JONATHAN COHN OCTOBER 6, 2011
President Obama on Thursday gave the media a homework assignment:
Go ask the Republicans what their jobs plan is, if they’re opposed to the American Jobs Act. And have it scored, have it assessed by the same independent economists that assessed our jobs plan. These indepenent economists say we can grow the economy by as much as 2 percent and as many as 1.9 million workers wold be back on the job. I think it would be interesting to have them do a similar assessment. Same people. Have those economists evaluate what over the next two years the Republican jobs plan would do. I’d be interested in the answer.
Actually, I tried this assignment a few weeks ago. But it's a trick question, because the Republicans don’t have a jobs plan. Or, to be more precise, they don’t have a jobs plan that anybody can evaluate.
You can see for yourself by heading over to Majority Leader Eric Cantor’s website and clicking the link for the “House Republican Plan for America’s Job Creators.” It’s just a list of ideas, with virtually no figures or specifics.
Just to make sure I wasn’t missing something, I contacted the two firms that modeled the effects of the American Jobs Act, Moody’s Analytics and Macroeconomic Advisers. Could they assess the Republican plan and compare it to the American Jobs Act?
I still haven’t heard from Moody’s. But Chris Varvares, senior managing director of Macroeconomic Advisers, did get back to me – and confirmed what other economists had said previously: “Several of the provisions lack sufficient detail to make a careful analysis or even an informed guess of their effects.”
Update: And here's a response from Mark Zandi of Moody's:
"I think the Republican proposals are generally good longer-term economic policy, but they won’t mean much for the economy and job market in the next year. Given the high odds of another recession in the next few months, it is vital for Congress and the Administration to provide some near-term support to the economy Or more precisely, to reduce the fiscal restraint in current policy. If policymakers do nothing, federal fiscal policy will cut 1.7 percentage points from real GDP growth in 2012 (state and local government cuts will shave another 0.3 percentage points from real GDP growth in 2012). This kind of fiscal headwind would be difficult for even a strong economy to navigate through; it will blow our currently fragile economy back into recession.
The most vital policy step is to extend and expand the payroll tax holiday for employees as proposed by the President in the AJA. This will reduce the fiscal drag next year to about 1.0 percentage points. Still difficult for the current struggling economy, but manageable. I think it is also advisable to adopt the President’s proposals to provide employers with a payroll tax holiday and to provide more funding for the unemployment insurance program along with the proposed reforms to the UI program. If policymakers agree to do all of this, then the fiscal drag next year would be very modest and recession risks would meaningfully recede.
None of this to say that Congress and the Administration shouldn’t work on other policy steps to address the nation’s long-term fiscal problems and other deeper, structural problems. This means among other things that any near-term economic support policymakers agree to must be paid for with more long-term deficit reduction. It would be ideal if this was done through entitlement and tax reform, but one way or another it needs to get done. If policymakers fail to provide some near-term support to the economy and we do slide back into recession, then the cost to taxpayers will balloon out and our long-term fiscal problems will become completely overwhelming."