Yesterday, I participated in a National Journal panel discussing budget issues with Steve Bell from the Bipartisan Policy Center and Laura Peterson from Taxpayers for Common Sense. One of the exchanges got to the topic of tradeoffs, with Bell arguing that, “if you take a look at the American public, they want what they want and they don’t want to pay for it.” [1:33:00 in the video below]

My response, which I’d like to flesh out a bit more here, is that just because budgeting is all about tradeoffs doesn’t mean that win-win policies aren’t out there. One notable example is infrastructure investment, which both creates jobs in the short run and raises long-run economic growth. In fact, the situation today is especially ripe for infrastructure for a number of reasons:

Low financing costs: The cost of borrowing is at historically-low levels, with interest rates on five-, seven-, and 10-year inflation-protected securities (TIPS) actually negative. This means the markets are paying the government to borrow money. But this is a temporary situation—as the economy picks up again, private returns will increase and the government will be forced to offer more generous borrowing terms to remain competitive.

Great deals: As state and local governments remain stuck in fiscal straitjackets, private commercial construction contractors are desperate for work, and their asking prices for projects has gone down. In fact, the Department of Transportation estimates that more than 2,000 additional transportation projects were funded due to competitively low bids or projects completed under budget. In other words, we’re getting much more bang for our buck than we usually do.

Fixing infrastructure costs less than rebuilding: Neglecting our infrastructure needs only makes the cost of inevitable repair compound over time.  It’s a lot cheaper to repair a bridge than to rebuild one from scratch.  For every $1 spent on preventative pavement maintenance, between $4 and $10 is saved on rehabilitation.

Right now we’ve got an amazing opportunity to do something that we need to do anyway at record-low costs, we’re practically being given the money, and if we delay investments, their eventual cost will be much higher. Oh, and it will create jobs. This isn’t win-win, this is win-win-win-win.

Iowa Sen. Tom Harkin, the Chairman of the Senate Committee on Health, Education, Labor and Pensions, has introduced a bill that shows the way to a better economic future for most Americans. The Rebuild America Act tackles many of the biggest problems that hold back the American economy and shut off opportunity for working families.

It’s an omnibus bill that will increase employment by making big infrastructure investments, developing renewable energy systems, addressing unfair foreign trade practices, providing assistance to state and local governments to retain police, firefighters and teachers, ending tax breaks that encourage companies to move jobs offshore, and promoting manufacturing in the United States.

It will help workers get a decent return on their education and their work by strengthening the minimum wage and overtime laws, better protecting the right to join a union and bargain collectively, enhancing retirement security, and guaranteeing paid sick leave.

It improves education by helping states improve teacher effectiveness and by investing in school modernization.

And it both reduces the federal deficit and increases tax fairness by closing loopholes that favor the rich, taxing Wall Street speculation, better balancing taxation of earned and unearned income, and instituting the Buffet Rule’s minimum 30 percent income tax on million-dollar-a-year incomes.

The bill would add millions of jobs to the economy, raise the typical family’s income and enhance its retirement security. The tax changes would shift the burden of hundreds of billions of dollars of federal taxation from working- and middle-class families to those who can afford to pay – the rich and ultra-rich.

We want to particularly applaud Sen. Harkin for his courage in swimming against the tide in two critical areas: Social Security and labor policy. The Rebuild America Act rejects the notion that Social Security is too expensive and that we can’t afford to meet the promises we made to America’s workers: That if they worked hard for a lifetime, they could retire with guaranteed benefits and inflation protection. Too many other politicians are ready, if not eager, to cut Social Security’s cost of living protection and to reduce benefits by raising the retirement age, no matter that such changes have the biggest impact on the retirement security of women and blue-collar and low-income workers, many of whom have seen little or no increase in life expectancy. By contrast, Sen. Harkin knows workers need more help, not less; that fewer and fewer workers have pensions; that 401(k) accounts are insufficient and undependable sources of retirement income; that Social Security is steadily replacing less and less of pre-retirement income; and that the Social Security COLA is not too generous, but rather too skimpy to keep up with the cost of health care inflation that drives the spending of older workers.

