The American Jobs Act Will Prevent A Recession – Pass It NOW!

Since President Obama announced his American Jobs Act, economists have almost unanimously predicted that it would boost GDP and create jobs. Here is a sampling of what has been said.

  • This headline at Bloomberg says it all, Obama Jobs Plan Prevents 2012 Recession in Survey of Economists. John Herrmann, a senior fixed-income strategist at State Street Global Markets LLC said “The plan ‘prevents a contraction of the economy in the first quarter” of next year.” Another quote from that article said ‘“The important thing to consider is: What happens if we don’t do anything?’ said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida. He said the program ‘very well could” forestall a recession in early 2012.'”
  • The Economic Policy Institute assessment of the jobs bill said, “So, how did President Obama do by our criteria? Very well, as the package provides a substantial boost to the economy in addition to continuing the important efforts already underway (providing unemployment compensation and the payroll tax holiday).”

What this comes down to is — Republicans have to choose between politics and helping the American people, who are clamoring for Washington to do something about creating jobs. The GOP is up against a wall and this is a test of whether or not the Republican party cares at all about American workers. I think I know the answer, but I’m still clinging to a shred of hope that they will do what is right for the country.


Cross-posted at Angry Black Lady Chronicles


14 thoughts on “The American Jobs Act Will Prevent A Recession – Pass It NOW!

  1. With all due respect to the economic consultants listed, the American Jobs Act would not be an incentive to this ex-business owner to hire more employees or expand his business. Here’s why in a nutshell.

    With regard to expanding their business, successful business owners take their cue from the market, not from the federal government. When the market justifies expansion, i.e., when customers are ordering and production capacity seems to be or about to be inadequate, business owners will expand. At such time most will discount payroll taxes and government regulations as a cost of expansion. At such time they will appreciate payroll tax cuts. However, the American Jobs Act puts the cart before the horse.

    Moreover, because the American Jobs Act is “fully paid for” but the means for doing so are unspecified, business owners reasonably assume that any front-end cost saving realized by the tax incentives promised by the President’s plan will probably be paid for by back-end increases in their own taxes.

    Business owners are comfortable betting on the market, not the federal government, for a return on their investment. While the market can be fickle and business owners can misread it at times, most trust it because they are an integral part of it. On the other hand, they view government intervention in the marketplace as undependable and unpredictable because it is driven by special interest politics.

  2. Our TROLL Sherman would HATE anything this president does so not surprised at this posting. For many years I owned a homebuilding business in Houston (I was incorporated). I went broke in the construction business (where I had spent 25 years) in the 1980’s under Ronald “Trickle Down” Reagan. Fortunately having a Texas Teacher Certificate, I taught in high school for 15 years, until my retirement. However if I was still a homebuilder, I would have hope in this administration. Home starts in Houston have been on the uptick since the Bush disaster. Single-family home sales shot up more than 30 percent last month in metro Houston compared to August of a year ago.

    I know this is LOCAL and also mortgage interest rates are the lowest in years. I know Houston is not California, Nevada, Arizona, or Florida where speculators have long run rampant. People move here either with jobs waiting, or expect jobs. Being the nation’s energy center has been a great draw with oil/chemical companies making record profits under Obama. I held onto my stock portfolio that dropped to 25% of my initial investments under Bush, but since Obama, my remaining stocks are nearly back up to where they were under Clinton when I invested my inheritance from my late parents estate. I am not suffering in this economy now as my stocks are getting healthier.

    TROLL Sherman, read you blog and love your “intellectual” infantile description of Michael Moore which shows you are a HATER.

    This fat tub of lard, and his ilk, is not only evil but dangerous to the internal peace of our society.

    The irony is the guy is purportedly “rich” himself!

    I used to sit next to a guy like him in first grade. Get within two feet and the ass stench was unbearable.

    I suspect Michael doesn’t have very many friends.

    TROLL Sherman, you think your wife’s friend Irene is EVIL only because she is a liberal! I suspect your only friends are fellow HATERS.

  3. You got part of that right, Sherman. A business does take its cue from the markets and when there is demand in the market for their product or service, they will meet it. The question is how to create demand. If they government invests in infrastructure, which by the way is sorely needed, then it employs real people…not some faceless robot…real people, who then have disposable income and are able to put money into the economy. That would be that whole demand thing. No money in the economy, no demand. That investment has a dual purpose, putting people to work who then inject that money into the economy and create demand for products, which spurs hiring to meet the demand. The second purpose is fixing our infrastructure, which those businesses use to transport their products, protect their factories and provide a civilized society that will enjoy the products and services, and educate our children in modern classrooms in order to compete with international competitors.

