby ensure economic security for Americans devastated by grossly under-supervised bank and finance giants. That goal must be put front and center as the test of any policy’s value. This is especially so as President Obama considers tax cuts for working families, and considers further raising the ceiling of eligibility for cuts to $250K per year.

It is crucial in any context that we create infrastructure jobs (and hence spending capacity) in the public service sector in communities all over America.

However, these jobs are funded by and dependent on federal contributions that derive from tax revenues. Jobs in the public sector, and the private contracting that follows, are a stimulus to spending that can accelerate very quickly and bring more jobs and much needed services to average Americans.

Extensive tax relief could cost such jobs, since public money will shrink, and the idea that jobs will instead be created in the private sector through business expansion is entirely hypothetical. Business confidence may take a lot of spending to revive; and business borrowing may still be stalled by credit shortage whichTARP has not reversed.

Tax relief may or may not produce a spike in spending either. In a frightened economic climate freed-up dollars will be spent only by those who still have work and can pay taxes. These are people who are also likely to feel inclined to save a little if they can? for the rainy day that is already hitting friends and relatives.

Of course, it bears thinking about: if the character of our economy remains as it is, any increase in spending on consumer goods is most likely to produce more outsourced jobs. That’s how modest budgets stretch to buy things at Wal-Mart, after all.

Public revenue, on the other hand, carries benefits way in to the future.

Let’s consider a case: school buildings, for example, are critical. For schools to begin to perform well for all students we need to triple or quadruple the number of school buildings (a huge building program!) to get classroom sizes down to 15 students ? a threshold minimum to promote learning. In addition, the long overdue refurbishing for simple safety and hygiene could begin. The jobs created in building and restoring schools would mean more jobs for teachers too. A Teachers Corps program could, as part of a National Service program, help supply the much needed teachers? even recruiting talent from within the neighborhoods most in need of new good teachers. Communities are enriched by such programs and taxes follow from the jobs.

Foundations might join the reevaluation of tax policy in this crisis. And payout a little more than usual; that is to tax ourselves. If we increase our payout directly or indirectly (by calculating administrative overhead separately) we will contribute to sustaining jobs in the non-profit sector.

Scale and local spending are as important to economic recovery and sustainability as local organizing and community based institutions are to democratic participation in public policy and government. Local hiring for planning, construction and maintenance is crucial to community health, education and welfare.

In the developing world, the Grameen Bank is now working with French yogurt company Dannone to produce enriched yogurt to improve children’s health through self-sustaining factories with agriculture at the family level, and management with local participation. It’s a downscale infrastructure-with-purpose that provides a good social investment example for government and business in the United States as well.

 

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