The Rebuild America Act therefore replaces the Social Security COLA formula with one that better accounts for cost inflation in the products and services that older workers pay for. It raises benefits across the board. And it pays for these improvements and addresses the program’s long-term revenue shortfall by “scrapping the cap” – eliminating the loophole that shelters incomes above $110,100 from Social security taxes.

In the area of labor law, the Rebuild America Act would make the most significant change in the minimum wage in our history by indexing it to inflation after raising it to a more adequate $9.80 an hour over a period of three years. The bill will also correct the gross injustice of freezing the minimum wage for tipped workers at $2.13 an hour, a problem that Congress ignored in both of the last increases it made to the minimum wage. Many states have acted on their own to address this problem, and Sen. Harkin is right to end this disgrace.

The Act will also address the continuing erosion of overtime protection, which is both the legal underpinning of the weekend and the best defense workers have against abusive schedules and worsening work-family conflicts. As long as employers have to pay 150 percent of regular pay for each hour worked beyond 40 in a week, they will be reluctant to force excessive overtime. But the Department of Labor has let the coverage of the overtime law erode steadily over the years, to the point that workers earning near-poverty salaries can be treated as exempt executives or administrators. The Rebuild America Act raises the income threshold for exemption back to historic levels and would guarantee overtime coverage for millions of workers who are unprotected today.

The values and policies embodied by the Budget for All, the budget of the Congressional Progressive Caucus (CPC) for fiscal year 2013, offer a stark contrast with those of the budget put forth by House Budget Committee Chairman Paul Ryan (R-Wis.). First, the Budget for All protects Medicare, Medicaid, the Affordable Care Act, and other elements of the social safety net. Second, it boosts public investments in education, infrastructure, and research and development. But the Budget for All and the Ryan budget are perhaps most diametrically opposed in their approach to economic stewardship over the weak recovery.

As my colleague Rebecca Thiess highlights, the Budget for All would finance a direct jobs program, infrastructure investments, targeted tax credits, and increased nondefense discretionary spending to ameliorate the ongoing crisis in the U.S. labor market. The Budget for All proposes increasing spending by $786 billion for job creation measures and public investments over the next two-and-a-half years (FY2012-14), relative to current law. This is critical: Expansionary fiscal policy remains the single best lever to fill the gap in aggregate demand and put Americans back to work. The Budget for All would accelerate economic recovery by increasing near-term budget deficits even while reducing longer-term deficits and sustaining primary balance over the second half of the budget window.

The Budget for All would increase mandatory and discretionary spending (excluding overseas military operations) by $259 billion in FY2013 and $261 billion in FY2014, boosting GDP by 2.3 percent and 2.2 percent, respectively, relative to current policy (the relevant baseline for aggregate demand). Net of the much smaller fiscal drag exerted by progressive tax reforms being gradually phased in, we estimate that the fiscal expansion proposed by the Budget for All would increase GDP by $280 billion (+1.8 percent) and $167 billion (+1.0 percent), respectively, in FY2013 and FY2014. By substantially boosting near-term aggregate demand, we estimate that the Budget for All would increase non-farm payroll employment by 2.1 million jobs in FY2013 and 1.2 million jobs in FY2014.

Conversely, the Ryan budget would accelerate the looming economic drag from contractionary fiscal policy with deep, aggressive spending cuts—failing the “first, do no harm” principle and sharply impeding job creation. My colleague Ethan Pollack recently estimated that the Ryan budget would reduce employment by 1.3 million jobs in FY2013 and 2.8 million jobs in 2014.*

On net, non-farm payroll employment would be roughly 3.4 million jobs higher by the end of FY2013 and 4.0 million jobs higher by the end of FY2014 if Congress adopted the Budget for All instead of the Ryan budget. To put this in perspective, the economy has gained 2.0 million jobs over the last 12 months but needs more than 10 million jobs to restore pre-recession unemployment and labor force participation rates. Going forward, the CPC budget would markedly accelerate the rate of rehiring, while the Ryan budget would drastically slow—or entirely wipe out—new hiring.

