JONATHAN COHN OCTOBER 6, 2011
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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."
8 comments
I'm scoring your work on this assignment "Incomplete." Surely you're not saying the current leaders of one of America's great political parties are promoting ideas without any factual, statistical, professional, moral, or historical reason to call them good ideas? Why, that would just be ludicrous.
- Konstantin
October 7, 2011 at 1:01am
I wouldn't trust what the triple A Moody's has to say about what makes a good economy. They sort of had a hand in crushing the world economy, after all.
- RedState
October 7, 2011 at 2:25am
Excellent. So this is yet another in Obama's approach to prevent the Republicans from using euphemisms and hand-waving arguments to oppose his concrete plan. AND he's laying the blame at the Republicans door, by name. Pass the Jobs Plan, or explain why you oppose it! Those really are the only two choices.
- AllanL5
October 7, 2011 at 9:21am
Obamanation states: " 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" Are these the same economists that said the original $800B stimulus would lower unemployment to 8%? Or did he get new ones ARE LIBERALS REALLY THIS STUPID??? DO LIBERALS BELIEVES THIS BS????
- mr_rationale
October 7, 2011 at 9:46am
Good commentary on Obamanation idiotic thinking -- applies to Keynesian idiotic thinking as well. Gov doesn't create sustainable private sector jobs "For those eager to put some math to the rhetoric coming from the White House over the president's jobs creation plan, and that should be everyone, here is a quick and dirty estimate based on the numbers being thrown around of a 2% GDP increase in year 1 and 1.9 million jobs created or saved... most saved, as in those you can't really quantify. Said otherwise, roughly a $300 billion increase in GDP yields 1.9 million jobs. So far so good. Now since the president is proposing to pay for the program over 10 years, let's assume the $475 billion in direct expenses is financed for 10 years at 2.5% which adds roughly $120 billion to the total cost of the program. In other words, as the calculations detailed and show below elaborate, the overall AJA plan will cost $250,000 per job created (excluding the interest expense) and $312,500 per union job, er job created (including interest). And that's how much it costs for Obama to purchase one vote... created or saved. Keynesian efficiency strikes like a Swiss watch yet again."
- mr_rationale
October 7, 2011 at 9:48am
At least Mr_R uses quotation marks. If it's not clipped from someone else, the paragraph may be the work of "Tyler Durden" (ha!) at zerohedge.com: http://www.zerohedge.com/news/cost-obamas-stimulus-plan-312500-job-vote-created-or-saved-and-guess-who-paying-it
- mldarby
October 7, 2011 at 9:59am
Learn your facts rat! The economists assessing the stimulus said it would create/save 3 million jobs. Based on a predicted jobs shortfall of 6 million, Obama predicted that this would reduce unemployment to 8%. However, the jobs shortfall mushroomed to 10 million, so even with the additional 3 million jobs, the shortfall was still larger than it was before the stimulus started. Quote the economists accurately before disparaging them.
- sighthnd
October 7, 2011 at 11:21am
Is that the same "Tyler Durden" who was dismantled on TNR after his popular post about how a family in poverty or minimum wages actually makes more money than a working couple something or other? It might not have been the same guy, and I forget the numbers, but I remember the post went viral among right-wingers though it was thoroughly debunked by serious economists and anyone who plugged in certain benefits & figures that were mysteriously omitted from the original formula. Also, I don't trust anyone who has repeated sexual encounters with a drugged up Helena Bonham Carter. Ick.
- Konstantin
October 7, 2011 at 6:10pm