The Broader Market

The following is a great article calling on the Obama administration to be bold in its job creation agenda. Enjoy.

by Michael Ettlinger, Donna Cooper, Sarah Rosen Wartell, and Bracken Hendricks

When President Barack Obama announces his jobs plan in September, it should be a plan that matches the scale of the problem. With millions unemployed and job creation sluggish, this is not the time to be timid.

In particular, the president needs to offer much more than proposals that conservatives in Congress might support—tax cuts that wouldn’t be nearly as effective as the alternatives. The president’s proposals also will have to go well beyond simply extending provisions such as payroll tax cuts that are set to expire. With millions of unemployed Americans, the plan needs to be one that will improve the economy, not just tread water. And the plan needs to create jobs fast, not just lay the groundwork for jobs in the future.

In short, the plan should be a sharp contrast to the economically nonsensical agenda his political opposition is passionately arguing for. The idea that simply slashing government programs and taxes is the key to economic success is a tried and failed strategy. The tax system we have now is a tax system inherited from President George W. Bush. We’ve seen the results. Economists across the political spectrum agree that spending cuts in a weak economy run counter to everything we know about getting a country out of an economic hole. President Obama should not meet halfway those who only offer economic incoherence. He should take them head on.

For the rest of the article, see here.

by Michael Ettlinger and Jordan Eizenga

Job creation isn’t going to get moving to the extent we need until there’s sufficient demand in the economy to get businesses believing that there will be good returns to investing and hiring. In short, they need customers. That said, at the margin there is something to be said for providing other forms of motivation to hire.

One way to do that is to create a “National Payroll Contest” that offers prizes to the firms that generate the greatest increases in payroll over the course of the year. It’s an admittedly quirky idea. But hear us out. It would be inexpensive, and if it worked it would help create jobs.

by David Min, Jordan Eizenga and John Griffith

The announcement yesterday that the Obama administration will consider proposals to sell off large numbers of government-owned foreclosed homes is an important step toward a new system of U.S. housing finance. If designed well, this initiative could generate much-needed revenue for the government, expand the quantity of energy efficient, affordable housing to thousands of American families, and create well-paying jobs.

Government-supported entities own hundreds of thousands of foreclosed homes, mostly from mortgages insured before the housing bubble burst. These owners include the Federal Housing Administration, Fannie Mae, and Freddie Mac. Most of these so-called “real-estate owned” or “REO” properties are currently unoccupied and losing value as they deteriorate.

The White House addressed this issue yesterday by releasing a public solicitation for proposals on how to deal with this growing stock of REO properties. Their goal is to reduce the number of foreclosed homes in a way that minimizes taxpayer losses, expands affordable housing, and addresses property repair and rehabilitation needs.

For more of this article, see here.

by Jordan Eizenga

Congress’s 11th-hour decision to raise the debt limit after agreeing to a $2.4-trillion deficit-reduction package may have averted economic calamity, but the United States is not out of the woods yet. The long-term effects of the protracted and fractious debt-limit negotiations, coupled with a deficit-reduction package that does nothing to put people back to work, tells me that we’re in for a rough ride. In particular, there are three things that concern me most going forward:

For more of this article, see here.

by Alon Cohen and Jordan Eizenga

The federal government is holding a significant number of foreclosed properties from mortgages it guaranteed before the housing bubble burst. The weak housing market would surely yield depressed prices if the government were to sell off these properties en masse. So what should we do with our growing stock of foreclosed homes? And can we put Americans back to work in the process?

Here’s what we propose: Institutions that hold tens or hundreds of thousands of these properties—both private institutions and those backed by the government, such as Fannie Mae, Freddie Mac, and the Federal Housing Administration, or FHA—should rehabilitate, retrofit, weatherize, and rent them or sell them to investors.

For the rest of the article, see here.

by Jordan Eizenga

If Congress fails to raise the debt limit before August 2 the United States’s credit rating will almost certainly be downgraded and interest rates will jump. Without the ability to borrow, the federal government will have no choice but to immediately cut the payments it is obligated to make by 40 percent. This will threaten Social Security benefits, active-duty military pay, Medicare and Medicaid payments, and all other federal activities, from law enforcement to education to health care. The American economy will quickly be plunged back into recession if the federal government is unable to meet a significant portion of these obligations.

by Jordan Eizenga

There is a lot at stake for Canadians in the faltering U.S. debt-limit negotiations.