The opposition to Obama’s Jobs Act risks putting further stress on the faltering U.S. economy.
Fourteen million people unemployed. Four job seekers for every available position. Long-term unemployment at record highs. These are just some of the grim economic data points that U.S. President Barack Obama is grappling with as he moves towards the final year of his first term.
While critical to employing about three million people, the stimulus package that Obama signed in 2009 was not big enough to adequately address the severity of the jobs crisis in the U.S. As a result, the administration is back with the $447-billion American Jobs Act, which Obama is currently promoting at events across the country.
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With this act, the administration aims to provide three main things: aid to state and local governments to prevent them from having to lay off public employees (like teachers and police officers), tax incentives for businesses and workers (most prominently via a cut in the payroll tax), and funding for infrastructure. The bill is paid for by higher income taxes on the very richest Americans, which Obama has been proposing since before he came into office, but has never been able to enact.
Moody’s Analytics estimates that Obama’s plan will “add two percentage points to GDP growth next year, add 1.9 million jobs, and cut unemployment by a percentage point.” Analysts at Goldman Sachs estimate that the plan will boost growth by 1.5 percentage points, while the Economic Policy Institute says it will create 2.6 million jobs and support another 1.6 million. Economists surveyed by Bloomberg News said that the plan would likely prevent the U.S. from falling into a double-dip recession.
Despite all this, the Jobs Act has already run into the buzz saw of Congressional opposition. Republicans, with the support of two Democrats, filibustered the bill in the Senate, so, even though it received majority support, the bill won’t move forward. House Republicans, meanwhile, refuse to even bring the bill up for a vote, deriding it as a “second stimulus.”
Adding insult to injury when it comes to the GOP’s intransigence, the provisions of Obama’s Jobs Act enjoy widespread public backing. According to a recent CNN poll, 75 per cent of Americans support providing more aid to states, 72 per cent support increased infrastructure spending, and 76 per cent support raising taxes on millionaires.
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Instead of listening to public opinion, the GOP has hung its hat on a plan that one economist found would likely push the U.S. back into a recession, due to its imposition of severe budget cuts. (Those who think adopting austerity will get people back to work ought to look to the United Kingdom, where the Tories’ harsh budget cuts have led to stagnant growth.)
However, the sad truth is that, even if it could get through Congress, Obama’s plan isn’t up to the task of getting the U.S. back to full employment, as the nearly two million jobs that it could create would still leave the U.S. with 12 million people unemployed, and scores more underemployed.
But the Jobs Act isn’t the only hope for bringing down joblessness. The administration could also boost the economy by pushing the government’s two mortgage giants – Fannie Mae and Freddie Mac – to forgive loan debt of troubled homeowners, freeing up money for them to spend elsewhere. The Federal Reserve could also implement additional monetary policy stimulus, as Federal Reserve Bank of Chicago President Charles Evans has been advocating.
Given its attitude of late, the prospects that the House Republican majority will approve anything that meaningfully moves the needle on unemployment are minimal at best. Obama should be shouting the merits of his plan from the rooftops, and doing whatever he can from the Oval Office to put Americans back to work. This way, the public would at least see that Obama is doing all he can, and would come to realize who is actually responsible for prolonging the pain of the Great Recession.
Photo courtesy of Reuters.
