President Bill Clinton Job-Creation Blueprint Fact Check

Reaction from economists include "overstated" and "preposterous."

ByABC News
June 28, 2011, 3:49 PM

June 29, 2011 — -- Former President Bill Clinton is hosting a conference in Chicago this week and has laid out a blueprint to boost jobs, with assertions a former Treasury official and economist has called "overstated" and "preposterous."

Clinton's 14 proposals, published in this week's Newsweek, focus on boosting jobs in the energy sector, job training, and making the United States more competitive in the global economy.

During the first plenary session today, President Clinton introduced an initiative from Visa and Kiva, a San Francisco-based online microlending firm, to support loans to small businesses in the nation's struggling cities. Kiva Detroit launched today as the first Kiva City.

Clinton's proposals also include a few tax breaks for employers, just as President Obama slammed Republicans today for refusing to accept tax hikes, even for the wealthiest Americans, while trying to reduce the deficit.

In 2005, President Clinton started the Clinton Global Initiative (CGI), which invites heads of state and other global leaders to address the "world's most pressing challenges." The two-day Clinton Global Initiative America in Chicago, focused on job creation and economic growth, will include Treasury Secretary Timothy Geithner, Indiana Gov. Mitch Daniels, Dow Corning Chairman Stephanie Burns, and CEO Tony Hsieh, among others.

ABC News asked labor economists and former government officials to take a look at 10 proposals among the 42nd president's blueprint.

1. Clinton said approval times to start shovel-ready projects can be too long, sometimes taking three years. He proposes that the federal government should be able to give a waiver to states to speed up start times on construction projects.

Cecilia Rouse, economics professor at Princeton and former member of President Obama's Council of Economic Advisers, said she can't speak specifically to whether approval processes across the country are too long but she said states should make sure they have the necessary safeguards.

"We don't want infrastructure projects that will crumble because we didn't have proper materials, for example," she said.

2. Clinton endorses the conversion of tax credits for new green jobs and startup companies into its cash equivalent for every employee hired.

Phillip Swagel, former assistant secretary for economic policy at the Treasury Department from 2006 to 2009 and former chief of staff at the White House Council of Economic Advisers, said he agrees with cutting payroll taxes for employers but does not think it should be done for only green jobs.

"We want stronger growth and more jobs, period," Swagel, now a professor at the Maryland School of Public Policy, said. "It's not a good idea for the U.S. government to pick particular sectors for growth.

"President Obama's policies already dump taxpayer dollars on so-called green sectors, and for little apparent benefit. If President Clinton is serious about enhancing use of renewable energy sources, then he could propose a sharply higher gasoline tax or a carbon tax, for example."

Although there is uncertainty about what the returns of investments in particular sectors will be, Rouse said, Clinton is trying to encourage "smart" investments overall.

"Psychologists have a way of looking at future selves, where would they wish we made investments looking back," she said.

Because the energy sector is changing for various reasons, including innovation and regulations, if the country invested with dollars and jobs in that sector, it would likely make a competitive, global impact, Rouse said.

"In that sense, energy is a way we can make some changes," she said.

3. Clinton attributes a tax-incentive structure "in large part" to the growth of the high-power battery manufacturing industry in the United States.

"This is overstated and partly missing the point," Swagel said. "There are always many reasons why firms and industries thrive or fail. Demand for new battery technology has been driven by mobile electronics and by the shift of motor vehicle production toward electric technologies."

Swagel said the U.S. government has subsidized firms in this industry, but its fundamental success is because of the need for the technology.

"It is not that the U.S. government somehow is picking winners," Swagel said. "Government subsidies might have helped, but it is a vast overstatement to say that this is a case in which the government has picked just the right winner."

Stephen Bronars, senior economist with Welch Consulting, shared in the skepticism. He said it is not clear that capital investment in manufacturing will create "that many" manufacturing jobs.

"Many of his proposals will employ lots of machines and computers in manufacturing," Bronars said.

There are 11.7 million people employed in all manufacturing industries combined, according to Bronars. In 1979, when the U.S. economy was smaller, there were 19.5 million people employed in manufacturing in the United States.

"There are 14 million people looking for work and many more waiting for the economy to recover so they can start looking," he said. "Manufacturing jobs is a small part of the solution to the jobs crisis."

4. President Clinton said job growth is likely going to come from the changing way we produce and use energy. "The U.S. didn't ratify the Kyoto accords, of course, because Al Gore and I left office, and the next government wasn't for it," President Clinton wrote. "They were wrong."

Swagel said the proposal seems like a "non sequitur."

Swagel said a cap-and-trade system such as Kyoto is effective if it acts like a tax on carbon-producing activity. There are ways to mitigate the negative effects of this tax on growth and job creation, such as auctioning the carbon allowances and use the revenue to reduce other taxes, Swagel said.

"In that case, carbon policy is a revenue neutral tax reform. But President Clinton's proposals are to boost spending rather than use the revenue to offset other tax reductions," he said. "So there are ways for the gist of the president's statement to be true. I just don't see him going in that direction."