U.S. jobs forum seeks cheap growth

The Economic Policy Institute, another liberal Washington think-tank, estimates a 15 percent new job tax credit could create 2.8 million jobs in 2010 at a cost of US$28 billion.

But critics of this approach worry that the government would inevitably wind up subsidizing some positions that would have been filled anyway, making it difficult to judge how many new jobs had actually been created.

This issue has already caused problems for the Obama administration, which is under fire for overstating the number of jobs saved or created by the first stimulus.

Some favor a more aggressive supply-side approach.

“The President should focus and begin by doing no harm,” said Glenn Hubbard, dean of the Columbia Business School in New York who was a top adviser to former President George W Bush.

“Proactively, support for training ... and a cut in the payroll tax and corporate tax are the ways to go,” he said, arguing that there were ways to stimulate employment without hitting the long-run deficit.

The first Obama stimulus is being delivered against the backdrop of a record US$1.4 trillion budget deficit, and more debt-financed government spending may do more harm than good.

Investors could take fright at the threat of the government issuing a flood of Treasury bonds, driving long-term borrowing costs higher and hobbling economic growth. But demand for another fiscal jolt may be politically hard to resist.

“I think the first (stimulus package) was absolutely needed and that stopped the slide. But I do think we are going to need a little more to ensure that the recovery doesn't drag on,” said John Irons, research and policy director at the EPI. “We need to make sure the recovery is a strong recovery.”

Underlining the political cost of rising unemployment, a recent Quinnipiac University poll showed Obama's job approval rating dropping to 48 percent nationally, the first time it had dipped under 50 percent. His approval rating for his handling of the economy was even lower at 43 percent.

The forum will gather figures from business and labor to examine “all good ideas” to boost job creation, the White House says. Obama will then embark on a national White House to Main Street Tour to escape the Beltway bubble and share ideas.

To his critics, this will be pure political theater.

“Are there any free things to do? Wouldn't that be nice, and why have we not done them before?” said Alex Brill of the conservative American Enterprise Institute.

“I am not aware that there is anything that can be done (cheaply), so that leads me to conclude that this must be about politics,” he said.

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