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1 The term Buffer Stock Employment was used at the time of the Second Annual Path to Full Employment Conference, University of Newcastle, Australia, December 2-3 1999. Such models have since been referred to as the Job Guarantee – see, for example Mitchell (1998) and Mitchell (2001). The term ‘Employer of Last resort’ was originally preferred by US-based advocates of these schemes (see, for example, Wray, 1998a; Tcherneva, 2012a), although here, too, the term Job Guarantee is popular (Murray and Forstater, 2017; Tcherneva, 2018, 2020). We use these terms interchangeably in what follows.

The term employer of last resort (ELR) is interchangeable with the term buffer stock employment (BSE) and Job Guarantee (JG). The latter two descriptions of the approach to full employment are found in the work of Mitchell whereas the ELR terminology is used by Wray.

Matt Bruenig criticizes the idea for its lack of clarity.8 He claims that “the flowering of dozens of mutually incompatible proposals that all go under the name ‘job guarantee’ ” suggests that the proposal is more of a rhetorical move than a policy proposal.9 Bruenig is of course right to notice that there have been multiple policies floating around that go by the name of “job guarantee,” but this only indicates interest and affection for the slogan, not some weakness inherent in the motivating ideas. My own feeling is that the interpretation of any policy by the press, the public, and political leaders is more important than the myriad micropolicy mechanisms of any given white paper. A good demonstration of this is how the press has intentionally distorted the meaning of “Medicare for All.” They have done this against both the text of the bills themselves and the myriad and detailed explanations of the utility and cost- effectiveness of the proposal by policy experts. This is to say that distortions of any idea by its opponents remains an intractable political problem, not a policy one. It follows, then, that defining the phrase job guarantee is the business of political campaigners, leaders, and advocates— not policy writers alone. Nevertheless, a survey of contemporary proposals suggests that a job guarantee refers to a set of policies that, when combined, are meant to remedy both structural and cyclical unemployment through direct, state-led employment. Good proposals do this by combining massive public infrastructure projects— thus creating expanded permanent or semipermanent public sector employment— with a more flexible solution for cyclical downturns. In other words, a robust job guarantee combines the “employer of last resort” principle (where the state swells to absorb unemployed workers in periods of recession and contracts during periods of recovery and stability) with an old-fashioned public works program. Good proposals also set a wage floor that is well above the current minimum wage and stem the possibility of downward pressure on wages through prevailing- wage clauses and limitations on redundant jobs. Such a policy also requires the establishment of employment offices and complementary active labor market policies (to fit job- seekers to jobs).

As you know, GDP is counted when money moves, whether it be goods or services. There is no connection with whether or not it leads to happiness. More crime and environmental destruction increase GDP. Why? Because crime means that more time is used by the police, and the more chemicals and equipment used to clean the environment means more economic activity is counted. But no matter how much those things increase and GDP increases, we will not become happier.

Although the initial financial cost estimated in table 1 may at first glance appear high, the initial costs will be offset by extensive cost savings through reduction of current social insurance programs, many of which would be substantively less necessary, return on investment within the program itself, moderation of economic downturns, expansion of economic capacity, and increases in tax revenues, particularly at the local and state levels. The latter entities frequently are bound by fiscal year constraints to balance their budgets that lead to tremendous cutbacks in the services they provide during economic downturns. The FJG substantially will reduce the need for the current levels of social insurance programs as individuals become ineligible for benefits such as SNAP after their earnings surpass the designated thresholds. In addition, progressive taxation, as outlined, could be enacted if politicians sought to offset the remainder of the FJG. Because the funding of the FJG will have Keynesian stimulus effects even as it directly provides full employment, we expect that increases in economic production will help reduce net costs further. Part of the initial cost of the FJG is due to the failure of the U.S. government to provide universal health care for its citizens. If the government were to provide all Americans with health-care coverage, program costs would be reduced considerably.

