This piece provides an objective analysis of the real likely effects of President Obama’s proposed Jobs Law. The long and short of it is that the bill would produce jobs and lower unemployment, but that the economic hole created by Republican economic policy is so deep that the effect would only be modest and possibly temporary.

However, it’s important to keep in mind that that’s the role of a stimulus: to provide a temporary bolster to the economy in order to give people and small businesses a chance to get solidly on their feet and ready to function adequately without help. It’s also important to keep in mind that the Republican proposals, such as they are, would not only not help at all, but they would make the situation worse as they are nothing more than the same failed policies that got us here in the first place.

Obama Jobs Plan: American Jobs Act Would Make Small Dent In Unemployment Rate

By TOM RAUM

WASHINGTON — Even if Congress heeds President Barack Obama’s demands to “pass this bill right away” and enacts his jobs and tax plan in its entirety, the unemployment rate probably still would hover in nosebleed territory for at least three more years.

Why? Because the 1.9 million new jobs the White House says the bill would produce in 2012 falls short of what it’s needed to put the economy back on track to return to pre-recession jobless levels of under 6 percent, from today’s rate of 9.1 percent.

That’s how deep the jobs hole is. The persistent weakness of the U.S. economy has left 14 million people unemployed and more than 25 million unable to find full-time work.

Economists of all stripes pretty much agree that it will be a long, hard road no matter what Congress does. Right now, the Republicans who run the House and the Democrats who lead the Senate aren’t finding much common ground.

Obama estimates his American Jobs Act would lower unemployment by just a single percentage point by next year, to just over 8 percent, heading into the 2012 presidential election.

Burned before by making overly optimistic job-creation predictions, the White House turned to prominent outside economists to crunch the numbers.

The projection of 1.9 million new jobs, a 1 percentage point drop in the unemployment rate and a 2 percentage point increase in the gross domestic product under Obama’s plan came from Mark Zandi, chief economist of Moody’s Analytics.

But Zandi said in an interview his forecast also is based on an assumption that “the president’s entire package is passed by the end of the year,” a slim prospect given the current divided leadership in Congress, and that there are no other budgetary policy changes.

“I assumed that it would be paid for,” Zandi said. “I didn’t know when I did that simulation how the president proposed to pay for it.”

Since then, Obama has said he would pay for his $447 billion package with permanent income tax increases of about $150 billion a year, mostly on wealthy individuals and corporations, in addition to spending cuts. That’s drawn criticism from Republicans, who say any tax increases could further stall the fragile recovery.

Zandi, who has advised both Republican and Democratic lawmakers, said he’s still sticking with his forecast, mainly because the stimulus in the plan, including a temporary reduction in Social Security taxes for both employees and employers and infrastructure spending, would come in 2012 and be paid for later.

But there is one feature Obama doesn’t emphasize.

Zandi said his job-creation figure only applies to 2012.

“Beginning in 2013, and certainly into 2014, the plan is a drag on the economy because the stimulus starts fading away,” he said. “So by 2015, the economy is in the same place as now, as if there were no jobs package.”

Also, Zandi said, his forecast does not leave any room for a new recession. If that happens, all bets are off.

“So it’s very important to get as many people working as fast as possible,” he said. “If we go back into recession, it is going to be very difficult to get out. And it’s going to cost taxpayers tremendously.”

Job creation has ground to a virtual standstill. The economy produced a scant 20,000 net new jobs in June, 85,000 in July and none in August. Economic output, as measured by the GDP, has been growing this year at an anemic annual rate below 1 percent.

The global economy is showing no signs of strengthening. A divided Federal Reserve is nearly out of ammunition for additional stimulus. And the U.S. is once again facing the possibility of a government shutdown at the end of next week.

The Obama-Zandi target of 1.9 million new jobs next year, or 158,000 a month, is somewhat higher than private analyses that suggest the plan would create 100,000 to 150,000 jobs a month.

Heidi Shierholz, economist for the labor-leaning Economic Policy Institute, calculates it would take job growth of 400,000 every month for three years in a row to get back to the 5 percent jobless rate last seen in December 2007, at the recession’s outset.

