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Franken program would offer wage subsidies to employers

U.S. Sen. Al Franken wants to try a successful Iron Range-authored 1980s jobs program to put more Americans back to work.

The Minnesota Emergency Employment Development program, proposed by then-Gov. Rudy Perpich, provided 7,400 jobs its first six months in a public-private partnership that saw wages subsidized for employers who retained workers for a set period of time.

The 19883-87 program was especially useful on the Iron Range to help fill a downturn in the mining industry.

Franken's Strengthening our Economy through Employment and Development Act would do the same - provide a wage subsidy to employers creating new jobs.

"If you employ someone, we'll give you 50 percent wage subsidies, up to $12 on a $24-an-hour job," Franken told the Bemidji Pioneer Editorial Board in a briefing Friday. It would cap out at a $48,000 a year job.

"The subsidy is for a year -- you have to agree to hire the person for 15 months," Franken said, with subsidies flowing to employers twice a month the first nine months and the final three months as a lump sum.

He asked for input on the bill at an economic development forum he held Friday morning in Bemidji and with labor leaders later Friday. Franken's bill has a wide range of Minnesota support of more than 50 organizations, from the Northwest Private Industry Council to JOBS NOW Coalition.

"The point is that it puts money into the employer's pocket right away, unlike a tax credit," said Franken.

SEED would subsidize a job at 60 percent for employers hiring veterans who served in Iraq and Afghanistan.

He'd pay for the measure with $5 billion reallocated from the Troubled Asset Relief Program, as banks repay their federal government loans.

SEED also includes another $5 billion to create "green" jobs through grants to state and local governments to upgrade their facilities to become energy conserving and energy efficient.

"Grants would be given to state and local and tribal governments to retrofit public buildings," Franken said. "That would put people to work who are on the bench, people in the building trades."

Workers would be hired to retrofit public housing, public buildings, schools and libraries to increase energy efficiency, he said. The two jobs programs under SEED could create 500,000 jobs.

"You're not seeing that money come back to Main Street," Franken said of banks which received TARP funds but weren't mandated to use the monies for offering credit. Franken opposed TARP as originally presented.

Tight credit markets have now reaching community banks, finding it tougher to find funds to lend, he said.

"I'm not seeing enough optimism" that the economy has turned around, Franken said. "That's why I want to put people to work right away, so that those people will be spending some money, those people will be paying some taxes. Those people will not be on unemployment insurance ... but mainly they'll be spending some money."

The more people who are working , the more optimistic the American people will get, he said. "That's what getting out of a recession is, that's why we have to continue to stimulate the economy."

Franken says he worries about long-term federal deficits, but is optimistic about President Barack Obama's appointment this week of a fiscal responsibility panel to recommend ways to get out of red ink.

"I'm a Keynesian, and I believe that right now we can't be stimulating the economy with one hand and destimulating with the other," Franken said, referring to the economic philosophy of John Keynes who advocated for government intervention in fiscal and monetary measures to help flatten out business cycle extremes.

That problem is seen in the states, he said, as they tighten their belts and lay off public workers while at the same time taking federal stimulus funds to keep people hired for infrastructure improvements.

"We're technically in a recovery but a jobless recovery," Franken said, adding that more federal stimulus funds are needed. Citing statistics that last year's $867 billion stimulus package created or saved 1.6 million jobs, Franken said that "we'd be in a lot worse situation if we hadn't done that."

The next stimulus should be patterned as Franken's SEED bill, he said, in providing jobs to fix infrastructure and save future dollars. "We need to do smart things now when we have people on the sidelines, and get them working. That will require some investment."

The federal government needs to "send more money to the states to keep necessary state and local employees employed and delivering services," he said.

"This is pure Keynesian economics -- when no one else is spending, the government has to spend," Franken said. "We just have to do it wisely and invest in things, like ... rural broadband or electronic medical records. Those will have a long, long-term payoff."

Franken remains optimistic that Congress this year will pass major health care reform, even though his 60th filibuster-proof seat has been taken by Massachusetts GOP Sen. Scott Brown.

He's also a strong supporter of keeping a public option in the bill, one that won't decimate the insurance industry but rather offers Americans choices and competition.

Franken predicts the House will pass the Senate health care reform bill, and then a reconciliation bill will be compromised that can pass with a majority vote rather than a supermajority. Former President George W. Bush used reconciliation to pass his 2001 tax cuts.

"It just creates another option for people," he said of provisions to offer a public-run health plan similar to Medicare. "There's other ways to skin that cat. You can have non-profits and co-ops. I'm still a strong proponent. I think without a public option, this health care reform is extremely important and a huge step in reforming insurance, to create more security for folks, to get rid of exclusions for pre-existing conditions that insurance companies have, to get rid of caps on coverage."

It's been a fast nine months since Franken took office after a protracted recount of the November 2008 election. But Franken he had his first bill -- to provide service dogs for disabled veterans -- in his first two weeks.

"A lot of my focus is doing stuff for Minnesota," the Democrat said. "We've had a bad year for dairy, and getting more dairy price supports for farmers. A lot of us in dairy states prevailed."

He also introduced a bill calling for country of origin labeling on products. It was also a difficult year for pork producers, and Franken and others convinced the U.S. Department of Agriculture to buy more pork

"Also in trying in the health care bill to keep a real eye on Minnesota's interests, which happen to coincide with the whole country's interests," he said. "We do health care very well here, relative to the rest of the country."