This morning, Berkeley economics professor and blogger Brad DeLong asked, “So what do we know about policies to successfully move the long-term unemployed back to where they ought to be?” Atrios jokingly responded, “We could hire them to dig holes and then fill them up again,” elaborating, “the way to do it is to have the government hire people to do stuff. Inevitably not all of that stuff will be tremendously productive, but plenty of it will be.”

Last week, the House Ways and Means Committee held what I think is the first Hill hearing on long-term unemployment. And a number of policy experts came to explain the gravity of the situation and to propose solutions. Their papers make for good, if depressing, reading: Here they are from Larry Mishel, president of the Economic Policy Institute; Heather Boushey, senior economist at the Center for American Progress; Michael Reich, economics professor at the University of California, Berkeley; Till von Wachter, economics professor at Columbia; and Jason Taylor, economics professor at Central Michigan University.

And, from their testimonies and a bit of research, here are some proposals that could help Americans out of work for more than a year (or two):

1. Offer bonuses for long-term unemployed persons who find work. A number of studies show that paying people to find jobs works to reduce the average length of unemployment. One Illinois study, for instance, found that offering unemployment insurance recipients $500 bonuses for finding a job cut spells of joblessness by about two weeks. However, other analyses cast doubt on the efficacy or fairness of such programs. (Offering reemployment bonuses to the long-term unemployed might feed into the inaccurate presumption that they are lazy, and don’t want to find jobs.)
2. Offer bolstered work-search help for the long-term unemployed. Expand offices that help workers find jobs, and update those offices to help the unemployed find short-term, contract or telecommuting work. Such offices do not always work well, but they do work on aggregate. This Upjohn Institute study, for instance, finds, “While the size of the estimated impacts differ, the consistent finding is that both UI work search requirements and reemployment services tend to shorten insured unemployment durations by speeding return to work.”
3. Expand retraining programs and increase outreach. A number of academic studies throw cold water on the notion that job retraining programs really work on a broad scale. This USA Today article gives an excellent layman’s explanation of why retraining in the midst of a jobs crisis is not always the best path to employment. That said, much of the current unemployment crisis is due to structural unemployment; those workers need to find different fields. I wonder if targeted programs, focused on taking workers from collapsing fields (construction) into expanding fields (home health work), might work better than the broad-based programs of the past.
4. Expand relocation allowances. The government already provides workers with funds to help them move to take a job. The program could be expanded or improved.
5. Encourage self-employment. Another pre-existing program that could be expanded into a number of other states and made more generous for the long-term unemployed. The Self-Employment Assistance Program excuses unemployment insurance recipients from work-search requirements, and lets them keep proceeds from businesses they start or expand.
6. Expand work-sharing programs, and include incentives for employers to hire the long-term unemployed.
7. Provide generous tax incentives for employers to hire the long-term unemployed.
8. Hike interest rates to prevent inflation. Just kidding.

Of course, the problem is, all of these programs cost money. Politicians’ concerns about the nation’s debt have made the likelihood of a deficit-funded direct-hiring program virtually nil. There is no easy and cheap policy solution, and therefore it will be difficult for Congress to act. In all likelihood, I fear, hundreds of thousands of workers — older workers in particular — will simply never find a proper, well-paying job again, instead moving into Social Security and in many cases disability benefits to stay afloat.

In it, they ask Congress to offer firms a temporary, incremental tax credit for hiring new workers, saying that it will cause companies to hire people faster than they otherwise would. They want it targeted to firms that are growing, to maximize its effectiveness, and widely publicized, to maximize its utilization. The hope is that, unlike public construction projects, which take a long time to get to the hiring stage, a wage subsidy can quickly get unemployed Americans back to work and spur consumer spending, which would cause companies to hire more workers to meet demand, thus having an amplified effect relatively quickly.

Here’s the full letter and list of signatories, which includes Robert Reich and Joseph Stiglitz:

February 18, 2010

The. Hon Nancy Pelosi
Speaker of the House of Representatives
United States Capitol
Washington, DC 20515

The Hon. John Boehner
Minority Leader of the House of Representatives
United States Capitol
Washington, DC 20515

The Hon. Harry Reid
Majority Leader of the Senate
United States Capitol
Washington, DC 20515

The Hon. Mitch McConnell
Minority Leader of the Senate
United States Capitol
Washington, DC 20515

Dear Speaker Pelosi, and Messrs. Boehner, Reid, and McConnell:

A great number of different policy actions–including the American Recovery and Reinvestment Act, the financial rescue, and the extraordinary monetary policy measures taken by the Federal Reserve–have in their sum played an important role in changing the trajectory of the economy from one of terrible decline to one of growth.  But with the latest unemployment rate at 9.7 percent, it is clear that additional emergency policy measures to jump-start job creation are still warranted.

A well-designed temporary and incremental hiring tax credit is a cost-effective way to create jobs, and could work well in the current environment.  At a time when GDP is beginning to rise and demand is starting to return, private firms are likely to respond to such a tax incentive by hiring sooner and more aggressively than they otherwise would have done.  Such a credit could thus help put Americans back to work more quickly than otherwise.  And by targeting firms that are growing, such a tax credit supports the businesses most likely to lead the recovery of employment.