“To get down to 5 percent in five years, we need around 280,000 jobs every month,” she added. “Right now, we’re more than two years into the official recovery, and we’re still bumping along at extremely low levels.”

What if Obama gets none of what he requested? She said failure to renew some current anti-recessionary programs such as extended unemployment insurance and the existing Social Security tax break for employees “will be a big blow” both to the economy and to the employment picture.

More likely, Congress will probably produce a watered-down version.

As long as the GDP grows at an annual rate beneath 2.5 percent, it cannot create enough jobs for new entrants into the workforce, let alone to re-employ those laid off during the downturn, said Martin Regalia, chief economist for the U.S. Chamber of Commerce, the nation’s biggest business lobby.

The chamber estimates it will take 20 million jobs over the next decade to get the economy back to pre-recession levels. It has its own jobs plan, which includes increased trade, greater oil drilling, quicker road and bridge construction and temporary corporate tax breaks.

“If you want to go from 9.1 percent down to 5.5 or 6 percent unemployment, you’re going to have to grow roughly at 4.5 percent (GDP) for three years,” Regalia said. “I don’t see that in the forecast.”

In the first six months of this year, the GDP grew at a scant 0.7 percent rate. Private forecasters see it growing about 2 percent in the final six months of 2011, about 2.5 percent throughout 2012, and increasing to about 3.2 percent in 2013.

Obama is quick to acknowledge a rocky road ahead.

“For a decade now, incomes and wages have flat-lined for the American people – for ordinary Americans, for working families,” he says. “They are working harder, making less, with higher expenses. And that’s been going on for a long, long time.”

Origianl post on the Huffington Post

So while I am not a big fan of economic stimulus, at this point it’s effectively triage. We need it.

46 Responses to “Obama’s Jobs Bill”

  1. Top super committee Democrats have proposed a “grand bargain”-like offer to their GOP colleagues on the panel, picking up where negotiations between President Obama and House Speaker John A. Boehner broke off this summer over a $3-trillion package of spending cuts and new taxes.

  2. ronaldblair2 ..the only people that believe the “2” internet only posted Obama BS papers claiming he was “born in Hawaii” ? Have no rational mind or common sense or can read more than a comic strip. Sad huh? Barry should go as an “illegal alien”. To the White House Halloween He could get 1 of those fast & furious guns and garb up like a drug mule! This whole State visit was a just a money pickup from Odrama with a note attached telling what they EXPECT$ if Odumbo wins again

  3. The people in this video are a perfect example of the typical Fox News viewer! Completely UNINFORMED / RACIST / BIGOTED scum bags of our great nation. It’s so sad…. They and the “Tea crowd are perfect examples for why Fox News needs to be pulled off the air ASAP.

  4. Than why do you got both of your legs crossed like a woman? Can you learn how to keep a camera from moving all over the place. C’mon we have enough nukes to split the whole planet in half away from foreigners

  5. Pr11368, I respect your decision to Obama, but I must say that after serving 2 years in Iraq that I am better trained to fight the terrorist than my wife and 7 year old Daughter… If we leave they will follow us here and terrorize our nation We are winning this war, there has been no attacks on U.S.soil in 7 years,thats because we have killed many of them and the others are fighting our trained soldiers, not our defenseless families.We must defeat them, they will not go away on their on

  6. asmusser jemil says:

    If I dragged my feet at my job as much as these lazy republican pricks do at theirs, I,d get FIRED!!!!

  7. hjel willer says:

    I feel sorry for the Republican voters, they have to vote for one of these clowns. None of them are Presidential material IMO.

  8. No Way Establishment! Romney Will NOT Be The Nominee! We WON’T Allow You To Screw Us Again Like You Did With McCain!

  9. Wonder how many of the GOP voters realize that GOP didn’t necessarily want a Keystone *approval*, just a keystone decision b4 the election.

  10. macacchens lett says:

    you go look up any number of stats, you dont even know the record of each administration?

    You can always call in though, I hear he did very bad

  11. matsukh azlini says:

    New Head of the EFSF will be Jacques Santer. He was Head of the EC and resigned in 1999 amid an alleged financial malpractice scandal. Neat

  12. melero paratto says:

    yes!!! props to Evan Williams!! the most underrated whiskey in the USA
    love how the reviews at 5 mins and just worked there way to 10 to 15. love it !!
    malt mention : malt maestros !! keep up the malty work!!

