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Editorial: Cooperation essential in restart of economy

Sat., Sept. 10, 2011

This past Thursday could – should – become a pivotal day in the reset of federal economic policy.

If recovery is to be snatched from the brink of a double-dip recession, Americans must see a concerted effort in the White House and Congress to help businesses create more jobs, and get the nation’s fiscal house in order. Another repeat of the debt-ceiling standoff, and infamous scammer Charles Ponzi would garner better confidence ratings than politicians – Republican and Democrat.

The jobs program announced by President Barack Obama contained a few worthy elements, but their immediate economic impact is questionable. Payroll tax cuts have so far done little to shorten unemployment lines. Investments in school modernization and transportation infrastructure, though desirable, require lead times that push new construction hiring well into next year.

And instead of spending $15 billion for the rehabilitation of foreclosed homes and businesses, the plan should directly address the factors driving more homeowners to walk away from their properties. They need better access to refinancing at lower interest rates. A proposal is reportedly due out soon. Hurry.

Another element of the president’s plan, spending $35 billion on teacher, police and firefighter hiring or retention, should be set aside.

One promising idea, copied from Georgia and North Carolina, would allow business to “try out” workers for short periods while they continue to collect unemployment. With mismatches between job requirements and worker skills one of the biggest impediments to hiring, trial runs might help reassure employers a job candidate really meets their needs.

The president also reiterated a commitment to less regulation, an assertion backed up by a decision last week to shelve new smog rules.

Meanwhile, the Joint Committee on Deficit Reduction co-chaired by U.S. Sen. Patty Murray met for the first time earlier in the day. The “super-committee” must find at least $1.2 trillion in budget savings over the next 10 years or across-the-board cuts will kick in automatically. The deadline is Nov. 23.

In her comments on the president’s speech, Murray correctly identified economic growth as the best remedy for budget deficits, but there is nothing in the most recent economic reports to suggest an upturn that would make her committee’s work easier. Before it gets fully under way, a large, bipartisan group of senators is already advocating a much more aggressive plan, on the order of $3 trillion, like that discarded as the debt-ceiling talks circled the porcelain.

House Democrats may try to add jobs creation to the committee’s workload.

And some observers warn that smaller government is a bad prescription for a contracting economy.

Tone will be almost as important as substance in the coming weeks. Public confidence in the nation’s leaders is in tatters. Even small solutions highlighted by a show of common purpose would be reassuring. But don’t, as the president has done too often, over-promise.

Recovery is going to be a very slow process.