The Economy and Jobs

Five-Point Jobs Plan

December 1, 2011

The United States is the most prosperous nation on earth, but our economic strength and security is at risk. After three decades of policies that have favored the wealthy over the middle class, unemployment is high and economic growth is low. The private sector, which is the primary provider of employment opportunities, is hoarding cash. Businesses are not hiring enough.

Usually, government’s role in job creation is indirect. In normal times, government provides an educated workforce, infrastructure, and policies that are good for business, rather than directly creating jobs itself.

But in challenging economic times like those we now face, I believe that government can and must do more to support our economy and to create jobs in the short term. That’s what I heard on my 650-mile walk around the state: the people want government to help create jobs. It’s their top priority, and therefore it’s mine as well.

I believe that the best social program for any individual or family is a good, steady job with decent wages and benefits. Government can and should be focused on ensuring that America is an opportunity society, in which all individuals willing to learn new skills and work hard have a chance to succeed.

As a matter of responsible public policy, we must deploy all the resources at our disposal, from both public and private sector, in order to stimulate the jobs that are the basis of dignity and opportunity for all Americans.

Today, I am announcing a five-point jobs plan that will put America on a winning path forward. It will strengthen the American economy in both the short and long term by utilizing the best of both the public and private sectors to create new jobs.

Initiative Amount Time-Span Estimated Jobs Created

Infrastructure Investment $300 Billion 5 Years 1,500,000

Clean Energy Investment $50 Billion 10 Years 684,000

Advanced Manufacturing Investment $50 Billion 5 Years 100,000

Government-Owned Equity n/a n/a

Made in the USA Tax Credit $100 Billion 5 Years TBD

Total $500 Billion 5 Years 2,284,000

1. Infrastructure Investment: $300 billion over 5 years

Invest $300 billion nationwide over five years to rebuild our infrastructure, including roads, railways, buildings, bridges, dams, water and technology infrastructure like broadband to create an estimated 1.5 million jobs.

Massachusetts, as an example of what is needed throughout the country, has an estimated $35 billion in infrastructure needs. These projects include:

* $20 billion worth of maintenance for our roads, bridges, dams, and tunnels to make business and workers more productive;

* $4 billion for Cape Cod, to keep their water clean and preserve the tourism industry;

* $1.5 billion for the South Coast rail project to Fall River and New Bedford to lower the 16% unemployment rate in those cities;

* $500 million to extend the T’s blue line from Revere to Lynn;

* $900 million to extend the T’s green line from Cambridge to Somerville;

* Paying off the $8 billion in debt that resides on our state’s transportation balance sheet so that we can buy new locomotives and upgrade tracks;

$500 million to double the T’s parking spaces.

By investing government resources in rebuilding our infrastructure, jobs will be created in engineering, construction, and manufacturing that will, in part, make up for the jobs lost to our nation’s failing housing industry. Further, these investments will aid private industry by spurring private investment, supporting local businesses, and providing a solid foundation for commerce.

Funding for this large-scale investment in our nation’s future should come from redirecting our resources away from foreign wars and from ending the Bush tax credits on the super wealthy.

2. Clean Energy Investments: $50 billion over 10 years

Invest $50 billion in clean energy research, development, and manufacturing to further America’s energy diversification while creating an estimated 684,000 jobs over the next decade.

By investing in clean energy, the United States can diversify our energy supply, stimulate the economy with new jobs, enhance our national security, and contribute to a cleaner environment. Wind, solar, hydro, and biomass power can be cornerstones of American produced energy that is sustainable and affordable. We must recognize and accept the fact that other nations are subsidizing these industries, and the United States is falling behind. Our challenge involves making renewable energy design, management, and production a top priority for government investment until the output pricing is competitive with other forms of energy. At that stage, capital from private industry can begin to replace government investment.

We should continue to explore public-private partnerships, working with all those industries that have a stake in the environment, to create a worldwide competitive advantage that accrues economic and environmental benefits across the country.

