that mirrors the structure we had to prepare for emergencies and natural disasters. one year ago, the national league of cities joined with three other national organizations to develop and endorse a more comprehensive long-term public job creation proposal. the proposal addressed many of the issues that would have to be addressed in a permanent job creation strategy. as such as allocation and distribution of funds, allowable uses of those funds, of the ability and targeting provisions. it is much easier to do and suitable to do within the structure of a public job creation program. importantly, protections to minimize substitution and of

employees. you will find that proposal in a paper i wrote. it is on the urban institute web site if you are adjusted in more details about what a full-blown proposal with the plot. hickel has to be creating some sort of capacity for infrastructure to support a job creation, one that could be radically expanded at the onset of a >> would close with a bottle of wine as a pro. now than ever. that is because we have made a lot of progress over the use and creative use of publicly funded jobs. it has not been progress that we have made on countercyclical job

creation. it has not been responding to the recession. it is an approach through what is now called a transitional jobs programs where publicly funded jobs are created to make their way into the labour market. that is a combination of countercyclical job strategies in times of recession and a transitional jobs infrastructure for better times and create a path forward in terms of how we can have a permanent infrastructure for the creative use of publicly funded jobs and one that will allow us to be much more prepared for the next recession. thanks. >> thank you. >> good morning. it is almost two years since the stimulus act was passed. at the outset, it was a sizable

number of analysts that were convinced that this was going to do great things in spurring jobs. by and large, i think that those people are convinced that it worked very well. there are a substantial number of economists and other analysts, including me, that thought that it would not do very much, if anything did a by m. large, i am sure they believe that it did not do anything. you may take the position of -- there are different ways that economists guard their secrets. i think we will have honest disagreements over the proposals that are being discussed today. for instance, the job creation credit. it may work. it may not. when i look at it, i affirm that it is going to say that we are going to downsize so that that guy over there can increase his

employment and we will split the difference. we mentioned dead weight loss. that is an example of it. we can disagree on balance or not. for me, the problem is that they are going to be a submerged between -- beneath much larger problems in the united states and the world economy today. if you ask me why there are such slow job growth, there are some factors at work. first of all, small businesses produce about 65% of the new jobs in the country. they are simply not hiring now. what our members tell us is that the housing crunch -- small businesses finance their

expansion by means of borrowing on their real estate equity. their private home, their office, their investment properties. that is how they grow. the barrault on those mortgages. a huge percentage of those mortgages are under water with no relief for the foreseeable future. they are now devoid of the chloral that is necessary for them to expand. there is -- the collateral that is necessary for them to expand. we are now approximately three weeks from the end of the year. we have no idea what marginal income tax are going to be. we do not know who it will hit and who will not hit. these are problems that could have been dealt with over the last two years and were not.

congress is pulling an all- nighter for their exam tomorrow. they are operating in an environment like that and they cannot make decisions. how this comes out, will be up to these companies and they cannot make decisions on expansion and hiring until they know where these rates will be. they have lost two years because of uncertainty over tax rates. thirdly, in the healthcare advisor, and the biggest of all questions that small businesses face over the last 25 years and will face for the foreseeable future is what is the cost of health insurance going to be for me and my workers and how might want to handle at? unfortunately, let me preface this, we need to do something about health care. it has been killing small

business for over two decades. what emerged from a two-year process was pushing these other items, the tax rates and the housing crisis also the agenda in favor of pursuing an extremely large health-care law. in the end, it produced a law that will cause a tremendous number of problems for businesses over the next couple of years. it is corn to bury it businesses in a mountain of costs and red tape -- is calling to bury businesses in a mountain of costs and red tape. -- is going to bury businesses in a mountain of costs and red tape. it will cut the deficit. businesses have to live under the knowledge that there is this a lot -- of this very big law.