There are many ways to design an effective hiring tax credit, but in general the beneficial effects will be greater the stronger the hiring incentives and the lower the administrative burdens placed on firms.  It is critical that such a tax credit be put into place quickly and that it is publicized widely.  Firms will begin to accelerate hiring only when know they can count on such tax relief.

We judge that a well-designed hiring tax credit is a well-targeted and economically sound strategy for aiding job creation at this phase of the recovery, and so we support a well-designed hiring tax credit.

In our personal capacities, we are sincerely yours,

Mark Zandi
Justin Wolfers
Laura Tyson
Mark Thoma
Peter Temin

Joseph Stiglitz
Betsey Stevenson
Isabel Sawhill
Dani Rodrik
Robert Reich

Richard Portes
Larry Katz
Barry Eichengreen
Peter Diamond
Brad DeLong

David Cutler
Robert Cumby
Tyler Cowen
Menzie Chinn
Alan Blinder

George Akerlof

From the report itself, John Yoo’s Office of Legal Counsel memo — and the lightning-fast reporting of Spencer Ackerman, Marc Ambinder and others on Friday — we now know that President George W. Bush and Vice President Dick Cheney, aware that ignoring the Foreign Intelligence Surveillance Act and the Fourth Amendment to the U.S. Constitution might come back to bite them later, sought the drafting of a legal opinion that would approve the president’s secret surveillance program and shield them from later attack.

The fact that the White House sought the assistance of Deputy Assistant Attorney General John Yoo in the OLC, though is itself evidence that the White House was trying to get around, rather than comply with, the law.

As I’ve noted before, legal memos justifying an unreasonable or inaccurate legal position don’t necessarily provide a “golden shield” for the executive.

Yoo, after all, was known when he was hired as the Berkeley law professor and staunch Federalist Society member who held theories on executive power that were far outside the legal mainstream. And the memos and academic analyses he then proceeded to write were so extreme and so mischaracterized law and history in an effort to reconcile conservative “originalist” principles with his own aggressive view of an all-powerful president as Commander-in-Chief that they’ve been characterized as an “outrageous theory of presidental dictatorship” by Yale University law professor Jack Balkin and as “simply hooey” by Marty Lederman at Georgetown (now in the Office of Legal Counsel in the Obama administration).

The inspectors general report details how Yoo and the administration ignored parts of the FISA law that conflicted with his theory, for example, and made the outrageous argument that a warrantless search doesn’t violate the Fourth Amendment’s prohibition on “unreasonable” searches and seizures because it can’t be “unreasonable” for the president to authorize it in wartime. Why it’s “reasonable” to prevent even secret judicial review of such searches is never explained.

For an academic to hold extreme views of executive power, of course, is arguably a matter of academic freedom, and even a form of creative theorizing that one might admire. (Although some of Yoo’s Berkeley colleagues, such as economist Brad DeLong, among others, have described his theories as reaching so far beyond the bounds of creative academic theorizing as to be simply dishonest and undeserving of that protection.)

But Yoo’s memos at OLC were not part of an academic exercise; they were making policy. Setting aside for a moment the potential culpability of Yoo himself, the more important point here is that, as the inspectors general report makes clear, the White House specifically sought him out and excluded his superiors, ignoring the usual chain of command in the Justice Department, apparently because they knew that John Yoo would give them the legal opinions that they wanted to hear.

That is not the purpose of the Office of Legal Counsel, as Dawn Johnsen, the Obama nominee to head that office has repeatedly made clear, along with more than a dozen other alumni of that office.

As Johnsen wrote in a law review article describing the ten “Guidelines” that should govern the Office of Legal Counsel: “OLC should provide an accurate and honest appraisal of applicable law, even if that advice will constrain the administration’s pursuit of desired policies … In short, OLC must be prepared to say no to the President.”

That the president and vice president apparently chose someone who they knew in advance would not say no to the president is more than an abuse of that legal office; it strongly suggests an intentional and unlawful abuse of executive power.

The latest news accounts that Attorney General Eric Holder is leaning toward appointing an independent prosecutor suggest he may finally be starting to reach the same conclusion.

From the story headlined “Obama Dials Down Wall Street Criticism:”

Treasury Secretary Timothy Geithner and his colleagues worked the phones to try to line up support on Wall Street for the plan announced Monday. They told executives they don’t favor using the tax code to retroactively penalize specific individuals who had received bonuses, according to people familiar with the calls. They asked officials to sign on “in pencil, not ink,” and to “validate” or “express support” for the plan, these people say.

Do you think the bankers thanked President Obama officials for their tacit support amid the AIG firestorm? You must be new in town.

Some bankers say they turned the conversations into complaints about the antibonus crusade consuming Capitol Hill. Some have begun “slow-walking” the information previously sought by Treasury for stress-testing financial institutions, three bankers say, and considered seeking capital from hedge funds and private-equity funds so they could return federal bailout money, thereby escaping federal restrictions.

This is the capitalist version of a labor union’s sit-down strike: show up for work but don’t do what the boss says. The message is: protect our bonuses — because without us, you can’t make policy.

Like it or not, Obama gets the message and agrees.

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