John Berlau, Director, Center for Investors and Entrepreneurs, Competitive Enterprise Institute

Overlooked in the debate about stimulus – amid all the talk about spending and tax cuts – is a crucial aspect of getting the economy growing again. This is, the mechanism of financing for entrepreneurs and the public policy incentives and impediments surrounding it.

Entrepreneurial firms – those with innovative ideas for new products and technologies – are the ones that will create the new jobs, whether they are blue-collar or white-collar, high tech or “green tech.” But no matter what kind of business an up-and-coming firm engages in, there are only two basic mechanisms they can use to raise capital to finance their growth: debt and equity.

To expand their businesses with money the don’t have, entrepreneurs can either borrow money from banks and issue bonds – debt transactions with contractual obligation to pay creditors a fixed amount at a certain date. Or they can issue shares of stock with no obligatory payouts but with an ownership interest in any future prosperity of the firm.

The debt markets we have heard about, as the “credit crunch” has made it more difficult for businesses as well as consumers to borrow money. But also disturbing is what is going on in the equity markets. According to the Wall Street Journal, in the last quarter of 2008, only one firm completed an initial public offering on U.S. stock exchanges and there were less than 25 IPOs all this year.

At first glance, this statistic may seem to be just a symptom of a bad economy. IPOs are associated in the public consciousness with boom times, such as the tech craze of the late ‘90s. But economic statistics about IPOs and business cycles tell a slightly different story. Recent studies have shown that debt and equity don’t always move together, and can be substitutes, rather than compliments, as forms of financing. They also show that in some instances, equity issuance can even be countercyclical and increase during bad economic times. This fact gives hope that increased equity issuance could lessen the severity of a recession and get the economy back on its feet much sooner. But this will only happen if – and this is a crucial if -- there are not undue policy barriers to companies going public.

During the recession of the early ‘90s, for instance, both the number of initial public offerings and the total proceeds of equity issuance actually increased in the U.S. The circumstances of the debt market back then were similar to, if not on the scale of, our current situation. There had been a debt boom with leveraged buyouts. There had been a real estate bubble, and 3,000 saving and loans had failed after making bad loans. Investment banks and other firms were deleveraging, and credit was harder to come by.

But many firms of different sizes were able to expand through issuing shares of stock. As UCLA economists J. Fred Weston and Yehning Chen wrote in the journal Business Economics, “Debt issuance in 1980-88 shifted to equity issuance and debt retirement in the 1989-93 period.” Although IPOs captured the headlines in the late ‘90s boom, the biggest year-to-year increases in the number of IPOs occurred in the early ‘90s downturn. According to Forbes, IPOs more than doubled at the beginning of the decade from 109 issues in 1990 to 259 in 1991. They then soared to 415 in 1992 and 540 in 1993. Among the stock offerings in these years are the now familiar corporate names of Cisco Systems in 1990, Starbucks in 1992, and PetSmart in 1993.

According to Weston and Chen, “The average annual gross proceeds of IPOs in 1991-1992 were $32.5 billion, about 35 percent above the previous ‘hot’ IPO markets of 1986-88.”  The authors write that “the main motive for the increase in gross equity issuance was deleveraging.” Many firms that had merged through leveraged buyouts in the ‘80s issued shares in a type of  “reverse LBO” to retire debt.

This increase in IPOs let businesses get the capital they needed for growth, helping to end the early ‘90s recession relatively quickly. The equity issuances “strengthened the viability of business firms and have made balance sheets … less vulnerable to economic declines,” write Weston and Chen. Similarly, Urban Jermann of the University of Pennsylvania’s Wharton School and Vincenzo Quadrini of the University of Southern California conclude in a recent paper that “greater flexibility in issuing equity … allows for milder business cycles.”

Unfortunately, with the advent of the Sarbanes-Oxley Act of 2002, companies have lost much of this flexibility in issuing equity. While the debt markets may have been governed relatively loosely during this supposedly “deregulatory” era, the post-Enron accounting mandates in Sarbox have been stifling the equity markets so much that even some Democrats have expressed concern about their effects on U.S. competitiveness and smaller public companies. Compliance with the act’s Section 404 governing “internal controls” over auditing costs public companies $35 billion a year, according to the American Electronic Association. University of Rochester economist Ivy Zhang found that the law has cost the American economy $1.4 trillion in direct and indirect costs.