If the JG programme was funded entirely by means of deficit spending, the economy’s job gap would fall continuously as the JG programme grew, because programme expenditures would increase private sector employment at the same time it was creating JG programme jobs. The number of jobs the JG programme would have to create to achieve full employment would therefore be determined by the point where the JG employment curve crossed the job gap curve. Based on Figure 1, the JG programme would achieve full employment by creating A jobs with an accompanying increase in deficit spending of B dollars. It could be, though, that the JG programme would have to maintain a labour force larger than A in order to perform its buffer stock function adequately. Figure 2 portrays this situation. Assume that C is the minimum level of employment the JG programme must maintain in order to perform its buffer stock function adequately. To maintain the programme at that size, total programme spending would have to equal E dollars, of which D dollars would represent additional deficit spending. The balance of the spending required to fund the programme (DE) could be matched by increased tax collections. The purpose of this tax increase would not be to ‘pay’ for the programme (even though people probably would think of the tax increase in those terms) but simply to limit the growth of aggregate demand that programme expenditures otherwise would cause. Comparing C to A and E to B shows that the programme would be larger in this instance (to adequately perform its buffer stock function) and would cost correspondingly more than if the programme were funded entirely with deficit spending. Finally, Figure 3 shows the level of funding and JG employment required if JG programme spending was fully matched by increased tax collections. In that case the job gap that existed before the establishment of the programme would be filled entirely with JG programme employment, creating a programme of F employment at a cost of G. This is not the option Post Keynesian JG advocates prefer, since they believe additional deficit spending could be undertaken in connection with the operation of a JG programme without untoward inflationary effects in most circumstances. Nevertheless, their analytical model allows for this option; and in some situations (e.g., when inflation rates already were rising) they might advocate the tax policy portrayed in Figure 3 in order to maximise the JG programme’s anti-inflationary effect (by taking advantage of the programme’s buffer-stock effect without causing any counteracting increase in aggregate demand).

School of Law; 2021, “FROM STIGMA TO DIGNITY? TRANSFORMING WORKFARE WITH UNIVERSAL BASIC INCOME AND A FEDERAL JOB GUARANTEE”, SSRN, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3764224 DOA 7/24/23] nmui

Federal tax administration may offer one area in which collection and redistribution of revenue could be accomplished by prioritizing equity and administrability over fault, so long as due process in revenue collection and fairness in audit exposure can be assured.1 62 To the extent an option is modeled after, or expanded from, the Earned Income Tax Credit (EITC) in order to reach more recipients, some could be refunded through payroll. But in order to streamline administration for those without earned income, some coordination would be required. The IRS arguably has greater experience working with taxpayers to assess, collect, and resolve overpayment or other disputes through the Taxpayer Advocate and under the Taxpayer Bill of Rights. In the pandemic, the fastest and smoothest method for distributing "economic stimulus payments" turned out to be a combination of direct deposit to previous tax filers; automatic distribution by the IRS to SSA recipients and veterans through an interagency matching system; and, most difficult, creation of a new process for non-filers.1 63 Additional credits, made fully refundable to those with no tax liability, could be instituted and made available-even for those lacking a social security number-without onerous filing procedures. Some of the advantages of using IRS administration would be symbolic and intangible. As commentators note, the EITC need not be administered by the IRS.1 64 Yet there are advantages: claimants could file without having to visit a welfare agency in person, which might raise concerns about stigma,165 and the EITC's location in the Internal Revenue Code (IRC) would somewhat insulate it from budget cuts as a spending program. 166 Indeed, the IRC can mask policy choices that, arguably, would not be popular if they were more visible.16 7 The perceived relationship between taxpaying and social provision persists as a way of reflecting shared public values about which forms of wealth, income, or consumption should be taxed, exempted, or subsidized (and whether those are simply different versions of the same action).1 68 Because tax policy reflects social choices and is typically protected from political whims and judicial review, it lends legitimacy to tax assessments, which most individuals report they are willing to pay so long as they are accurately calculated (and so long as others also comply).1 69 A UBI administered through the IRC might only displace concerns about fraud, abuse, and program integrity onto the administration of a JG, but such concerns would not be insurmountable in a voluntary JG regime. Existing administrative schemes, such as the unemployment insurance benefit system, may be ill-equipped to handle the issues that currently arise in the workfare sanctions context and could still arise in a combined UBI and JG regime. During the pandemic, the burdensome state-run unemployment insurance benefit expansion resulted in highly visible fraud in some instances and lack of skilled coders to quickly adapt the system in others. 7 0 Significant policy making or other substantive expertise would be required to identify and define the kinds of activities that would qualify for a paid JG-for example caregiving or maintenance work that might be done regardless of whether compensation was available. Restrictions on educational and training activities, such as participation in college coursework, currently consign many TANF recipients to low-wage, dead-end jobs that disappear in times of economic recession thus necessitating a return to public assistance.' 7 ' Any JG must fully account for and, indeed, affirmatively support participation in postsecondary education and caregiving work, as well as in other occupations that confer a public benefit. 7 2 Again, tax administration could be part of the solution as treatment of income or benefits from a range of sources is already a task of the Department of Treasury. For good or ill, the tax arena already operates as a default system for determining which activities confer sufficient public over private benefit or which advocacy efforts cross the line into impermissible political activity, and it could perform this function for JG job selection as well.7 3 Meanwhile, workfare agencies currently tasked with administering punitive sanctions could adjudicate a broader range of employment-related issues in the vein of unemployment insurance benefit hearings.