i get questions about how we will handle the paperwork burdens and what are the paperwork burdens going to be in our answer has to be that we do not know. there will be about 10 years of regulation riding and each year you will have to spend a lot of time with your broker, your accountant, your attorney, and you will have to find out what they are going to be. there are feedback loops on taxes. in the new law, if the owner of a small business, if he happens to report his business income, as most do, under 1040, his wife gets a salary at her job. there will be a 0.9% payroll tax added onto her income which will hit his business income. if they sell a beach house, there is a 3.8% tax on profits. if these taxes costs and -- if

these taxes kos an aphid -- acid reflux, there will be a -- if these taxes cause an acid reflux, it will affect the rate. for firms with over 50 employees, a huge uncertainty under the extent of penalties. to figure out what kind of penalties, the entreprenuership would have to know what their employees household incomes -- not only what i am paying my employee, but what is their husband or wife earning. how many people live in their house? that gives rise to the employee spouses uncle tax.

if an elderly uncle moves into their house, it could trip up the wire that lance tens of thousands of dollars of penalties on the companies. and the other thing, because this law has to be fixed, we have seen the 1099 problem. i will be comfortable that it will be fixed, but it will burn precious time. this is detracting from solving those things. the question of how we get businesses and jobs growing again, how do we get governments i back on the ball on job growth, those are great questions. unfortunately, we have not begun asking those questions yet. this is a well intended plan

that the panel is proposing will be able to be anything but a ripple on the top of these larger trends. we will have discussion on it. >> i am going to propose two ideas. neither of which are highly costly in federal dollar terms, but both make sense in the short run and long run. in the first one is to create at least 1 million home ownership vouchers patterned after the rent voucher program that we already have and the second one is to provide a $5,000 per worker subsidy for expansion of registered apprenticeship training along with an increase in marketing budgets for the office of apprenticeships. let's start with the housing

idea. this comes with the notion that a big part of our job losses have been in the construction sector. between mid-2007 and 2010, u.s. jobs are down about 36%, but construction jobs are down about 6%. 30% of all jobs lost in the private sector since the early 2007 or in construction. this is a huge area. we are seeing that the house price declines and construction unemployment fee on each other. house prices and declining means less construction and less jobs and less housing demand.

there is a negative feedback loop. now, normally, construction is a cyclical industry that comes back during a recovery, but so far, not in this case. as was pointed out in a "wall street journal" editorial, it was said that both the depression and post-world war two era readily was signaled by an increase in housing investment. new housing construction expenditures have remained flat since the great recession was declared in 2009. the housing demand has not recovered because 15 million owners are estimated to owe $770 billion on their homes more than they are worth these are the continuing problems -- the are

worth. these are the continuing problems. in addition, we have what bob just mentioned about the problem of home equity limiting the expansion of small businesses in hiring because the small business people have very little collateral as a result of this huge reduction in house prices. now, we have tried some plans. i will not go into it. suffice it to say that we have tried ways of restructuring mortgages, a homeowner tax credits, these plans have generally been poorly targeted. they do not make sense in the long run. the benefits -- it is unclear why certain groups are getting benefits and others are not. largely, they have been a

failure, all they have spent large amounts of money. but what about home ownership vouchers? what is it? it would expand the current rent voucher program that would provide low-income families with an amount necessary to cover the monthly carrying costs of buying a home. the families would pay 30% of their income in return. the maximum amount would be equal to the local printer voucher for the monthly cost of caring for a home in the 25th percentile of all local homologous -- all local home values. for disciplines would have to participate in a home ownership training program. there also have to put some escrow in for repairs and it would provide local housing authority is funding for jobs to address some of these homes.

we could have a recruitment plan. i cannot go into details now. why does this make sense? rents have increased by about 11% since the house prices have dropped by about 20%. the fair market rent, which is the benchmark for subsidizing rent vouchers, that fair market rent is more than enough to cover the carrying cost of homes in about 90% of communities. in many cases, the amount is hundreds of dollars more a month than you would have with the housing vouchers. i have done some calculations on this. i have looked at nearly all metro areas, but in this packet,