The minutiae Sarbox forces companies to document can be especially frustrating to innovative technology firms, precisely the ones most likely to create new, good-paying jobs. According to John Battelle’s “The Search,” considered a definitive history of Google Inc., Sarbox was “hell for a company like Google, which made its money literally pennies at a time, from millions upon millions of microtransactions.” Battelle reports that Sarbox compliance significantly delayed Google’s IPO. “According to engineers involved in the work, Google had to significantly restructure its advertising report system from the ground up.”

The sheer size of Google’s IPO in 2004 -- with a market cap topping $1 billion -- is illustrative of IPOs, or the lack of them,  in the post-Sarbox era. The number of IPOs on U.S. exchanges has decreased dramatically, and while there has been disagreement over whether Sarbox has discouraged the listing of foreign IPOs here, what no one really disputes is that the law has kept smaller public companies from going public. According to Business Week, the median market for a company doing an IPO was $52 million in the mid-‘90s. Today, it has shot up $227 million.

And some Sarbox defenders have said this was a good thing, as it kept risky small companies away from the investing public. Besides, they added, there was plenty of money in the credit markets to finance their growth. Herb Greenberg, columnist for Dow Jones’ MarketWatch, wrote in late 2006 that “fewer IPOs might be a good thing,” because “many of these companies shouldn’t go public in the first place.” Saying that he was a “big believer in a safe (relatively speaking) marketplace,” he argued Sarbox was “a good thing for investors” because now, superwealthy “entities … are gobbling up risky-ish deals that otherwise might go public today.” Greenberg said not to worry about entrepreneurs not finding capital. “Based on everything we’ve been hearing lately, there’s more money earmarked for private companies then there are places to put it,” he confidently asserted.

But now, of course, this is no longer the case, as the credit market has caused a substantial shrinkage in private equity and other non-public transactions dependent on debt. Further, Sarbox failed to stop and may have diverted the government’s attention away from the real fraud threats such as the alleged Madoff Securities Ponzi scheme. Moreover, trying to shield investors from the individual risk of entrepreneurial companies may have added to the greater systemic risk as financing shifted from the equity to the debt market. So to get the economy growing again, policymakers must pay as much attention to overregulation on the equity side of ledger, as they are to new regulation on the debt side.

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“I’ve enjoyed reading the older and newer ideas of my fellow economic policy bloggers to amend, improve and put our stamp on the President-elect’s stimulus package. But, to respond to our moderator’s specific question of the week—my “favorite idea for economic stimulus that still is not getting the attention it should receive,” (I raised it on our blog a few weeks ago) is a tax proposal to bring several hundred billion dollars of capital sitting overseas back home and put it to work in the good old USA.  Here’s some more background.  Believe it or not, there is such thing as a free lunch when it comes to economic stimulus. Congress should consider legislation similar to the successful bipartisan 2004 law that enabled U.S. businesses to invest $360 billion of their foreign earnings in the U.S. at a temporary, reduced tax rate of 5.25%. Many successful U.S.-based companies have generated substantial earnings that could be invested in restoring the economy at virtually no cost to the federal government.  However these earnings are trapped overseas due to U.S. tax laws that many foreign competitors do not face.  
 
In the most recent study by the American Council for Capital Formation (see full study here and two page special report here) Dr. Allen Sinai of Decision Economics, Inc. analyzed the economic benefits that would occur if Congress enacted legislation similar to the 2004 American Jobs Creation Act (AJCA).  Based on an estimated $545 billion of repatriations, Dr. Sinai’s quantitative study concludes:
 
o   Increased U.S. GDP, peaking at an additional $110 billion in 2010
o   Reduction in outstanding debt, which would improve credit availability
o   An average annual increase of $56 billion in new investment over the next 5 years
o   Increased U.S. R&D spending by approximately $7 billion per year over the next five years
o   Job generation within the U.S. economy peaking at 614,000 in 2011
o   Nearly $140 billion in tax revenue over five years from initial cash investment and residual economic activity

The ACCF study also indicates that the U.S. Treasury would receive an average $28 billion per year over five years in tax revenue it would not otherwise get.  This would be generated primarily from the resulting increase in aggregate economic activity through higher personal income, corporate profits, capital gains, social security and excise tax receipts. State governments desperately seeking to shore up budget shortfalls would also see some increase in revenues. 
 