  13. stig russ says:

    Amen~ if we could only get someone like this nowadays to straighten up our act like boot the idiot who get elected that isnt even a citizen of our country! good ole Wayne <3

  14. Fox’s old, white, rural, GOP viewers don’t want to be bothered by a dead black kid when there’s so much Obama hatred to wallow in.

  15. lovichery gema says:

    Can the economic crisis have an impact on tuberculosis in the EU …: In preparation of this debate concerns wer…

  16. if you’re determined to starve children & the elderly could you at least cut out the references? #Mitt –

  17. grayatt kbanbach says:

    At some point, do we wake up and realize you can’t rebuild a world-class economy when nearly everything is made in China?

  18. shigergens says:

    Levant on the enemedia’s coddle of killer Khadr. Omar Khadr is returning to Canada. He is an enemy of state, a Muslim soldier in the global jihad. He should have rot in GITMO if not face a firing squad. No, instead Obama cut his snetence down from 40 years to 8 years and then asked the Canadian government to take Khadr. Khadr killed Sergeant First Class (SFC) Christopher James Speer (September 9, 1973 – August 6, 2002) Speer was a combat medic with a Delta Force Speer was awarded the Soldier’s Medal for risking his life to save two Afghan children who were trapped in a minefield, on July 21, 2002, two weeks before his death. Khadr killed an American soldier – and Obama freed him. Muhammadan in the White House. Allahu FUBAR.

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  20. when people ask me what my dad does for work I say ” He is the reason that the economy crashed”

  21. borner deman says:

    (Massimiliano ti rispondo io che la so) Quando scopri la soluzione ti fai una risata perchè è fisicamente ineccepibile ma è fondamentalmente comica. Il viene e le bombe “sganciate”, cioè non sono più fisicamente agganciate all’aereo e inoltre bombe (sganciate) e sono perfettamente allineati, eppure… le bombe rimangono nell’aereo.

  22. korout albeinh says:

    … spoke out at Log Cabin Republican convention in San Diego about … Kate Middleton wore a second gown by Alexander McQueen 39s Sarah for

  23. wyk abdin says:

    Forum Thread | 1st Trip Up/Down the Mountains: This week my husband and I took our almost 3yr old on a 4 day

  24. golsch mindeli says:

    Obama admin wants to block any WIPO work on patents and health that focuses on flexiabilities, such a compulsory licenses.

  25. stranek says:

    Strasbourg, France, Jun 13 (Prensa Latina) The president of the European Commission (EC), Jose Manuel Durao Barroso, has admitted the existence of a systemic problem in that bloc, and urged the …

  26. molak rueck says:

    Boehner asks where are the jobs. Hint: 3 million would be created if GOP joins us to pass the highway bill

  27. Entitlements? Ah, interesting that you accept that framing? I’m of a different mind. I believe the economy is here to serve society and not the other way around. I also believe that a nation’s greatest wealth are its people. They, and what they can accomplish, exceed the value of any resource in the ground, or manmade. So, for me, growing, maintaining, and protecting that resource is a society’s number one job. That resource’s health, education, ability to work, and ability to live safely without coercion, and in approx that order, are what I think a society should be about. I think sneering that it’s an entitlement, as if people are a kindly pest we have to put up with–remember, I think people are the resource, that’s my measure–is beneath contempt. Especially when it’s done by elected officials who are completely ignorant of how our federal monetary system works, and who have made no to understand it since we became monetarily sovereign on August 15, 1971. (I count myself among those ignoramuses, but I’m changing that.) Allowing a Paul Ryan to design a national fiscal policy is similar to giving the keys to a county ferris-wheel to a nine-year-old class bully who likes showing off with his friends. is a currency USER. The United States, the Bank of Canada are currency ISSUERS. Absolutely no comparison. The ECB issues currency, but it doesn’t have a Congress or Parliament to legislate monetary policy or constrain with fiscal policy. Incidentally, once you grasp the difference this represents, it will make the idea of an international currency, a global currency, a farce.]