The likelihood of a fiscal crisis increases as federal debt continues to rise in relation to GDP, because mounting federal debt could erode investors’ confidence in the government’s fiscal position and result in a sharp reduction in their valuation of Treasury securities. In turn, investors would demand higher yields to purchase Treasury securities and thus drive up interest rates on federal debt. Additionally, concerns about the U.S. government’s fiscal position could lead to a sudden increase in inflation expectations, fear of a large decrease in the value of the U.S. dollar, or a loss of confidence in the federal government’s ability to repay its debt in full, all of which would make a fiscal crisis more likely. If a fiscal crisis occurred, it would result from multiple factors, and no clear basis exists for identifying the level of debt that might lead to such a crisis in the United States.

Several characteristics of the U.S. financial system make a fiscal crisis less likely in the United States than in other countries, and financial markets do not currently reflect any notable concern about the risk of such a crisis in the United States. But given the persistently large budget deficits that are projected under current law and the already high debt-to-GDP ratio, the risk of a fiscal crisis is likely to be higher in the future if steps are not taken to stabilize the debt.

This study identifies determinants of fiscal sustainability of the welfare state by focusing on tax structure. As confirmed by the results of the study, it is essential to secure financial resources to maintain the welfare state. In the short term, fiscal space may not drive the expansion of welfare expenditures, but it nonetheless leads to this in the medium-to-long term. The problem is that an increase in welfare spending may worsen fiscal sustainability, and it is not always an appropriate solution to reduce welfare expenditures in order to increase fiscal space, which is in keeping with the arguments of welfare state opponents. It is impossible to cut welfare spending thoughtlessly because many social problems should be addressed through collaborative social efforts, and it is also not a suitable alternative to increase welfare spending indefinitely while worsening fiscal space because this may over time dismantle the financial base of the welfare state. It is therefore important to seek ways to maintain welfare spending while ensuring fiscal sustainability. As can be seen from the analysis results, the level of tax burden is an important aspect of fiscal sustainability in the welfare state. Tax revenue is the funded basis for maintaining the welfare state, so increasing tax compliance to offset the negative impact of increasing welfare spending will promote social cohesion. However, the national financial effort to maintain the welfare represents more than collecting additional taxes. The excessive burden does not always have a positive impact on fiscal sustainability, and it is not always possible for a country to collect more tax revenues to expand welfare. Thus, the most important aspect of total tax revenue that should be considered is the manner in which tax revenue is raised because depending on which method is adopted, the impact of taxation on the sustainability of economic, political, and social dimensions varies. As indicated in this study, it appears that securing tax fairness contributes to the fiscal sustainability of the welfare state.

One reason is that the federal government currently levies relatively high tax rates on somewhat narrow bases. Indeed, the United States stands alone among major developed countries in not raising a large portion of its revenues through a value-added tax (VAT), and then compensates for this by levying some of the world’s highest tax rates on corporate income, capital gains, and ordinary income.113 The federal government then define these tax bases in ways that permit large-scale tax avoidance and tax gaming, especially for the corporate income and capital gains tax bases.114 There is controversy as to how successful the federal government might be in fixing these loopholes and structural flaws if greater effort were applied toward tax reform. Regardless, as things stand, the empirical literature implies that there is only limited space between the federal government’s top tax rates on corporate income and capital gains, and the overall revenue-maximizing levels for these tax rates. There is thus only constricted room for state-level tax rates on these bases without unduly harming national welfare. To a lesser degree, this is also so for the top tax rates on ordinary income.

The existing empirical literature implies that there is substantial vertical distortionary responsiveness to tax rates on corporate income, capital gains, and (to a much lesser extent) ordinary income. By contrast, the empirical literature does not provide much in the way of solid evidence as to the possible magnitude of horizontal distortionary responsiveness to state-level tax rates on these bases. Nevertheless, because the empirical literature implies that the vertical distortionary responsiveness is substantial, and because federal-level tax rates on these bases are much larger than any state’s tax rates, we infer that it is implausible that horizontal distortionary responsiveness could be large enough for horizontal externalities to counteract the impact of vertical externalities. As we will demonstrate, were horizontal distortionary responsiveness so large, this would imply that many state governments have currently set their state-level tax rates near or above their acting state revenue-maximizing levels. We do not know of any serious analysis suggesting that this is the case, and we think it exceedingly unlikely that this could be true without it being a major topic of academic and policy discussion.51 Overall, then, we conclude that tax cannibalization is very large for the current top state-level tax rates on corporate income and capital gains, and that tax cannibalization is rather large for the top state-level tax rates on ordinary income.

