The United States has just completed its third year of economic recovery, but the unemployment rate remains above 8 percent, and there are worrisome signs of a slowdown. So it is no surprise that jobs have become a major focus in the presidential campaign - or that the candidates have very different ideas about how to boost employment.

Last autumn, President Barack Obama proposed the American Jobs Act, a US$450 billion package of fiscal measures aimed at job creation. The AJA amounted to about 3 percent of GDP and was designed to take effect in 2012, providing a timely employment boost and insurance for the US recovery against global headwinds.

Most of its measures had enjoyed bipartisan support in the past; tax cuts comprised about 56 percent of the total cost; and the package was paid for in Obama's long-term deficit reduction plan.

The AJA was filibustered by Senate Republicans, and the Republican-controlled House of Representatives likewise prevented the bill from coming to a vote. Mitt Romney, now the Republican presidential candidate, attacked the plan as "mere stimulus" that would "throw a cup of gasoline on the embers" of the recovery.

Ultimately, Obama, bolstered by polls endorsing his plan, won partial passage of two AJA policies: a one-third cut in employees' payroll taxes (he had proposed one-half), and an extension of unemployment benefits by about 60 percent of what he had recommended.

But Congress failed to approve a 50 percent cut in employers' payroll taxes - a business tax cut that many Republicans favored in the past and that ranks high on budgetary effectiveness. Nor did Congress approve US$30 billion in federal grants to states to enable them to employ about 135,000 teachers, police, and firemen, despite strong voter support.

Public employment

Romney opposes more federal money for the states, arguing that "it is time to cut back on government and help the American people." But teachers, firemen, and police are American people who help other American people. Government employment is falling at the fastest rate since the 1940s, and is now at its 2006 level. If public employment had grown during the last three years at about the same rate as the population, as it did during George W. Bush's presidency, the unemployment rate would be around 7 percent rather than 8.2 percent, owing to about 800,000 additional jobs.

Likewise, Congress failed to approve Obama's call for US$90 billion in additional infrastructure spending, which would have supported about 400,000 jobs, despite the fact that the US has at least US$1.1 trillion in unfunded infrastructure needs. Moreover, infrastructure investment not only creates jobs in the near term, but also promotes long-term competitiveness.

Altogether, Congress left at least one million jobs on the negotiating table, holding unemployed workers hostage to the outcome of November's election. Meanwhile, in response to persistent media pressure, Romney has unveiled his policies to boost short-term job creation. They are not convincing.

Romney says that he would ensure that the US puts more people to work in the energy sector. But, while the oil and gas industry has grown significantly since 2007, it employs fewer than 200,000 people, implying a negligible effect even if employment in this sector doubled in the short run.

And, while Romney says that he would open new foreign markets, Obama has been doing just that. Moreover, Romney's promise to charge China, America's third-largest export market, with currency manipulation, and to impose large tariffs on Chinese imports, would almost certainly invite retaliation, causing a decline in US exports and jobs.

Romney would also repeal "Obamacare"- the 2010 health-care reform legislation - because it "is scaring small business from hiring." But the evidence for this claim is meager and anecdotal. A recent survey found that most small businesses support the reform.

Laura Tyson, a former chair of the US President's Council of Economic Advisers, is a professor at the Haas School of Business at the University of California, Berkeley. Copyright: Project Syndicate, 2012.www.project-syndicate.org. Shanghai Daily condensed the article.

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