Investments in new wind, solar, hydro and biomass technologies can create new jobs and new sources of energy for our businesses and our homes. Indeed, our nation must accelerate the shift from using coal and oil to cleaner fuel production, which would reduce our dependence on fossil fuels and thereby enhance our national security.

One of the great attributes of this nation is our knack for leading innovation and change. If we challenge our scientists, engineers, entrepreneurs, and business leaders to use their creativity and resourcefulness to pioneer environmentally sound ways to grow our economy and create jobs, the opportunity for advancement and progress is boundless. And, as the economies of other countries grow around the world, they will demand the expertise that we have developed and our environmentally sound technologies and approaches.

The result could be a stronger economy here and a cleaner, safer environment throughout the world. America should be in the forefront of such innovation, harnessing new ideas with public and private sector leadership and investment.

If the federal government invested $50 billion in clean energy, to both produce alternative energy and to make energy efficiency improvements, we could leverage another $50 billion in private investment in the sector, therefore creating about 684,000 new jobs.

Eliminating tax subsidies for fossil fuel production could generate $46 billion in funding for clean energy investment over the next decade.

3. Advanced Manufacturing Investment: $50 billion over 5 years

Invest $50 billion in tax incentives, loan programs, and grants to promote collaboration between high tech industry and manufacturing.

Many U.S. based small and medium enterprises (SMEs) in the manufacturing industry face significant competitive challenges. First is a lack of access to capital; the industry does not typically attract venture capital or private equity funds, and since the financial crisis of 2008, many banks have tightened their lending criteria. Second, is a lack of access to skilled labor; many SMEs have workforces with an average age over 50 and don’t see a younger generation ready, willing and able to step into their shoes. Third is policy related; reliability of the R&D tax credits, stable tax rates, and a more flexible and balanced regulatory environment.

This jobs plan addresses each of these challenges by making direct investments in the following areas:

* Forums to facilitate synergies between high tech and manufacturing firms and identify potential joint venture partnerships;

* Direct investment, subsidized financing, accounting, legal, and insurance, and discounted back office solutions for joint ventures between high tech and manufacturing firms to develop new products;

* Direct investment in municipalities and state governments to transform fallow sites and former manufacturing buildings into “high tech manufacturing ready” and “shovel ready” sites for small and medium enterprise (SME) manufacturers;

* Workforce development and training and federal funding for community colleges to enlarge the skilled labor base for advanced manufacturing;

* Relaxed regulatory oversight and compliance requirements for SMEs with track records of compliance;

* Industry sub-sector alliances similar to the SEMATECH model to address challenges in which the private sector is not providing viable solutions.

Historically, the American economy has developed through discoveries, inventions, and the fusion of expertise in industries that create new cycles of innovation. We are at our best when we combine two clusters of excellence in order to create a third cluster of new businesses and new jobs. In other words, the American economy grows through triangles, when we mix two industries together to make a third. For example, in Massachusetts:

* Financial services + information technology led to the development of State Street Bank, Investors Bank and Trust, and Boston Financial Data Services;

* Heath care + higher education led to the development of biotechnology firms such as Genzyme, Boston Scientific, and Biogen Idec and others.

Government can, and should, foster these synergies to ensure that the United States is on the cutting edge of innovation. As American scientists, entrepreneurs, and engineers make new discoveries or design new products, they should not have to ship their ideas overseas to be manufactured. With government’s investment in the large scale manufacturing of products with high barriers to entry, American high-tech manufacturing companies can build these inventions, thereby creating American jobs, streamlining the production process, and encouraging further discovery and innovation.