Increased GDP, job creation, debt reduction--all at virtually no cost to the government or taxpayers. That’s a free lunch that should be easy for congress to digest.
 

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Obama’s idea of giving companies a tax credit for hiring a new worker or "saving a job" reminds me of the famous sophism of Bastiat, which said that the French government should develop a device that blocks out the sun to promote the hiring of candlemakers. At the heart of Bastiat's mockery is a simple idea: a government that uses economic policy to make life better for its citizens should not merely try to maximize the quantity of jobs in existence. (Never mind the fact that implementing such a credit could have all sorts of administrative problems.) Government should be concerned foremost with economic well-being, broadly defined, where the number of jobs in existence is merely a byproduct of its social welfare maximand.

If Obama wants to pursue a “Keynesian” policy – temporarily increasing government’s demand for goods and services with higher spending – he should insist that the new goods and services be worthwhile. What’s worthwhile to rush into production? Spending items that might well have been funded eventually anyway, such as interstate highways, water projects, improvements to the power grid, etc. In this way, a built-in financing mechanism is imbedded in the spending. We can partially pay for today’s higher spending by reducing the spending that would have occurred a few years down the road anyway. (Then again, maybe I’m being naïve to believe that policymakers could be so benevolent.)

Similarly, as Mankiw pointed out recently on his blog, we must also keep in mind the drawback in how we are likely to measure the gains from a stimulus plan. BEA uses a simplistic assumption for the public sector which says that for GDP purposes, all government spending (less transfers) is valued at the amount government pays for it. But as we all know, paying a government worker to dig a ditch and paying another government worker to fill it back up may very well add the same amount to GDP as a worthwhile government spending program that had the same price tag, but the ditch workers output is worthless to society whereas the worthwhile program’s existence is not.

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I can't figure out whether to be happy or not that the tax cuts will apparently last two years. Why? As Professor Meltzer notes, both theory and evidence tell us that temporary tax cuts are less effective than permanent ones.   And, temporary tax cuts are usually extended, so we might be seriously underestimating the package’s long-term cost by counting only the first two years.

On the other hand, the tax code is a mess and adding more tax credits will just add to the complexity. If we must have them, it would be best if they didn’t linger. And, especially if the president-elect’s campaign promises become law, tax revenues won’t come close to covering the cost of government even after the recession is over. Although alarm bells are sounding at the prospects of trillion-dollar deficits incurred in the name of economic recovery, running big temporary deficits to avoid worldwide economic collapse is clearly an essential investment. Yet, continuing current policy would produce trillion-dollar deficits by 2018, assuming a robust economy, and those deficits will just grow and grow.

This recipe for economic collapse  will make the current troubles look like a minor downturn by comparison.

So, how can government deal with the short-term economic collapse without aggravating our long-term problems? One way would be to promise a national value-added tax (VAT) starting in 2010 and phased up after that. (A VAT, common throughout the rest of the world, is basically a sales tax that is collected in stages from producers and retailers.) The VAT could be used to pay for part of health care costs, mitigating the largest driver of our long-term budget problems. (For details, see my Senate Finance Committee testimony.)

The conventional wisdom is that tax increases are a bad idea during a recession, but this future tax increase would spur spending. If people know that the goods that they plan to buy will cost more starting January 2010, they have an incentive to spend more now. Similarly, if the VAT rate gradually rises over time, there will also be an incentive to spend in 2010. And the VAT is an efficient revenue source. When fully phased in, it would encourage more saving (since spending is taxed and saving isn’t)—reversing a menacing trend and huge long-term problem.

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 The stimulus package should re-vamp the safety net to better support the low-skilled workers who will be hit hard by the recession.  Without jobs, the Earned Income Tax Credit will do them no good.  Even if the new administration extends Unemployment Insurance benefits to part-time workers, millions will fail to qualify because their employment is sporadic.  The safety net is all those workers have.

The largest piece of the safety net is the Food Stamp program, which provides benefits to buy food for people with incomes near or below the poverty line.  Food Stamps serve 13 million households, including families and elderly couples. Broad as it is, however, the Food Stamp program is not very deep.  Average benefits per household are only $225 per month. 

The new administration has proposed to raise benefit levels, but it should go one step further.  Instead of merely boosting benefits once and for all, it should index them to the state of the job market.  That way, benefits would rise when unemployment rises, but revert to normal when unemployment falls.  The safety net would become elastic, expanding in bad times and contracting in good times.

