The Incredible Smallness of The American Jobs Act
Posted by Michael A. Kamperman on September 9, 2011
The American Jobs Act presented by President Obama is not big, not bold, and not up to the challenge of helping 25 million Americans find full-time work. When the President calls for a joint-session of Congress to present a plan to deal with what he termed a ‘crisis,’ shouldn’t the plan ‘solve’ the crisis? It’s not that the plan is without merit, it’s just that it’s way too small to solve the problem. For starters, where is the fix for housing? The President has backed Wall Street over Main Street and has rejected the idea which I originated in my book, but is now being touted in many quarters, to refinance all homes that are current on their mortgage without an appraisal or credit check. Instead, the President’s economists will get together with housing regulators to see how to get the already failed HARP program to be more effective. The payroll tax credit is a very good idea, especially offering it to both the employer and the employee. So why limit it to only $5 million in wages for the employer? That limits the incentive for larger firms to higher and most of the good jobs in this country are in those larger organizations. Basically, why come forward with a plan designed to do less than 10% of the job? Moody’s estimates the plan will create/save only 1.9 million jobs.
Basically, for the $450 billion the President proposed you could take 15 million unemployed Americans and give them a job with the federal government with a total compensation package of $30,000 each. Most of the unemployed are lower skilled workers and that would be a meaningful wage for many of them. You could find something for all of them to do that would improve America. That would create 10 times the number of jobs as the President’s plan does for the same amount of money. Is ideology against government workers so sacred that we would be willing to get only 10 cents on the dollar to avoid some form of conservative sacrilege?
The worst part of the plan is that the President wants to fully pay for it by cutting other parts of the budget over the next ten years and raising revenue from the wealthy and from corporations. The bottom line is that any form of raising revenue without growth is raising taxes. And raising taxes is a drag on economic growth, which would offset some of the benefits of the plan. Plus, it plays into the false ideology that the biggest concern the nation has is the debt and the deficit. They should simply buy back all outstanding Treasuries with printed money and end this falsehood. At least then we could talk about policies that would really revitalize the nation. Importantly the plan is not $450 billion in new money. Almost $250 billion is intended to replace programs that expire in 2011. We already have that part of the plan in place and job creation in August was still zero. The idea that simply doing more of the same will create jobs is farcical. It will save jobs to continue these policies because to cut them off would actually cost a couple of million more jobs. If the Federal Reserve doesn’t go big in a couple of weeks the economy is toast.