As the United States develops job creating industrial policy, we should focus on industries that have dual benefits: jobs + helping the environment (renewable energy) or jobs + saving lives (biotechnology) or jobs + cutting edge competitiveness for the future (information technology). Other examples of industrial sectors in which we should focus our national resources include:

* Nanotechnology

* Robotics

* Aviation and aerospace

* Waste management

* Water management

As Susan Hockfield, President of MIT, wrote in an op-ed in the New York Times this summer, the United States cannot thrive economically on the service sector alone. Moreover, she articulates how innovation and manufacturing are inherently linked, and that surrendering our manufacturing base to other countries imperils our ability to maintain our creative competitive advantage. She also advocates for “major innovation investment” for our manufacturing sector.

4. Government Equity in Industry Investments

Government secures up to 3% equity in infrastructure, alternative energy, and high-tech manufacturing investments, aligning the interests of government and business while jumpstarting new industries in a potentially deficit-neutral manner.

The provision of the 2008 Massachusetts Life Sciences Law that I authored gives Massachusetts an equity stake in new life sciences businesses. The equity could generate hundreds of millions of dollars in a revolving investment fund to create new companies and new jobs in the life sciences industry. The law could help Massachusetts-based scientific teams achieve medical breakthroughs to cure chronic diseases. If this premise were applied to all of the investments outlined above, in infrastructure, clean energy, and advanced manufacturing, these investments could significantly reduce the net government investment made for this jobs plan.

In addition to providing much needed investment and capital in new, necessary industries, government equity in these industries allows government to take advantage of the benefits of capitalism. By working within our economic system, equity policies support the private sector while aligning the interests between government and business. This is not capitalism unfettered, rather, it is government investment in our economy while balancing this marginal risk with responsible, mutually beneficial regulation and oversight.

For companies that are already successfully involved in the targeted industries, like high-tech manufacturing or alternative energy, tax incentives are offered in exchange for non-dilutive stock shares. This, again, creates a mutually beneficial agreement whereby the business benefits from government provided tax breaks and the government benefits from a stake in the company which it can sell in the future, providing further investment funds.

Loans provided to companies will include a contractual agreement (in the warrant), giving the government the right to purchase stock at a pre-arranged strike price.

5. Tax Incentives for MADE IN USA Products: $100 billion over 5 years

Provide up to $100 billion in individual tax credits for consumers who show proof of purchase of goods made, assembled, or grown in the United States.

We haven’t seen a trade surplus in the United States since 1975, and our current trade deficit stands at $497 billion, $252 billion with China alone. It can be difficult to even find products in any major store that are made in America, yet consumer demand is one of the greatest economic drivers. By creating tax incentives for individuals to purchase goods Made In The USA, government can encourage retailers to offer such products and customers to seek them out.

With the onus on the individual to track and report their American made purchases throughout the year, government’s role in this policy will be minimal. It is, after all, the private sector that is the driving force behind job creation. As Americans learn of this policy and wish to take advantage of it, consumer demand will drive the private sector to offer more American made products.

Implementation of this policy ultimately imposes very little on the private sector. As products are already labeled with SKU or UPC codes that designate the product’s country of origin, customers would either have to recognize these codes or retailers would strive to create a system to make them easily identifiable. Again, this would be created by the private sector itself and not imposed onto businesses by the government. The tax incentives would apply to all products purchased at companies in the United States with a UPC or SKU code that identifies that product as being manufactured, assembled, or grown within the United States.

Credits will be capped at $1,000 per income tax filing, and will be awarded proportional to a tax filer’s income. Those earning less than the median household income will be eligible for a 50% credit on all purchases. Those earning between the median household income and $250,000 will be eligible for a 20% credit, and those making over $250,000 per year will be eligible for a 10% tax credit, thus encouraging those who are able to invest more of their annual spending on American made products.

END

Posted August 8, 2011

The United States is the most prosperous nation on earth, but our economic strength and security is at risk. After three decades of policies that have favored the wealthy over the middle class, unemployment is high and growth is low. The private sector, which is the primary provider of employment opportunities, is hoarding cash. Businesses are not hiring. Consumers and families facing very uncertain futures have cut back their spending.