Republicans have labeled the rising national debt a dire threat to national security. Indeed, an ever-increasing federal debt constrains future defense budgets and severely limits the government’s ability to respond to future conflicts or economic crises. Moreover, China is the single largest foreign holder of U.S. debt.

Ironically, however, virtually every one of the GOP voices now citing the national debt as a major national security threat voted for the 2017 tax cut, which is forecast to balloon the debt. Nearly two years following the passage of the tax law, its dramatic effects are coming into focus.

The end of the Cold War marked the United States’ progression into the sole rules-maker and -enforcer for the world. Several factors contributed to America’s ascension to this role—military power, alliances, liberal values, a large population, and a cultural willfulness (at least for a time) to be the global hegemon. All of these factors were important. A primary reason America became the hyperpower with the ability to enforce international rules was economics. Our dynamic economy was a good reason for other countries to be allied with us. It incentivized peace. And—most importantly—our economy created enough wealth to support the most fearsome military in the history of the planet. That was then. Today, America is still digging out from the financial crisis of 2008. This economic shock resulted in the enactment of many irresponsible policies—including drastic cuts to the military. But military budgets can be restored, so long as there is money in the treasury. The Republican tax cut of 2017 succeeded in goosing the macro economy—but at the cost was America’s long-term fiscal solvency. And, by total coincidence, as America’s financial indiscretions have mounted, resulting sequestration policy which caused military budget cuts, China, Russia, Iran, and Saudi Arabia have moved to challenge the international order, an order that the United States is its biggest beneficiary. Consider this: For the first time in peacetime, America’s debt-to-GDP rate has exceeded 100 percent. The primary reason for this explosion of debt is non-discretionary expenditures—Medicare, Medicaid, and Social Security—and continuing tax cuts. By now everyone is familiar with the insanity of government spending under Trump: As a candidate, he promised to eliminate the national debt in 8 years. Instead, he has set new records for widening our budget deficits. And even the White House’s own (totally unrealistic) scenarios can’t envision reduction of the national debt. It’s not hard to see where this all leads: Eventually non-discretionary spending and higher interest rates crowd out discretionary spending. And one of the easiest things to cut is military spending which is the biggest discretionary item in the budget. This presents a problem that other nations do not face. Most countries carry national debt. But world peace does not rely on their financial stability. If Mauritius has a debt crisis—their current debt per capita is $148,000 for every man, woman, and child—no one has to worry about the trade routes in the South China Sea. Which is why, ultimately, fiscal responsibility is a national security issue. The more our debt forces us to cut military spending, the further we will be pushed from our position as global hegemon, and the more other nations will attempt to challenge global norms in order to shift them in their favor. These norms include secure trade lines and the sovereignty of smaller nations. In recent years, the United States has been forced to choose between preserving these norms and risking escalation to war—for instance, with the Chinese building of artificial islands, Russia’s annexation of Crimea, and Iran’s interventions in Syria and elsewhere. American presidents have struggled with these choices. But at least they had choices. And this fact had an inhibiting effect on aggressor nations. At some point our fiscal problems may make it so that America doesn’t even have a real option. At which point Russia, China, and other bad actors will be unbound by anything but their own ambitions. Presidents always seem to understand how important the national debt is right before they take office. Candidate Obama called President Bush unpatriotic for significantly increasing the national debt. President Obama doubled that debt during his term. Candidate Trump kicked off his campaign by talking about the national debt. President Trump has grown it at record pace. Deficit reduction is hard. We have grown used to a government that gives more things away with each passing year. Cutting the deficit means taking some of those benefits away. It’s telling that Candidate Trump made two contradictory promises: (1) That he would eliminate the debt in 8 years. (2) That he would not cut Medicare and Social Security, because they benefit the largest demographic of the electorate, which became his base. There was no way to keep both of them. You can guess which one he chose to honor. It’s hard to blame Trump. This has the been the posture of every president since the turn of the century: They make noise about the dangers of debt and then refused to reform the two programs most responsible for driving our debt. Debt reduction is simple, but not easy. It requires less spending and more revenue. But more, it requires a great deal of political will and leadership which seems to be lacking in the two elected branches of the federal government. At some point, someone will have to take one for the team and make the hard cuts. For people who hoped President Trump would be a reformer, it’s a disappointment that he didn’t use his straight-talk, unfiltered persona to tell these hard truths. Because maybe he could have been the president to make it work. An America facing a debt crisis will have to make very difficult compromises and disruptive adjustments that will change the comfortable and safe world we and our allies live in, disruptive adjustments that will make it very difficult for our allies to trust us to lead them again. Before becoming Secretary of Defense, James Mattis talked about the national debt as the greatest national security threat to the United States, including during his confirmation hearing. He was right. Maybe the next president will heed his warning.