i'll look for communities. we can see that house values would be well enough -- low enough so that the rim voucher is more than covered by hundreds of dollars a month. if we add into that that people would be paying 30% of their income, even very modest earnings supplemented by the itc, would mean the cost would be very low. i estimate that we could finance approximately 1 million housing vouchers. i even have an offset. the offset is to lower the low income housing tax credit, which is a supply oriented subsidy, which is just the opposite of what we need today. we need more demand for owner

occupied housing, not subsidies to increase the supply this program -- increase the supply. this program would would increase housing affordability. it would reduce the waiting for the current program and it would increase sustainable ownership for a long time. one of the things that people talk about is "haven't we tried that before?' first of all, there would be very little risk. they would hit some home ownership training and they would get a very good mortgage. so, that is the first idea. the second idea is to expand

apprenticeship training. this is a great way to subsidize human capital, which we are trying to do through the school an approach, and expand jobs. there are very large sectors of the work force in apprenticeships. our apprenticeship system works were it is tried. we have very low budget amounts. the office of apprenticeships is only about $24 million a year, which is a drop in the bucket compared to the need. i was just in indiana yesterday and it turns out that to cover all of indiana, the office of apprenticeship employes to people. -- employs two people.

this is a way of integrating education and training that link to careerist directly. no employer will provide an apprenticeships option unless they have a job to go along with it. therefore, you do not have a low of mismatch. you do not have lost earnings will you are undergoing training like the situation in community colleges and four year colleges. the evidence shows that the gains from apprenticeships for exceed the gains even for technical training in community colleges. i think that we could move in that direction and have a substantial impact on jobs, but also it would be sensible in the long run, i want -- in the long run. these are sensible in the long run standpoint. >> i would think all of the

panelists for sticking to their time allotments. that gives us more time for questions. i get the first crack. sometimes i do not know where to begin. i will start with him. -- with tim. could you elaborate on the difference between your plan and what is on the table and to speculate as to whether they could work together or some modified version of it could work if this package moves ahead? >> as i mentioned, the bill that was passed was not the obama a administration proposal. distinguish it from the proposal a have with john bishop and what

you think it would be less affected? it is less money. in terms of creating jobs, the subsidy is solid. it is six. tucson% -- is 2.6%. if someone is hiring right now, you do not get very much subsidy. you get a $1,000 bonus if you keep the person for a year. the credit that we were proposing was somewhere around $7,000 per job. it was a much bigger subsidy. ct says that you have to be unemployed for 60 days. there are many problems with this. one is that employers simply it

seem to not want to deal with this. there are stigma of fax -- effects. most of the research indicates that there would be lower effectiveness. if you want to target the disadvantages, then you are talking about public service jobs programs. the third aspect is that the higher at a + 2 -- higher act applies to all hires. one of the things that this does is increase is the dead weight

loss problem. this is normally about 10% of employment in the u.s., even in a recession. there are expansions by some firms and new jobs created by some firms. in contrast, what you decide -- once you decide you're going to hire, you're going to end up subsidizing and most employers will say that they will tell their tax accountant to figure out whether or not we can get any of this, but we are not going to take this into account or change our hiring procedures of who we hire to do this. in my opinion, if you want to target job creation, target job creation.

this targets hires. this targets hires of the long- term unemployed, which employers to not want to deal with. they form the south to different tax accountants to find out what they are eligible for. if you look at the data, there have been some preliminary reports by the treasury department and it is hard to see re act.act of the higher a i cannot see any sign that the quantity of this year is any different from previous years if you look at that data. i have not had a formal analysis of it. maybe we would find a modest effect. i'm pretty skeptical. i think that we need to start over again with an approach that targets will we are trying to increase, job creation. >> you talked about the two

proposals that may take a little time to get up and running. do you have a policy or a strategy for boosting job demand in the short term? >> i like kim's proposal. . tim's proposal. proposal. in south carolina, where they put together a tax credit along with four or five people to market it, they have been able to create a new apprenticeship program for week. -- program per week. i do think that you could move