But in challenging economic times like those we now face, Tom believes that government can and must do more to support our economy and to create jobs. That’s what he has heard on his walk around the state: the people want government to help create jobs. It’s their top priority, and therefore it’s Tom’s too.

Our Goal: An Opportunity Society

Tom believes that the best social program for any individual or family is a good, steady job with decent wages and benefits. Government can and should be focused on ensuring that America is an opportunity society, in which all individuals willing to learn new skills and work hard have a chance to succeed.

How Tom Will Make a Difference: Smart Growth

Tom will help families and communities by crafting “smart growth” policies that promote a strong economy and create good jobs.

Massachusetts Governor Deval Patrick has championed “Smart Growth” for cities and towns across the Commonwealth. Smart growth refers to an approach to community planning and development that takes a holistic view of the environmental and human impacts. Smart growth approaches bring together community stakeholders to address housing, resource management, transportation, neighborhood enhancement and other essential perspectives essential to control urban sprawl and optimize the use of critical land and other resources.

It is clear that smart growth can be particularly effective in urban areas — such as Pittsfield, Springfield, Worcester, Fitchburg, Brockton, Fall River, New Bedford, Lowell, Lawrence, Lynn, and Boston. The smart growth idea, combined with an approach called “collective impact”, breaks down silos of government programs, facilitates collaboration amongst stakeholders in cities, and encourages integration of services. For example, an investment in commuter rail transportation to Fall River could be married with a nearby community health center near the train station, a neighborhood workforce training program, affordable housing, subsidized day care, and public school improvements. This “smart growth” or “collective impact” approach could lift up Fall River’s economy and future.

Tom understands that the private sector is the primary economic engine in our country and that its growth is necessary in order to sustain and grow employment opportunities. But government policies that shift too much wealth to the privileged few in the private sector have been undermining our nation’s economic strength. Tom’s graduate school education in economics and business, combined with his sixteen years in the private sector in Massachusetts, has helped him see this subtle but important change, and identify a better path forward for a stronger American economy.

Over the past thirty years, a variety of conservative politicians and the Republican Party, including Scott Brown, have pushed trickle-down economic policies that have depressed middle-class income growth and opportunities, while benefiting only the super wealthy. Assertions that cutting taxes will create jobs and reduce the deficit are feel-good policies that seek to fool people. They are unproven, unwise, and irresponsible. In fact, trickle down economics has resulted in 30 years of stagnant middle class income, a major recession, foreclosed homes, evaporated college funds, shrunken retirement savings, lost hope and lots of anxiety. It helps the rich get richer, while the vast majority of us get left behind. Don’t be fooled by it.

As an alternative, Tom believes that government should stimulate the economy in the short term by reprioritizing government spending. Instead of spending tens of billions of dollars overseas maintaining military bases in over 150 countries, and fighting wars in Iraq, Afghanistan, and Libya, the United States should reinvest much of that spending here at home, where it is desperately needed and could be put to better use.

Here are some of the “better use” ideas for smarter economic and job growth policies that Tom has heard along his walk:

Major rebuilding of our infrastructure: roads, bridges, dams, water treatment facilities, city-based public transportation, high-speed rail, airports, municipal buildings, and more;
Incentives for companies to focus more on job creation and being responsible partners for home-grown innovation and healthy communities;
Stimulating growth in the renewable energy and life science industries and in other business sectors in which Massachusetts has a competitive Jobs and mentoring for youth so they can steer clear of gangs and instead lift themselves onto the middle class ladder;
Better balancing for small businesses of government regulations with allowances and flexibility for “good guy” small businesses that have been compliant for several years.
Improving our public education system so that we can rank #1 again, instead of 18^th in the world;
Training for workers in transition between jobs;
Earned income tax credits, subsidized child care, and affordable housing near workplaces for low wage workers; and
High quality and affordable health care for all, and lower cost health care for small businesses;