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Archive for Saturday, September 10, 2011

Economists show support for job-growth plan

September 10, 2011

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A tentative thumbs-up.

That’s the assessment from economists, who have offered mainly positive reviews of President Barack Obama’s $447 billion plan to stimulate job creation.

Some predict it would put hundreds of thousands of people back to work next year, mainly because a Social Security tax cut for workers would be deepened and extended to small businesses.

“Payroll tax cuts are very powerful,” says Allen Sinai, chief economist of Decision Economics. “They provide a boost to direct income and, in turn, spending, which is important to growth.”

Mark Zandi, chief economist at Moody’s Analytics, estimates that the president’s plan would boost economic growth by 2 percentage points, add 2 million jobs and reduce unemployment by a full percentage point next year compared with existing law.

The heart of Obama’s plan is an expansion of the Social Security tax cut, which took effect this year and is scheduled to expire by year’s end. The tax cut now applies only to workers; it reduces their Social Security tax from 6.2 percent to 4.2 percent. Employers still pay the 6.2 percent rate.

Obama would renew the tax cut for a year and deepen it: He would drop workers’ Social Security tax to 3.1 percent.

Under his bigger tax cut, an extra $1,550 would go to taxpayers earning $50,000 a year. The Social Security tax is imposed on the first $106,800 of taxable income. That means the maximum savings would be about $3,300 for an individual and $6,600 for a couple.

Obama would also halve Social Security taxes for businesses on the first $5 million of their payroll. The White House says 98 percent of U.S. businesses have payrolls below that threshold.

Zandi calls this a “creative” way to help small companies, which have struggled more than larger ones to recover from the Great Recession of 2007-2009. During recoveries, small businesses normally drive job creation.

“Something like this is much needed” for an economy grappling with 9.1 percent unemployment, Zandi says. “The economy is on the edge of recession.”

Susan Wachter, a finance professor at the University of Pennsylvania’s Wharton School, figures that the Social Security tax cuts alone would add 1 percentage point to economic growth and create 1 million jobs next year.

Michael Hanson, a senior economist at Bank of America Merrill Lynch and a former Federal Reserve economist, predicts similar benefits. He thinks the additional jobs would lower the unemployment rate by nearly half a percentage point in 2012.

Comments

AppologiesMyLiege 2 years, 7 months ago

Remember, there is no bill to pass. Late in his speech Obama revealed that in about eleven days he would deliver something in written form. The transparency of what Obama was really doing was as clear as glass and many in congress last night looked ready to explode, much like the time Obama castigated members of the Supreme Court during a State of the Union speech. For some reason, Obama is convinced that divisive behavior on his part brings about unity in others and buys support for his proposals . . . not! Don't take this bait. Obama couldn't have been more transparent about his real objectives. The markets started heading down last night after his speech because nearly everyone knew that his "all-or-nothing" proposal had something that everyone in congress could vote against, both democrats and republicans. Chances for passing are like this month's jobs report: zip, nada, zilch, zero. The market continued to tank today because real job creators know that his proposals are not going to help them. If anything, they are temporary crutches that make things worse when the one-year juice runs out and we are back in the same place. Near the end of his speech, Obama stared down the republicans in the audience and said, "Regardless of the arguments we've had in the past, regardless of the arguments we'll have in the future, this plan is the right thing to do right now. You should pass it. And I intend to take that message to every corner of this country. I also ask every American who agrees to lift your voice and tell the people who are gathered here tonight that you want action now. Tell Washington that doing nothing is not an option. . . . " Finally, the transparency became crystal clear to any thinking person. This was a kick-off campaign speech, one that included a dare for the republicans to vote his proposals down. He is chomping at the bit and ready to blame republicans for the next year for the lack of jobs. This sounds like something my kids would do . . . when they were growing up.

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AppologiesMyLiege 2 years, 7 months ago

Before we heard anything about Obama's jobs proposal or any specifics of what he was proposing, we were treated to a hearty refrain that congress should "pass this bill right away". The "pass this bill" theme was hammered on congress all night long, with Obama repeating the refrain nearly 20 times - you should pass this bill right away! The last time I heard such urgency was during the TARP bailout bill, where justification for huge too-big-to-fail bailouts was shouted down with a similar refrain to pass TARP now, immediately, or face financial disaster. The over-persistent use of "pass this now" took much credibility from nearly everything that Obama proposed last night. It makes you wonder who is advising him. Does it matter to anyone that there is not a written American Jobs Act for congress to pass? So far, the American Jobs Act is nothing more than a theme in a speech. As of today (and for at least the next week or so) there is no jobs bill for congress debate or vote on. For Obama to claim that there is a bill and that congress must "pass it now" strains credulity. Two comments from Obama's speech come to mind that reveal the unintended transparency of last night's oration. Obama said that "this is an approach I have been advocating for months", unintentionally revealing that he could have given this speech in late spring or early summer - certainly before he took his end of summer vacation when he announced this September speech. Obama revealed that he was frustrated and sympathized with the public sentiment on a lack of jobs growth. He declared that "Americans are tired of waiting". He inferred that he and all Americans have been waiting on a recalcitrant congress, when all the while Obama and his staff haven't actually prepared a new jobs bill . . . one that must "be passed now." Why did Obama wait this long if he knew that Americans are tired of waiting? And why assemble a joint congress (a hugely important step usually only taken for state of the union and times of war) and then primarily castigate congress as job growth villains who should "pass this bill right now"?

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AppologiesMyLiege 2 years, 7 months ago

What plan? Is there a written copy of it somewhere?

Let's see what Dennis Slothower has to say about this so called "Plan",

OBAMA AND HIS JOBS SPEECH I can't leave for the weekend without a discourse on Obama's contribution last night to what he disdainfully referred to as an ongoing "political circus" in the halls of congress. If congress is a circus, then was Obama the center ring act last night? To hear Obama complain that congress is at fault for our national job crisis and that they must immediately pass his American Jobs Act says so much more about Obama, the man, than it does about congress. To Obama, it is always somebody else's fault. My own children often said the same thing as they were growing up. I initially assumed that "political circus" was a reference to the recent seven or eight month control of the House by Republicans via last November's election. But since Obama has been in Washington for a few years now and obviously knows that Democrats controlled both the Senate and the House for four years prior to the sudden emergence of the Tea Party House Republicans, he must feel this political circus goes back quite a while. Have the long-entrenched democrats who supported the Obama Stimulus 1, Obama Care and Obama's financial reforms also been nothing but circus performers on Obama's stage? Surely there were a few democratic Senators who were wincing last night. Before Obama was elected he campaigned on "transparency". He proudly proclaimed that the public would finally have a glass window to look into the presidency and know what is going on behind the doors. And while real transparency has been cloudy the last three years, last night's speech had so much transparency it was as though Obama was merely reading words with passion, certainly not understanding the implication of what those words meant. Only a day or two before the Jobs Speech, the administration leaked that this jobs program could cost upwards of $300 billion. Before the evening was through we learned that it was actually $450 billion. What message do you get?

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just_another_bozo_on_this_bus 2 years, 7 months ago

"A tentative thumbs-up.

That’s the assessment from economists, who have offered mainly positive reviews of President Barack Obama’s $447 billion plan to stimulate job creation."

Which pretty much assures that Republicans will oppose them. Can't have any good news going into elections next year.

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