Who Pays for Economic Recovery?
We need more jobs in America. The question now is who pays for them.
Over at the Washington Post, Charles Lane recommends that the working poor bear the brunt of job creation efforts. If we just lowered the minimum wage, he proposes, businesses might hire more people. Voila: lower unemployment. Forget the fact that a higher minimum actually stimulates job growth on its own, or the evidence that in fact, cutting wages doesn't boost hiring. Of course the nation's poorest working people, many of them unable to make ends meet now, would be asked to sacrifice. But in Lane's words, "why not?"
Recent events in Britain suggest a different tack. Yesterday, Chancellor of the Exchequer Alistair Darling announced a 50% tax on bonuses in the financial industry, an effort to not only raise revenue but encourage banks to use their profits for lending rather than exorbitant bonuses. A similar tax imposed in the U.S. - or an even more lucrative permanent tax on financial transactions -- could be used to fund American job creation efforts at the scale we really need ($400 billion over two years, Robert Reich suggests, not the $70 billion Obama seems to be contemplating).
The two proposals represent a sharp contrast in who pays for the job creation efforts the nation requires. I know which one I'm rooting for.