the apprenticeship program very quickly. on the housing side, you can move pretty quickly because there are communities that have experimented with it on a very small scale. if the government got behind it, i think it could move very quickly. people are already paying more in rent than would be the cost of a home with a good mortgage. the cost may be very low and it would have this multiplier effect. aside thet's put uncertainty. let's say that we could find a way of getting equity for expansion. what would you think about the

proposal that tim has made in terms of the tax subsidies. -- subsidies? are there others then once you have mentioned above would make it attractive? >> -- than the ones you have mentioned above the would make attractive? >> there would be a lot a lot of gamesmanship. people that were already going to hire somebody would cash yen and other companies would be subsidizing them for plants of the already had. -- plans of that they already have. -- plans that they already had. the companies that we talked to

have a simple message. part of it is the housing thing. if i can i get credit, and if no one is buying my product, what i want to hire someone? that is the reality that they face every day. i do not think it is one to make a big difference. -- going to make a big difference. i do not see anything on the horizon suggests that this will make a difference. this is a reality that they face. >> we have to recognize that we have employment today, somewhere around 140 million. if there is a stimulus of 2 million, that is on the base of

140 million. that is still a relatively small%. -- small percentage was even in today's economy, during an average year, jobs are created by employers that start up and expand. there are jobs being created and people are thinking about creating jobs. this works on the margin. this season of prospect of selling additional goods or services. it takes a business that is on the margin of thinking about this, that may be thinking about expanding in 2013 and said that this is something that will label me to expand more cheaply during the initial time. there are a lot of investment costs in hiring new employees.

the question is, would rather hire new employees when you could have some of those investment costs covered by this wage credit program which you would get if you hired people in 2011 or 2012 under this proposal. if you wait until later, you do not have those investments costs. you do not have to change very many decisions to make a significant difference in the job market. >> cliff, you talked about the need for an ongoing infrastructure for a public service job. what would be the nature of that infrastructure and do you have any idea of the approximate cost of doing that on an ongoing basis? >> public job creation programs are complicated programs to run. there is no question about that. part of the challenge of the bad

policy cycle that we have had over the years is that we get into a deep recession and unemployment spikes and the pain gets too much at one point and only at that point do we get serious about putting people back to work and we try to do with very quickly. it is a pattern that leaves the system vulnerable to sloppiness . and infrastructure, it probably would be rooted in the development system. it also would be strongly connected to community because part of that strategy is about doing useful work in communities and there is an enormous amount of useful work to be done in our cities and towns across america. when i was at the center of

budget priorities, there was an extensive paper on what needed to be done to more fully fleshed out the very long list -- flesh out the very long list of public benefits. there are lots of relationships that need to be built to run an effective job creation program. particularly between local government and work force agencies and nonprofit organizations. that is one to be better over time. what drives me crazy about the public job creation to date is a tendency to focus on the

ministry of challenges we typically cost menace -- focus on the ministry of challenges. when you think about the katrina experience in new orleans, it was terrible. it was a terrible breakdown in our governmental structures. we did not walk away from that experience and a side we were going to scrap the whole national system of emergency preparedness and disaster planning to be walked away and said that we have serious problems that we have to fix. local officials and state officials will appear sleeves to make it better so that the next katrina but does not have the same experience -- next katrina does not have the same experience. on the implementation son, we

redoubled the effort to solve the problem. somehow, in the jobs arena, but has not been the dynamic. the dynamic has been to solve the problems and say that we cannot possibly do this and throw our hands and walk away. >> i have a question for cliff. i would be curious if, tomorrow, people are watching this and congress says that this is a great idea. let's do this. it is enacted the next week. fees of lee, from your experience with these programs, what scale to you think it would be reasonable to talk about for 2011 or 2012? >> the scale would grow over time. the first thing i think we would do is go back to the structure

where we cut off large numbers of publicly funded jobs. you turn that spigot back on and allows states like illinois and cities like los angeles to get back to what they were already doing. i think that you could get within four to six months, you can get jobs in place. >> how many in 2012? 1 million? >> i think so. he peak in the context of public service employment, we could go beyond that. >> one program that i like was