Immediately slashing government spending, as Ryan has proposed, is not a game or a joke—it’s economically irresponsible budget policy that has backfired across much of Europe and would seriously aggravate un- and underemployment. And as proven by the Budget for All, racing down the austerity path isn’t required for a fiscally responsible budget. The CPC budget would reach the same debt level as the Ryan budget without jeopardizing the economic recovery.

Fiscal responsibility demands sound economic stewardship, which means addressing the jobs crisis and closing the gap between potential output and actual GDP (the economy is currently running $883 billion—or 5.4 percent—below potential). While a large output gap persists, government spending cuts will have a particularly adverse impact on aggregate demand and fiscal sustainability will remain elusive. (Again, just look to Europe.)

The Congressional Progressive Caucus has proposed a credible budget that would prioritize jobs first and phase in deficit reduction as the economy strengthens (with emphasis on policies that will have relatively little deleterious impact on aggregate demand). Ryan has produced a budget that would choke off economic recovery in an attempt to gut government and refund the tax bill. The CPC budget is credible and economically viable; the Ryan budget is not. And literally millions of jobs hang in the balance between these two competing visions for the United States of America.

*The employment impact of the Budget for All is meant as an apples-to-apples comparison with these estimates for the Ryan budget, which were also calculated relative to current policy excluding spending on overseas military operations (which has a relatively small impact on domestic output).

Earlier today, the EPI Policy Center released The Budget for All:  A technical report on the Congressional Progressive Caucus budget for fiscal year 2013, which details the composition and effect of this year’s budget alternative from the CPC. While the policies in the Budget for All reflect the decisions of CPC leadership and staff, the EPI Policy Center provided the CPC with technical assistance in developing, scoring, and modeling CPC policies and their cumulative budgetary impact.

First and foremost, the Budget for All would address our most pressing challenges by financing up-front job creation measures and sustained public investments. Overall, the Budget for All would allocate $2.9 trillion for front-loaded stimulus and investments in human and public capital over FY2012-22 relative to current law. This would include:

• $227 billion for a direct jobs program modeled off of Rep. Jan Schakowsky’s (D-Ill.) Emergency Jobs to Restore the American Dream Act;
• $247 billion in increased transportation outlays relative to current law, including $50 billion in immediate investments for 2012, $53 billion in rail investments, and $30 billion for an infrastructure bank;
• $135 billion over FY2012-2022 in tax credits to foster hiring, innovation, manufacturing, and insourcing jobs to the U.S.;
• $183 billion to reinstate the Making Work Pay tax credit from 2013-2015 (the payroll tax holiday would be allowed to expire on schedule Jan. 1, 2013);
• Undoing the Budget Control Act (both the discretionary spending caps and the automatic sequestration cuts), which would increase nondefense (NDD) discretionary outlays by $583 billion; and
• $1.6 trillion in additional NDD spending for domestic priorities in areas including education, scientific research, and health.

By the end of the budget window (FY2022), NDD spending would total 3.5 percent of GDP, compared with 2.5 percent under current law, 2.4 percent under Obama’s budget request, and 2.1 percent under Wisconsin Rep. Paul Ryan’s budget. By FY2022, NDD spending would be 38 percent higher than under current law, 46 percent higher than under Obama’s budget, and 65 percent higher than under the Ryan budget. On average, over the 10-year window, NDD spending in the Budget for All would total 4 percent of GDP, slightly above the 3.9 percent of GDP historical average over FY1962-2011.

