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Opinion: Democrats Push ‘Job Guarantee’ Amid Midterm Elections

         4/29/2018

Democratic Senators

                                                                                                                                                                                                                                                 

Democrats and progressives are fawning over a new legislative measure being taken by Sen. Bernie Sanders to “guarantee” a well-paying job to everybody who wants one. The Vermont Senator is not the only lawmaker who is pursuing legislation to artificially create jobs using federal funds. Democratic Sen. Cory Booker is also pushing for legislation that would “establish a three-year pilot program that would guarantee jobs for all residents in up to 15 high-unemployment communities and regions”. Both proposals, however flimsy, enjoy the support of an increasing number of congressional Democrats. These legislative appeals to populism are actually in line with Donald Trump’s campaign rhetoric on infrastructure, and it is no surprise that Senate Democrats are releasing these policy proposals during this felicitous time of the midterm elections. However, even if they might hold popularity with voters, the economic response to government stimulus is not likely to result in growth.

Historically, federal impositions and stimuli on the markets have had negative effects on economic recovery. Frustratingly, most people in the United States are taught that President Franklin Roosevelt saved America from total economic irreparability by putting people to work on various government projects. This myth should have been put to rest a long time ago, because of the amount of evidence that we now have of the effects of FDR’s “New Deal”. In 1931, just before the impression of FDR’s presidency, the unemployment rate was at a whopping 16.3 percent. Later in 1939, by which time FDR had already initiated a frenzy of infrastructure projects to decrease unemployment, the unemployment rate had risen to 17.2 percent. In fact, one famous 2004 UCLA study by economists Harold L. Cole and Lee E. Ohanian, suggests that the policies of the Roosevelt administration actually prolonged the Great Depression for 7 years. Yet Democrats believe that their plans to “guarantee” everybody a job will be anything but an impediment to the market in a time of economic prosperity.

The last attempt to recreate FDR’s “New Deal”, was the Stimulus Package of 2009 to help “recover” from the Great Recession. The average real GDP growth of recovery from past recessions in the US was about 4.3 percent. Obama struggled to recover at a 2 percent rate; a historical low. Simply put, the mythology of money multipliers via stimulus policies are not an effective way of putting Americans to work.

Aside from the historical failure of government intervention, Democrats still discount the positive effects on the economy that have been made in the Trump administration. Top Democrat Kirsten Gillibrand tweeted recently regarding the new democratic proposals: “If Republicans could give $1.5 trillion in tax cuts to corporations and the wealthiest among us, why can’t we invest a similar amount in a guaranteed jobs plan for regular Americans who are unemployed and willing to work to better their local community?” The greatest irony is that the money that was given back to the wealthy and corporations will most likely employ more Americans than gratuitous government spending of a similar magnitude ever could. The Republicans and Trump must work to ensure that no such policy will ever be granted to the Democrats, especially following the passage of the robust Omnibus Spending Bill.

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