The Breakdown: Economy

$35 billion of jobs bill to go to states

Marketplace Staff Oct 17, 2011
The Breakdown: Economy

$35 billion of jobs bill to go to states

Marketplace Staff Oct 17, 2011

Kai Ryssdal: This morning found the president of the United States in western North Carolina. Asheville, to be particular, on another bus trip stumping for another plan to get the economy going again. The subject at hand this time ’round was his now-defeated jobs plan. Senate Republicans blocked the $447 billion package last week. So now, the president said, he’s going to take it nice and slow, bit by bit.

Barack Obama: I guess that maybe they just didn’t understand the whole thing, so we’re breaking it up into pieces.

Up first, according to the White House, is a $35 billion package of aid to states that the administration says will help keep teachers and firefighters on the job.

We’ve called Bill Galston at the Brookings Institute for a little insight. Welcome to the program.

Bill Galston: My pleasure.

Ryssdal: First of all, the immediate effort today by Democrats in Congress, this $35 billion for the states. Why are states so important in this jobs equation?

Galston: Well, very simply, the decline in employment at the state level is pulling against — and in some months, counter-balancing — gains in other parts of the economy. And as long as job loss continues at its current pace at the state and local level, it’s going to be very difficult to get up any head of steam in the jobs market.

Ryssdal: Seems to me, though, Bill, we’ve already had quite a bit of difficulty getting up a head of steam. How’s $35 billion going to help?

Galston: Well, at this point, every little bit helps. States are facing some pretty urgent problems in teaching and in law enforcement and other basic services. Their tax bases still haven’t recovered to where they were prior to the onset of the Great Recession. And they need all the help they can get.

Ryssdal: As the president dismantles his jobs package and tries to get it through Congress, what do you suppose is going to come up next?

Galston: I would suspect that the extension of the temporary payroll tax reduction is going to be pretty far up the line, if not absolutely the next item to come up. It is something that I suspect will eventually receive congressional support simply because it is an idea that makes a lot of sense, and I think it’s going to be very difficult for Republicans to maintain the line against a tax reduction indefinitely — it sort of cuts against their grain.

Ryssdal: They’ve been doing pretty well so far.

Galston: Yes, but the White House, I think, is betting on a proposition that as far as I know is solidly rooted in public opinion. Namely that if you look at most of the individual items in the jobs bill, they do enjoy strong public support. And they are hoping that once the spotlight turns on each of those items individually, that the political pressure on the Republicans to cooperate, at least to some extent, is going to go up. And I think they’re probably right in that bet.

Ryssdal: Some of the parts being greater than the whole? $35 billion at a time is more than $447 billion?

Galston: I don’t think they’re going to get to $447 billion, and I don’t think they think they’re going to get $447 billion. But at this point, they’re aiming for a number of slices, hoping that it adds up to at least half a loaf.

Ryssdal: Is there a chance, though — and there have been some burblings that maybe third quarter gross domestic product will be like 3 percent, which is you know, not great but not really terrible, where we’ve been — is there a chance that a sign of a rising economic tide might lessen this urgency?

Galston: Possibly. But there has been an almost unrelenting drumbeat of terrible economic news for the past four years. And public expectations have all but collapsed. There is very little confidence in the future, and I doubt very much that one quarter of decent GDP numbers will be enough to change those perceptions and expectations. People are still going to be hurting. They’re still going to want some sort of action, details to come.

Ryssdal: Details to come. So they just want something and we’ll see what the specifics are later?

Galston: Absolutely.

Ryssdal: Bill Galston, a senior fellow in governance studies at the Brookings Institution. Bill, thanks a lot.

Galston: My pleasure, Kai.

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