Linking benefit levels to the job market allows the government to raise benefits when they are most needed, without committing to high levels of benefits in perpetuity.  This would address the concerns of fiscal conservatives, who fear that the stimulus package could lead to permanent spending hikes.  Indexation means that relief payments could rise during downturns without permanently raising spending.

Linking benefits to the unemployment rate would also make the safety net a much better automatic stabilizer of the macroeconomy.  Right now, safety net spending rises during downturns because more people sign up for benefits.  If benefit levels rose with the unemployment rate, spending would rise during recessions at a much greater rate. 

By how much? Suppose that when unemployment rose from 5 to 10 percent, benefits rose from $225 to $450, and when unemployment fell back to 5 percent, benefits returned to $225.  Suppose too that Food Stamp cases grow in the near future the way they did during the recession of the early 1990s, rising by 9 million households.  Then linking benefits to the unemployment rate would inject about $50 billion a year into the economy.  Viewed differently, the program would cost $50 billion during years when unemployment runs 10 percent.  When unemployment is 5 percent, it would cost nothing.

Dollar for dollar, safety net spending should provide a greater economic boost than spending on other programs.  Government spending that goes to middle-income households often goes to pay down debt, which doesn’t stimulate the economy.  Families with poverty-level incomes don’t have as much debt, because even when credit is easy, banks don’t give them mortgages.  Money that goes to poor families gets spent, which stimulates the economy. 

Finally, indexing benefits to the labor market also alleviates the incentive problem that has motivated debates over welfare policy at least since the time of the Social Security Act.  The central problem is that high levels of transfer income reduce work effort.  That’s clearly an issue when jobs are plentiful.  However, when jobs are scarce, there is less work to be reduced.  Raising benefits when jobs are scarce provides much-needed relief.  Reducing them when jobs are abundant mitigates the incentive problem.

If we link benefit payments to the unemployment rate, then poor families will get help in hard times, the economy will get a boost when and where it needs it, and high benefits won’t reduce work effort when the economy gets moving again. 

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Listening to the present fiscal stimulus debate, one cannot help get the feeling that the United States is going down Japan’s well trodden path in the 1990s. For rather than addressing the root causes of the present US economic malaise, the incoming Administration seems to be looking for a quick fix for the US economy with a large fiscal stimulus package to the exclusion of policies to address the US economy’s present fundamental weaknesses.

            There are two key issues that are not being currently addressed by the incoming- Administration, which would seem to be essential for laying the groundwork for a sustainable economic recovery. First, the financial system has to be restored to normality with a view to getting credit flowing again. Second, as Marty Feldstein never tires of reminding us, a floor has to be set underneath the housing market. Japan’s experience during its lost decade in the 1990s should be a powerful reminder to us that large fiscal stimulus alone will not be sufficient to restore sustainable growth if the financial system remains dysfunctional and if asset prices keep falling.

            The crying need for a coherent financial market strategy is vividly illustrated by the virtual lack of results from financial policy measures to date. Despite the literally hundreds of billions of dollars in liquidity injections by the Federal Reserve, and despite the disbursement of almost US$300 billion under the TARP program, the US financial system today is practically as dysfunctional as it has been at any time over the past eighteen months. The banks are not lending, the securitization process has all but dried up, and the spreads that even the best rated of corporations are paying have widened to onerous levels.

            One has to hope that amongst the very first priorities of the new US Administration will be a radical rethinking of the TARP program in an effort to restore the US financial system to a semblance of normality. For in the absence of a normally functioning financial system that makes credit more readily available, efforts to revive the economy through fiscal stimulus and unorthodox monetary policy measures will prove to be short-lived.

            In rethinking the TARP, the new Administration would do well to take a close look at the successful Swedish bank support program of the early 1990s, which quickly restored the Swedish banking system to normality. In contrast to the Japanese approach, that program made the vital distinction between solvent and insolvent financial institutions. It also used a “good bank”/ “bad bank” approach to rehabilitate insolvent institutions so that they could quickly resume lending

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The economy is in a very weakened state, with further contraction expected for many months.  So it is extremely important to focus on policies that work, not just those that are politically expedient.  The centerpiece of an effective policy is to extend for at least 3 years, and preferably for a longer period, current tax policy.   It will be difficult for the economy to stabilize and then recover if it must face the threat of higher marginal tax rates.  