The Budget for All is committed to protecting and strengthening Social Security, Medicare, Medicaid, and the Affordable Care Act, and in stark contrast to the Ryan budget, proposes no benefit cuts. The budget would build on health care reform by offering a public insurance option and negotiating lower Medicare pharmaceutical prices. Regarding national security, the Budget for All would responsibly end the war in Afghanistan and overseas contingency operations while realigning spending by the Department of Defense toward domestic priorities.

To adequately fund budget priorities while achieving a responsible fiscal path, the Budget for All proposes progressive tax code reforms that would ask more from the most fortunate in our society. These would include adding higher tax rates for millionaires and billionaires, eliminating the preferential treatment of capital income over earned income, taxing accumulated wealth, taxing financial speculation, and responsibly pricing carbon (rebating a quarter of revenue to low-income households). Regarding the Bush tax cuts, the Budget for All would let the top two rates expire on schedule (following Obama policy) and temporarily extend the 28 percent and 25 percent brackets, phasing them out as the economy strengthens. The Budget for All’s individual income tax rate reforms would save $1.7 trillion relative to full continuation of the Bush-era tax cuts and $1.3 trillion relative to Obama policy.

The Budget for All is economically responsible and fiscally sustainable throughout the budget window; it increases near-term deficits, reduces long-term deficits, and sustains greater public investments throughout the budget window. And equally as important, it does so without engaging in budgetary gimmicks; the Budget for All finances the likely continuation of the Alternative Minimum Tax patch and the Medicare physician payments “doc fix” over the next decade.

In short, this budget proves that there is a sensible, credible alternative to governing than the one put forth by Ryan, which would eviscerate the social safety net and other important programs. The Budget for All demonstrates that we can fulfill Americans’ top priorities—investing in a strong economic recovery and fostering shared prosperity—while meeting respectable fiscal targets and preserving the legacies of the New Deal and the Great Society.

Brad DeLong and Larry Summers have a new paper out that’s worth reading. Little in it is brand-new to obsessive followers of the fiscal policy debates of the past few years, but it’s a very useful compendium of evidence.

Their basic argument is that the effectiveness of fiscal policy support (say, like the Recovery Act) quite likely remains substantially under-estimated by most well-known models and assessments (and even these well-known models already make a powerful case for its effectiveness). They, in fact, go so far to say that:

“A combination of low real U.S. Treasury borrowing rates, positive fiscal multiplier effects, and modest hysteresis effects [i.e., the “scarring effects” of recessions – see here] is sufficient to render fiscal expansion self-financing”

To put this simply, fiscal support pays for itself, even in narrow budgetary terms (let alone in broader economic terms). This is a key lesson – one we have tried to impart before in a policy memo:

“The original Recovery Act spurred income creation that resulted in higher tax collections and lower safety-net spending, substantially blunting its bottom-line impact on deficits”

And in congressional testimony:

“While this caution may be useful, it should be made clear that the case for full self-financing over time of  temporary fiscal support in an economy stuck in a liquidity trap is actually not totally implausible…”

Why is this point—that well-designed fiscal support programs are significantly or even totally self-financing—so important? Well, for some reason, far too many policymakers (even, or especially, ones who self-identify as Democrats, who one would think would be friendlier to calls for fiscal support for job creation) have settled on the mantra that short-term stimulus can only be done if coupled with long-term deficit reduction. There never was a real substantive reason for this stance – even if the Recovery Act, for example, had not come with any induced deficit offset at all, it would have added all of 2 percent to the long-run fiscal gap of the United States.

But, once one allows for the very real possibility that well-designed fiscal support adds nothing to long-run deficits, the logic of holding it hostage in the name of concern over long-run deficits falls apart completely. In short, holding up short-term fiscal support in the name of extracting long-run promises on deficit reduction makes about as much sense as insisting that a house with drafty windows that’s also on fire can only have the flames doused if somebody can be found to simultaneously do some caulking.

