Thursday, October 21, 2010

Conyers' Deficit-Neutral Jobs Bill

Conyers' Deficit-Neutral Jobs Bill
cross-posted from Open Congress blog

by Donny Shaw (July 14, 2010)

If I had to pick the top three factors in U.S. politics right now I would say the unemployment situation, concern about the deficit, and distrust of the financial industry. Remarkably, Rep. John Conyers [D, MI-14] (pictured) has introduced a bill this session that seems to fall on the popular side of all three of these issues. It would be deficit neutral, dramatically reduce unemployment, and levy a new tax on the riskiest Wall Street transactions.

The bill is called the 21st Century Full Employment and Training Act. Here’s how it would work.

First, the bill sets a series of binding unemployment-rate targets that over a ten-year period would bring the rate down to 4%. Here are the targets:

  • 9% unemployment after 6 months of the bill being enacted
  • 8% unemployment after 2 years
  • 6% unemployment after 5 years
  • 5% unemployment after 8 years
  • 4% unemployment after 4 years
If, according to data from the Labor Department, any of the above targets are not met, money would be automatically disbursed from a new “National Full Employment Trust Fund” that would be set up under the bill to fund new job positions around the country. That money would go primarily to city governments in areas with exceptionally high unemployment rates, but some of it would also go to state governments (30%) and indian tribes (5%). Those funds would then be disbursed to public and private projects that directly address the needs of their communites.

Examples spelled out in the bill include repairing schools, revitalizing abandoned property, expanding emergency food programs, and increasing staff at programs that help disadvantaged youth.

All jobs created under the bill would have to be designed to last for 12 months or more at at least 30 hours per week. They would also have to meet some minimum pay requirements to ensure that employees funded by the bill earn rates equivalent to regular employees.

You’re probably wondering how anything like this could possibly be deficit neutral. Well, the answer is that the bill calls for a new financial transactions tax to be levied on companies that engage in high-risk trades. Stock trades, futures contracts and credit default swaps would all be included. More exotic transactions would likely be taxed several times over under the bill, and the impact on short-term, risky speculation would be more significant than that on long-term investing and hedging. The idea behind this financial transaction tax is twofold — it raises money to fund the jobs trust fund and it discourages financial companies from getting involved in too much short-term speculation.

This bill has not moved an inch in the legislative process. It was introduced on May 4, 2010 and has been stuck in committee since. But that’s really no surprise. Congress right now can hardly pass a 6-month extension of unemployment insurance, let alone a massive new jobs program. And they can’t pass a financial reform bill that contains a relatively modest $19-blilion-over-ten-years tax on big banks and hedge funds, let alone a sweeping financial transactions tax that could cost the industry as much as $100 billion per year. But support for the bank tax is steadily growing — see the work of Dean Baker and Bankster USA — and the unemployment situation is set to take a turn for the worst, so a legislative package like this may look different to us in the coming months and years.

Read HR 5204

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