  28. Romney appears to be trapped in Obama’s message box on it: if he vascillates again he will alienate far right who believe climate change is all a vast hoax. If he doesn’t, he stands to lose mainstream centrist voters to Obama.
    Devon Merli liked Shawn Lawrence Otto: Climate Change Obama Can Believe In: Why Global Warming Will Heat Campaign Trail in Coming Months on 26 April 2012 (2 months ago).

  29. whonfiell crondritas says:

    Trade and Economic: Effects of Responses to the Economic Crisis
    OECD | 26 Aug 2010 | ISBN: 9264088436, 9264088443 | 130 pages | PDF | 5 MB
    Mirrors: Rapidgator | Filefactory | Letibit (DepositFiles)
    The analyses presented here suggest that exit strategies from measures to deal with the crisis will be most effective in boosting growth and jobs if they first roll back measures that discriminate between domestic and foreign firms and those that target specific sectors. General demand stimulus measures and active labour market policies are preferable under current conditions.

  30. Michigan to lay off 400 unemployment workers: Many jobless claims workers in the state of Michigan will soon be …

  31. tresharlat says:

    Happy to one of the behind the scenes members of EC&R, Jill Couch. The last 20 years would not have been possible without you!

  32. The Obama Administration is calling for continued government of wind energy, touting a new showing that it accounted for nearly a third of new electric capacity added in the United States last year.

  33. he wishes he was as vile as Cheney Republican Paul Ryan described as Dick Cheney with very good hair –

  34. Some girl just commented on my Instagram talking about her class ran EC so ever since they left it got wack. ** …

  35. During an economic crisis the president doesn’t get to play golf more than 100 times–go to work and fix the economy. …

  36. Obama has 6 point lead over Romney. so depressed, last nite he sat on his couch and bought the Häagen-Dazs cor …

  37. olaglio shardansdo says:

    Another photo by EC…man we’ve done a lot together! Glad to get to work w/a pro like you, and glad to have …

  38. damabueris says:

    Columbus Dispatch

    Haley Barbour Recommends ‘Proctology Exam’ For Republicans Following …
    Huffington Post
    Barbour, speaking on a panel about the 2012 election, said Republicans need to improve their ground game to compete better in the next presidential election after Mitt Romney lost to [President Barack] Obama by only a couple of points nationwide and in …
    Down the ballot, election not so rosy for DemocratsColumbus Dispatch
    Christie calls Romney comments ‘divisive,’ urges GOP to move past electionThe Star-Ledger – NJ.com
    Christie Criticizes Romney’s Post-Election CommentsWall Street Journal (blog)
    La Crosse Tribune -NBCNews.com -Minneapolis Star Tribune
    all 4,037 news articles »

  39. “Do GOP ldrs have a better strategy today than they did in ’11, and do they have the backbench to execute it …

  40. dockersena ther says:

    there’s no truth in this story it was played on a Republican site to hijack the flag protest just like other lies YNWA

  41. http://pressage.es/

    Periodismo en tiempos de Internet- Noticias de Cuenca – Azuay – Ecuador – Eltiempo de Cuenca
    http://www.eltiempo.com.ec
    Los temas que trataron en el conversatorio estuvieron referidos a la red y los medios de comunicación y los desafíos de los periodistas en tiempos de Internet.

  42. dusuitsins says:

    Bailed-out banks RBS and Lloyds need another £10bn to see them out of the economic crisis. All together now ……

  43. Osborne hints that he knows he got it wrong last year: “My main aim this year is to avoid f***ing up the budget”

  44. Must Read! Eric Holder pays $450 for $15K gov jet to NYC. 11 Million wasted while he warns on safety cuts:

  45. falat feely says:

    The U.K.’s offshore oil and gas regulator accepts the safety case submitted by Total (TOT) for the of the Elgin gas field in the Sea, which was shut down because of a gas leak a year ago. The field contributed ~9% of U.K oil and gas production before the shutdown, and its is for the U.K. economy as it teeters on the brink of another recession. Post your comment!

  46. ston grano says:

    …at very least under republican constitution we should reform House of Lords and Honours system, but seems to me it cd…

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