The Office of Management and Budget just posted a draft of its annual report to Congress on the benefits and costs of federal regulations. This official documentation of all major regulations reviewed by OMB includes an individual listing of the benefits and costs of all such rules finalized by the Obama administration through Sept. 30, 2011 (the end of fiscal year 2011). This listing, Table D-3 found on pages 126-128, includes nine final rules issued by the Environmental Protection Agency and two final rules issued jointly by EPA and the Department of Transportation.

If the monetized benefits and costs of these 11 individual rules are tabulated (hereafter referred to as the “Obama EPA rules”), the results are strikingly positive. As the table at the end of this post indicates:

• The benefits of the finalized Obama EPA rules are valued at $98 billion a year (all figures in 2010 dollars).  Most of the benefits come from saving lives and other health benefits, but also include economic benefits such as reduced fuel expenditures by consumers or increased worker productivity.
• The compliance costs of the Obama EPA rules amount to just $8.3 billion a year, or far below one one-thousandth of the economy.
• The net benefits from these rules is $90 billion a year. The ratio between benefits and costs is 12-to-1.
• Using methodology I wrote up previously, I estimate the economic benefits from the joint EPA/DOT rules alone, connected to fuel efficiency and greenhouse gas standards for cars, amount to about $13 billion a year, or more than the compliance costs for all 11 Obama EPA rules.

Since the OMB report is designed to cover data only through the end of the previous fiscal year, it does not include EPA’s “air toxics” rule that was finalized on Dec. 16, 2011. This rule has significant compliance costs, amounting to $10 billion a year, but much larger benefits, amounting to $64 billion a year (using the midpoint of the benefit range). Combining this rule with the rules in the OMB report, the benefits of Obama EPA rules finalized to date amount to $162 billion a year, compared to compliance costs of $18.3 billion a year (about one one-thousandth of the economy). The net benefit figure for this combination of EPA rules is $144 billion a year.

Cost-benefit data should not be considered precise, and there are many complexities to such analysis that have not been fully addressed (such as many benefits are not monetized). Nonetheless, the magnitude of the net benefits of the Obama EPA rules shown by this data indicates that they are likely to be of much value to the nation.

Annual costs and benefits of major EPA rules finalized during the Obama administration, through Sept. 30, 2011 (in millions of 2010 dollars) Rule Costs Benefits Revisions to the Spill Prevention, Control, and Countermeasure -99 NESHAP: Reciprocating Internal Combustion Engines (Diesel) 380 1,604 Light-Duty Vehicles Greenhouse Gas Emission Standards and CAFÉ Standards* 4,060 14,574 Lead: Amendment to the Opt-out and Recordkeeping Provisions in the Renovation, Repair, and Painting Program 354 2,282 Review of the National Ambient Air Quality Standards for Sulfur Dioxide 836 12,860 NESHAP: Portland Cement Notice of Reconsideration 1,038 13,666 NESHAP: Reciprocating Internal Combustion Engines–Existing Stationary Spark Ignition (Gas-fired) 255 838 Water Quality Standards for Florida’s Lakes and Flowing Waters 171 28 SPCC milk amendments -147 Greenhouse Gas Emissions Standards and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles* 606 3,129 Cross-State Air Pollution 843 48,926            Total 8,297 97,907 *These rules are joint EPA/DOT rules Source: Table D-3, Draft 2012 Report to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entitities.  EPI converted the data from 2001 dollars to 2010 dollars using the GDP deflator

All budget proposals should be evaluated first and foremost by how they address the most important problems facing the nation. Today that problem is joblessness. Unemployment is still elevated at 8.3 percent, the highest in a generation, while the average duration of unemployment is still at peak levels (about 40 weeks). Poverty rates for young children (under the age of 6) are at their highest recorded levels, while the number of households in extreme poverty (earning incomes of less than $2 per day) has doubled since the mid-1990s. Although the economy has added 735,000 jobs in the last three months, even at this rate it would still take five years before the labor market fully recovered. In short, any policy that fails to address job creation—or at least fails to extend the economic provisions that we’ve already put in place—should be rejected.