President-elect Obama has indicated he intends to extend most of the tax relief enacted in recent years, but likely not those elements most important to economic growth, namely the top tax rates, the tax rates on dividends and capital gains, and the death tax.  There will be time enough to debate tax progressivity once the economy has recovered.  The focus now must be on the recovery itself, and extending current law in its entirety is the first step.  It is, however, a policy of doing no harm, and so it is only a first step.

The second step should be to lower marginal income tax rates further, both individual and corporate.   There are normal processes that take hold to launch a recovery and these are based on individuals and businesses responding to incentives and opportunities.  Reducing marginal tax rates accelerates those processes and strengthens them.  Recovery does not come from Washington.  Economic recovery comes from within the economy itself.

There is a curious commentary underway that the economy is so stressed, so paralyzed, that incentives don't matter at this time.  This view is immediately contradicted by all the businesses making hiring decisions (yes, hiring is still going on), making investment decisions (yes, investment is still occuring), and by individuals going about their daily lives responding to prices to do more or less, buy more or less, save more or less.   Incentives still matter, and individuals and businesses still respond to improved incentives. 

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Those designing the stimulus package should consider adding one big sector that got left off the list: investing in the nonprofit sector. Spending just 10 percent of the stimulus, or up to $100 billion, to assist nonprofits could help to revive the economy since these organizations are being hard hit by the recession. By including this sector we can take advantage of a huge network of institutions that work hard every day to improve the welfare of communities and individuals, that will spend the money quickly, that have the capacity to spread the dollars widely, and that in the absence of such help will need to shrink and thus become another drag on the economy.

The nonprofit sector in the U.S. is relatively large and diverse. In 2006, it received almost $1 trillion in revenue and spent or gave away almost all of this. It employs 10 percent of the work force and has grown rapidly in recent years. It includes a wide diversity of organizations from very small, locally-based soup kitchens or mentoring programs to large universities, hospitals, and social service groups like the Red Cross. Unlike the household sector it does virtually no saving and thus any funds provided to this sector will be fully spent and spent in a way that the citizens who voluntarily support such efforts approve. And unlike spending on new infrastructure projects, most of the money will move into the economy very rapidly and employ people with a broad range of skills – skills that go far beyond those needed to repair a highway or create cleaner energy. Finally, without such assistance this sector will shrink, adding to the ranks of the unemployed. Like state governments, this sector must balance its budgets and since it is likely to see a sharp drop in donations as the result of both the recession, and the decline in stock prices or other asset values, it will be forced to cut back thereby adding an additional downward pull on the economy.

To avoid any partisan wrangling and get the money out quickly and simply, the funds should be allocated in proportion to what each of these organizations spent last year as reported to the IRS. For further details on this idea, see this

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As many have noted, an ideal stimulus would both get the economy moving today while meeting the long-term needs of tomorrow.  Investing in our national infrastructure certainly meets these dual goals, and has already been part of the discussion.

However, while funding for roads, bridges, public transit and water systems has gotten plenty of attention, we cannot forget about the need to repair and improve our nation’s schools.  At least an additional $127-322 billion is needed to bring facilities into good overall condition, according to a 2000 study by the National Center for Education Statistics. A Department of Education survey published in 2007 found that 43% of schools indicate that the condition of their facilities “interferes with the delivery of instruction” (see National Center for Education Statistics).

Recovery funds could be distributed according to existing formulas (e.g. Title I) or by other mechanisms designed to ensure that funds were committed quickly. Increased funding could have an immediate impact since a significant infusion into school districts' capital budgets would unclog maintenance backlogs and would allow districts to address longer-term needs, such as reducing energy usage or expanding capacity.

Significant funding for school repair would create lasting and tangible assets--something people could see and feel--which would be a welcome, confidence-boosting departure from other recovery efforts (like the TARP program) that few understand.

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The biggest failing is that policy has addressed future mortgage defaults by reducing mortgage rates.  A more effective program would address the low demand for housing by offering an incentive to buy up some of the existing unsold houses.  I propose a tax credit for anyone that makes a down payment on an existing unsold house in 2009. 
Congressman David Dreier introduced legislation based on this proposal. 
Increasing the demand for unsold houses would slow or end the fall in house prices reducing future defaults.  Also, it would improve the mortgage market by giving a more certain value to the underlying houses.