the program in minnesota in the mid-1980s. to four months, i think that you can do something. i am glad to hear that you agree. s over here may disagree. i will take them in the order from left -- from my left. >> one thing that concerns me about the proposals that you're talking about is whether you are fighting long ago wars. i heard to cite data from the 1930's and things that have worked the question is, are we in an economy that needs massive, structural change and these programs are not

recognizing it? the other bob noted that this has been -- construction is a cyclical industry and its return is a sign of the return of the economy. sometimes cyclical trends term structural. -- turn up structural. we are in an unusual situation. we have tremendous cities of sparkling in houses that are entirely empty. the question is, are we actually want to see an increase in the return of demand for construction men have this huge overstock of houses in the country. i think it is a serious worry. look at detroit. they're trying to grapple with their problems.

i do not think we have factored in these proposals. it is something that has been written by your colleague that has noted that for the first time in u.s. history, we have passed the point -- to put it simply, there is no discretionary spending left in the government accounts at this point. everything from day one is fully spent when congress walks in the door. if you look at programs that rely on government to fund them over the long haul, are you turning that into something of a promise that you cannot keep? i do not know the answers. those are the questions for me.

>> i will refrain from responding. somebody mentioned the magic word of public jobs in the 70's. >> let me get to that. first, bob talked about how we are for to get out of the housing situation. we certainly will not get out of it by subsidizing a larger supply of housing. i think that we have to shift it towards the demand. . -- the demand. point. demand rand has either gone up or is stable. turning to the public service employment, i think that you have to remember that in the

1970's, part of the backlash was that there was massive substitution. a lot of that has to do with the fact that the early stages of the public service employment programs allowed for higher wages and allow for people who were just unemployed -- allowed for people who were just unemployed. mayer's love the program because they could simply expand hiring in a not so different way than they were doing anyway. then, we tried to have a more targeted program in the late 70's. a program that limited wages. you only want people that cannot get other jobs to take those jobs and you want to maximize the number of jobs. as a result, the mayors were not

so fond of that. when they found that we cannot use our normal work force for that. we did not want them to do that. today, you have the same thing. cliff said nothing about wages. wages are critical. for an efficient program, you need relatively low wages. in a lot of major cities, there will be people screaming. they say that these are starvation wages and you cannot afford a family on them. they ignore the fact that when you have a wage, you can also get the earned income credit which would be a 40% of subsidy for wage. -- 40% subsidy for wage. there are a lot of decentralize ways to create jobs.

small groups could fill up eight two page proposal and walk out puts it would create and you would have a competition. you created a competition. he had four more proposals then you have funds for which is good because then you choose the best ones. you have a strong monitoring program and you have this bottom of system that builds on the entreprenuership of local organizations. you can get things running more quickly and they can relate to neighborhoods and relate to people and if you cut them up, if they are not doing what they promised, you can cut off a few projects without cutting off the whole city of chicago. you want to look towards those approaches as well. >> i know that cliff but wants

to respond on a point or two. while he is responding, i can't queue of people for questions -- i can queue up people for questions di. i think we will start at the front and moving our way back. >> i am delighted to hear about this. he described the learning curve that i think that the country needs to go through. these were adjusted so that by the time you got to 1978 or 1979, you had very metal will -- very manageable substitutions. there's always going to be some of mouth. -- some amount.

public service employment is under a great disadvantage because everything is visible. a reporter can go and see, or whatever. this is going to have what tim referred to as leakage. leakages enormous. but it is invisible. -- linkage -- leakage is enormous. but -- leakag leakeage is enormous, but it is invisible. i love bob idea about competitive structures.

the only issue for me is that it takes quite awhile for the federal government to get a competitive program u

of the american people have a chance to work for a wage and to support their families in that context. and then, you know, the longer term vision and how you can use publicly funded jobs as stepping stones into the labor market for people who need that help. >> middle and high school students, as you work on your documentary for c-span's studentcam competition here are a few tips from our judges. >> one of the things i look for when watching your videos is you, the student. i want to see you and your personality and that helps make your videos stand out from all the rest. >> what i like to see most