Paul Ryan’s latest budget doesn’t just fail to address job creation, it aggressively slows job growth. Against a current policy baseline, the budget cuts discretionary programs by about $120 billion over the next two years and mandatory programs by $284 billion, sucking demand out of the economy when it most needs it and leading to job loss. Using a standard macroeconomic model that is consistent with that used by private- and public-sector forecasters, the shock to aggregate demand from near-term spending cuts would result in roughly 1.3 million jobs lost in 2013 and 2.8 million jobs lost in 2014, or 4.1 million jobs through 2014.*

Of course, this leaves out taxes. Ryan’s proposal involves cutting taxes on corporations, eliminating the Alternative Minimum Tax, maintaining the Bush tax cuts and preferential rates on capital gains and dividends, and consolidating the rate structure into two brackets, 10 percent and 25 percent. He says he’ll pay for these tax cuts (excluding the Bush tax cuts, which are already currently in effect) by eliminating tax expenditures, so it won’t result in revenue loss.

Now, temporary tax cuts can create jobs because they pump more money into the economy and boost consumer and business spending. The payroll tax holiday is one such example. But the fact that Ryan’s tax proposal won’t change net revenue levels in the near-term means that its economic effects will be minimal – and it will certainly not materially offset the job declines stemming from spending cuts. Worse, the composition of Ryan’s tax-shift means that it will likely result in a small job loss because it shifts the tax burden from high-earners to middle-class households. Low-income households will also face higher taxes because Ryan would allow certain tax credits like the Earned Income Tax Credit, Child Tax Credit, and the American Opportunity Tax Credit to fall from their current levels. Redistributing money away from people who spend more of each marginal dollar of disposable income (low- and moderate-income households) to those with much higher savings rates (high-income households) is broadly recognized as leading to a decline in aggregate demand.

*2-year figure in job-years

In a conference call with investors Monday, Apple CFO Peter Oppenheimer argued that the company could not repatriate its $65 billion (yes, with a ‘b’) in earnings and investments held overseas because the corporate income tax constituted too large a “disincentive” to do so. This was apparently the latest in a lobbying effort by Apple to have Congress institute a repatriation “tax holiday” similar to one passed in 2004, that saw hundreds of billions of dollars of foreign-held corporate earnings brought back to the country under preferential tax rates.

Calls for another corporate tax holiday have been growing in the past six months, with various pieces of legislation introduced in the House in 2011 that would reward companies that repatriate profits with a low tax rates. These calls for a repatriation holiday are often bipartisan (House legislation introduced in the summer of 2011, for example, is co-sponsored by Utah Democrat Jim Matheson and Texas Republican Kevin Brady).

It is important to note that a repatriation holiday solves no economic problem at all … unless one defines Apple investors’ obligation to pay taxes as a problem.

The best economic case made in favor of such a holiday is that by encouraging U.S. corporations to return their overseas holding to the domestic economy, this will greatly increase the supply of investment capital that can be mobilized to help businesses increase capacity.

But, as we’ve noted over and over again, U.S. businesses today still are not using anywhere near the full amount of capacity they already have. And access to cheap credit for corporations is historically easy. And business investment is the one area of the economy that is actually growing historically fast. And corporations are already sitting on historically large amounts of investable capital. In short, there is no plausible reason at all to think that repatriating foreign earnings provides any relief to the actual economic problems facing the U.S.

What a holiday would do, especially given the 2004 holiday, is convince U.S. corporations that profits earned abroad will always be given an opportunity to be brought home at very low tax rates in the future. And this will provide further incentives to firms to increase the share of their profits that are earned abroad, which means increasing the share of jobs and capacity that is held abroad.

