Politics

09.29.13

Jobs First Plan Would Create a U.S. Economic Ceasefire for Stability

Instead of brinksmanship all the way to a government shutdown and default, why not call a truce that would freeze spending and tax changes and remove the debt ceiling until unemployment drops below 6.5 percent? Mark McKinnon on Jobs First.

As Washington seems determined to veer back into chaos, let’s review some events we’ve witnessed in the last month or so.

President Obama firmly stating that he will not negotiate on the debt ceiling.

House Republicans angling to get big spending and tax cuts out of a new round of negotiations.

The financial markets bracing themselves, as business leaders wonder whether Washington really is going to crash the economy this time.

Sound familiar? It should. Because we’ve seen all this before.

Somewhere in the last few years, Congress and the president seem to have decided that it’s OK to govern by bouncing from constant crisis to constant crisis.

It’s little wonder that Congress’s job approval rating is already hanging at a dismal 19 percent, while the president’s approval has dropped to 44 percent. And it’s little wonder that more than three out of every five Americans say our country is on the wrong track.

It’s time to put a stop to these constant battles. It’s time for a truce. And No Labels—a group I cofounded with Republicans, Democrats, and independents—has a plan to make that ceasefire a reality.

It’s called Jobs First. This plan would simply prevent any new changes to taxation or spending levels until the unemployment rate finally drops below 6.5 percent.

In the meantime, it also would suspend the debt ceiling, so the Treasury Department isn’t barred from paying the bills Congress and the president have already rung up.

Our leaders in Washington would still be able to take on issues like tax reform if they wanted to, but any solution would have to be revenue neutral. And most important, there wouldn’t be any emergencies looming over those negotiations.

You might think this all sounds drastic—but a ceasefire is far preferable to the economic instability we get when our leaders in Washington create crisis after crisis. These constant battles aren’t just eroding the public’s already thin trust in Washington, they’re also weakening our economy and costing us jobs.

During the four months of uncertainty of 2011’s debt ceiling crisis, the rate of job creation declined by a third. A team of economists at Stanford and the University of Chicago recently estimated that 2.5 million more jobs would be created over the next 18 months if Washington stopped creating all this extra uncertainty.

In other words, every minute our leaders in Washington spend on political games, they’re hurting the economy. And that pain is nothing compared to what would happen if Congress ends up allowing a shutdown or a default on our bills.

Remember in mid-September, when the Federal Reserve decided to keep up its extra measures to boost the economy? That was because the Fed determined that the economy still isn’t strong enough. On top of that, the Fed said the unemployment rate needs to dip to at least 6.5 percent before it will be comfortable backing off further extraordinary measures to support the economy.

Given that diagnosis, now is no time for Congress and the president to create any more economic instability.

That’s why we need the Jobs First plan. It will end these constant crises until our economy gets back on much steadier footing. And in the meantime, it will give Congress and the president the space they need to start solving problems again.

If this plan is enacted, Obama and House Speaker John Boehner will be able to sit down at a negotiating table without having to wonder who will blink first.

No politician from either party will be able to say, “If you don’t meet my demands, the economy gets it.”

Instead, there will have to be good-faith negotiations. Each side will have to give and take from their own priorities. And we’ll all be better off for it.

Jobs First is obviously not my first choice. It’s nobody’s first choice. It would be much better if Congress and the president could end these high-stakes negotiations and stop pushing our country toward catastrophes of our own creation.

But anyone who’s been watching for the last few years knows that won’t happen all on its own. If we want our leaders to stop fighting and start putting jobs first, this is the best way forward right now.