Economists learned long ago that temporary tax reduction has little effect.  Permanent reductions have larger effects.

 

OK I don't want to beat a dead horse, but if one of the objectives of the stimulus is to start doing now things we ought to be doing for the long run, then now -- when unemployment is soaring -- is the ideal time to adopt wage insurance. I have long advocated this idea, along with a number of other colleagues through the years (Robert Lawrence, Lori Kletzer, Gary Burtless, and Lael Brainard). It has been endorsed by a number of groups and studies. Now is the ideal time to adopt it.

In previous years, with more normal rates of unemployment of 5%, the cost of the program would be about $3.5 billion. I suspect that the cost now, with peak unemplyment expected to top 8%, would be double this number. But even at that level, the cost is a drop in the bucket in the much larger stimulus.

Wage insurance would cushion downward mobility of workers who may not be fearful of taking wage cuts or even moving to find new jobs. And it would provide an effective subsidy for best kind of retraining, on the job. As other parts of the stimulus generate new jobs, it would be helpful to have a program like wage insurance encouraging more rapid reemployment and retraining of displaced workers to fill them.

Aid for the nation's training and re-training system is a form of counter-cyclical stimulus has so far received little attention. In a recession worker training can serve two kinds of functions. First, it can help equip unemployed and underemployed workers for good job opportunities when the economy begins to recover. Second, it can reduce the number of jobless workers who are looking for work by giving them a useful way to spend their time outside of a Job Service office. Adults who are devoting all their time to upgrading their skills in a training center or college classroom will not be competing with newly laid off workers for a dwindling number of job openings.

Contrary to popular belief, the U.S. Department of Labor is not the main source of public funds for worker training and re-training. DOL's total spending on that function is considerably less than $6 billion a year, a sum that is way too small to pay for training of millions of newly jobless workers. The two biggest sources of public funds for worker training are federal grants and subsidized loans for post-secondary education and training (financed through the U.S. Department of Education) and state and local grants to post-secondary institutions, such as state universities and local community colleges. Many of the ultimate beneficiaries of this spending are older than the traditional college-going ages (18-22). More than a third of the students enrolled in colleges and universities -- 6.4 million people -- are over 24 years old. Most of these are adults who have worked for a while and decided to go back to school to improve their credentials.

Academic research shows that the demand for post-secondary schooling places, especially in community colleges, tends to be counter-cyclical. A high unemployment rate drives up the demand for college admission and enrollment. If it is hard to find a well-paying job, it certainly makes sense to improve one's credentials to make it easier to get a good job in a future recovery. Unfortunately, neither the federal portion of the funding stream (through the U.S. Department of Education) nor the state and local funding stream (through grants to public community and four-year colleges) automatically increases in a recession. In fact, the state and local funding stream is strongly cyclical: It tends to decline in a recession. Peter Orszag and Tom Kane, among others, have found that state funding for post-secondary education is highly vulnerable to cutbacks in a recession. Governors and state lawmakers face shrinking revenues, and they tend to focus on protecting state programs for the needy and unemployed, for the criminal justice system, and for K-12 education. State spending on post-secondary education often shrinks in the face of lower state revenues and increased demands for essential state services. The federal government does nothing to offset these cutbacks through bigger grants to publicly supported colleges and universities or more generous aid to students enrolled in post-secondary institutions. The net result is that the number of education and training slots can decline even as the demand for them rises.

Part of the federal counter-cyclical stimulus package should be devoted to protecting public college, university, and community college educational slots in this downturn. There are two ways to do this. Any federal package should include two kinds of spending: (1) More generous grants and loans for students (which will indirectly help both public and private education institutions); and (2) Direct grants to publicly supported colleges. The latter form of aid should be more generous for institutions located in states that have experienced the biggest increases in unemployment. To discourage states from using the federal aid to reduce their own funding for post-secondary schooling, the federal aid package should explicitly reward institutions that maintain or increase the number of enrolled and newly graduated students. Institutions that curtail admissions or enrollments should receive less generous assistance or no assistance at all. The goal of the aid package is to increase the number of unemployed and under-employed adults who are engaged in improving their job skills. The primary goal is not to provide general fiscal relief to the states, a goal that can be achieved through other kinds of counter-cyclical aid.

Updated 11:37 a.m. on Jan. 5.

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