Apple (and other multinationals) already has the chance to defer taxation on profits held overseas – this is a substantial tax benefit already. There is no public policy case at all for giving them and other multinationals another holiday from corporate taxes. Luckily, the Obama administration seems unswayed so far by Apple’s complaints.

Representatives of fish processing companies in Alaska are complaining about the possibility that they might lose access to 4,000 to 5,000 temporary guest workers they hire each year through the State Department’s “Summer Work Travel” (SWT) program, a part of the J-1 visa Exchange Visitor Program originally designed to facilitate a cultural exchange between Americans and citizens of other countries. The companies worry that they won’t be able to find enough workers this summer and that the whole industry will be negatively impacted as a result. The fundamental problem is that the industry has come to depend on an exploitable foreign workforce instead of hiring U.S. workers.

The J-1 SWT program was not designed to be a temporary foreign worker program. Its purpose is to facilitate a cultural exchange between foreign college students and American residents. If fish processors need a workforce, they should look to unemployed Alaskans and other Americans first, and if they still can’t find enough workers, there are other work visa programs that are more appropriate (for example, the H-2B program). Secretary of State Hillary Clinton and the State Department should not be persuaded by the fish processors or the two U.S. Senators from Alaska, who have urged the secretary to spare the industry from a ban on using J-1 SWT student workers.

The concern of the fish processors likely stems from an Associated Press story about a leaked memo outlining a number of changes to the SWT program the State Department might implement this year. This includes prohibiting the employment of SWT student workers in seafood processing plants and other potentially dangerous workplaces.

The following is an excerpt from the statement of purpose in the Fulbright-Hays Act, the legislation that created the J-1 Exchange Visitor Program which includes SWT. It clearly states what the program is designed to do:

The purpose of this chapter is to enable the Government of the United States to increase mutual understanding between the people of the United States and the people of other countries by means of educational and cultural exchange; to strengthen the ties which unite us with other nations by demonstrating the educational and cultural interests, developments, and achievements of the people of the United States and other nations, and … thus to assist in the development of friendly, sympathetic, and peaceful relations between the United States and the other countries of the world.

Even if you read the entire Fulbright-Hays Act, you won’t find anything that suggests a congressional intent to provide employers with a temporary workforce or to help them fill labor shortages. It’s clear the SWT program is not primarily a guest worker program; it is intended to facilitate a cultural exchange. The State Department’s new Guidance Directive outlines this clearly. The work component of this cultural exchange is designed to allow the SWT student worker to interact with Americans and to allow him or her to earn enough money to travel to and within the United States. This allows foreign students from lower-income backgrounds to visit the United States when they otherwise might not be able to afford it. From that perspective, it’s a good thing, but it’s impossible to argue with a straight face that J-1 student workers in Alaskan fish processing plants are experiencing the cultural exchange envisioned in the Fulbright-Hays Act.

A recent investigation revealed an example of what SWT recruiters for fish processing jobs tell potential participants about the cultural exchange program they offer:

“We’re looking for hard workers who are not afraid to work every single day, up to 16 hours a day,’’ said Sarah Russell of Leader Creek Fishing in the village of Nakenak [sic]. “You will make a lot of money in a very short period of time and you won’t spend it anywhere because there’s really nothing to do in Nakenak, other than work.”

That says it all.

Russell admits the J-1 SWT student workers will work long hours – double all-day shifts to be exact. If you work 16 hours a day, when will you have time to interact with other Americans? Perhaps in the workplace? Probably not, since the plant is likely to be staffed with many other SWT workers from around the world. Russell also notes that the job is located in an isolated location with nowhere to shop and nothing to do. I assume that also means there are no cultural or educational activities available locally. How are SWT student workers supposed to interact with Americans and learn about American culture if they live far from them and are working for two-thirds of the day? (Presumably they sleep during the eight hours they have all to themselves.) Quite simply, they can’t, and that’s why it doesn’t make sense to allow fish processing jobs in the SWT program. Read more