Although we cannot further elaborate the specifics here, imagine (hypothetically) a proposal for a state to reduce its corporate income tax rate and to then make up for the lost revenue by levying something similar to New Hampshire’s Business Enterprise Tax. As we discussed previously,228 a proposal of this sort could lessen tax cannibalization to the extent that the proposal would successfully reduce the ways in which the state’s taxes previously piled on to the flaws in the federally defined corporate income tax base that invite vertical distortions. But, again, the revenue benefits from this would largely end up with the federal government rather than with the acting state.

Similar logic holds when taxpayers shift to the use of partnership forms or to the use of debt financing to reduce their domestic federal- and state-level corporate income tax liabilities. These distortionary responses again directly reduce the taxpayers’ corporate income tax liabilities, but do not directly affect the taxpayers’ sales tax liabilities. After all, conducting business in a partnership form looks the same from the perspective of a sales tax as does conducting business in a corporate form. Likewise, the sales and purchasing activities of a corporation appear the same from the perspective of a sales tax regardless of the extent to which the corporation is financed with debt or with equity

3. Comparing the States’ Corporate Income Tax Rates to Sales Tax Rates.—Consider first the measured distortionary responsiveness to corporate income tax rates, as compared to sales tax rates. Certainly, not all of this measured distortionary responsiveness is single-instrument. Correspondingly, perhaps about a third of the measured responsiveness to corporate income tax rates comes from taxpayers shifting real investment activities abroad.153 This form of responsiveness might well be induced by the overall tax burden on business investments—potentially including both the burden of corporate income tax rates and the burden of sales tax rates. A state government swapping from the use of corporate income tax rates to the (distributional and revenue-neutral) use of sales tax rates might thus not substantially reduce this form of distortionary responsiveness.

By contrast, the remaining two-thirds or so of the measured distortionary responsiveness to corporate income tax rates comes from: (a) profit shifting, (b) shifting from the use of corporate organizational forms to partnership organizational forms, and (c) shifting from equity financing to debt financing.154 These forms of responsiveness are directly induced only by corporate income tax rates, not by sales tax rates (at least not to any substantial degree).

In theory, the tax cannibalization problem may occur whenever state governments and the federal government levy taxes on overlapping tax bases. We demonstrate that the tax cannibalization problem currently does occur with respect to state-level taxes on corporate income and capital gains, and possibly also ordinary income. n9 Specifically, we show that state governments' current top tax rates on these bases impose large, wasteful costs through tax cannibalization. [*299]

Extrapolating from the existing empirical literature, we develop a model showing that a typical state's top corporate income and capital gains tax rates generate surprisingly large economic waste. n10 We propose federal-level reforms that could eliminate much of this economic waste while still maintaining the current levels for state governments' revenues and distribution. Through enacting these reforms, the federal government could produce a "win, win, win" for the federal government, state governments, and taxpayers.

Recessions always inflict the most pain on Americans in the middle and lower end of the income distribution range, destroying jobs, eroding wages and wiping out savings for those working in industries such as construction, manufacturing, hospitality and retail.

But the crushing economic impacts of the COVID-19 pandemic have reached levels unseen in the last four decades, and the long-term scarring will be severe without intervention from Congress – not just in the form of emergency relief, but also with targeted policy solutions.

But unions are by no means all bad for business. In representing worker interests, they can help make a company a more attractive place to work, reducing turnover and increasing employees’ commitment to business success. Higher union wages and benefits also attract more job applicants, allowing management to select the best workers.

But a benefit to society

Some advocates of laissez-faire capitalism argue that trade unions are bad for productivity. “With few exceptions,” according to one American economist, George Reisman, “unions openly combat the rise in the productivity of labour.”

Other economists disagree. “Unionisation and high worker productivity often go hand-in-hand,” say Harley Shaiken and David Madland. “Fairness on the job and wages that reflect marketplace success contribute to more motivated workers.”