    I’m having a very hard time imagining a businessman sitting around and saying, I don’t want to expand my business, even though there is demand for my products, because the government might take a little of that money. That is fucking stupid. When I was getting my first bachelors degree in Business, they never taught us anything about making business decisions based on how much personal taxes we might incur. It never even came up. Business is about making money, if there is money to be made and demand, a good business person will make a product to fulfill that demand. If your hypothetical business owner doesn’t want to fulfill that demand, there is a guy around the corner who will. I’m picturing your guy sitting in his office saying, I don’t want to make anymore money because the government might take some of it, so I’m just going to sit here with my arms folded and cry. You are creating a fantasy to justify your bad ideas. No empirical evidence supports what you are saying, in fact, history has shown us quite the opposite.

    And contrary to your fantasy, this is a crap shoot or a blackjack table where businesses bet on the market. Unless you are talking about the stock market, or maybe you are conflating the “market” for goods and services with the stock “market”, which is much more like a crapshoot. I suspect you’ve gotten lost in your own fantasy justification for your failed supply-side brainwashing.

    And you might want to pick up a history book, because the government has been intervening in the marketplace since our founding and how fickle business people react to it is there problem. Maybe if they are so fickle, they should find another line of work, like journalism. The idea that business leaders are so fragile and scared by any little move by the government is another of your fantasies. Like I said before, it’s pretty simple, you have demand, a business will jump in to fulfill the demand. No demand, no expansion, no investment. Even if the government were completely hands off, it wouldn’t matter. If there isn’t demand, there isn’t a reason for a business to fulfill it. And a government can create demand by spending money and putting it in the hands of people who then spend it, thus creating demand. Good luck with your delusions, it must be tough.

  4. Yeah, but it seems like people are expecting miracles from this President like none before. It’s bizarre to watch. The fact that people who call themselves liberal would bitch about a health care bill that covered and additional 30 million people would be applauded.

  5. Republicans in Congress today began slashing hundreds of funds for such agencies as National Public Radio, Americorps, Pell Grants to college students, and Departments of Health and Human Services, Labor and Education. The House Appropriations Committee called for eliminating more than 30 education programs, including President Barack Obama’s “Race to the Top” initiative.

    So I don’t have much faith that the GOP will do anything to pass the American Jobs Act. Hold on America, just keep SUFFERING for only another 13 months until Republicans take over ALL branches of our federal government.

  6. extreme liberal: that was an excellent response to Sherman.

    Some lierals do seem to be expecting miracles from PBO. Eight years of GWB is one reason.

  7. Thank you for a reasoned response.

    If, as you say, a “business does take its cue from the markets” and responds exclusively to the “demand thing,” then by your own argument all the incentives in the American Jobs Act aimed at business owners (payroll tax cuts, a tax holiday for hiring new workers or raising employee wages, tax incentives for new investment, tax credit for hiring veterans, tax credit for hiring the long term unemployed and regulatory reforms and reductions) are worthless window dressing.

    Thus, again by your own argument, the only useful measures in the President’s bill are those that increase demand in the economy (preventing layoffs of teachers, police and firefighters, modernizing public schools, modernizing roads, airports and waterways, expanding access to wireless, subsidized employment and job training, cutting employee payroll taxes and “allowing” Americans to refinance their mortgages at lower rates).”

    However, let’s examine these measures more closely. Preventing layoffs will not add new demand to the economy. It merely preserves current demand.

    Modernizing and repairing infrastructure will add new demand to the economy only to the extent that new workers are hired for these projects. Any new demand will be over the very long term.

    Even if half of the unemployed workforce found subsidized jobs and training as a result of the bill, new demand added to the economy could be at most 5%.

    Payroll tax breaks and refinancing opportunities would increase the incomes of ordinary Americans by a few percentage points at best, but these measures would only add new demand to the economy to the extent that these ordinary Americans spend the increased income rather than save it for a rainy day.

    In truth, neither you nor federal government planners can know what exactly ordinary Americans will do with this bit of extra income. They are as likely to hold it or to spend down debt, as to create new demand.

    The only consequences of the American Jobs Act that can be accurately predicted are the amounts of money that will be distributed initially by the government to favored political cronies and constituents.

    Of course, due to the fact that the bill is “fully paid for,” this money will have been taken from others in the economy in the form of taxes. As a result, those “others” will no longer be able to save or spend it. Thus, the effect on overall new demand will probably be nil.

  8. Bob has an excellent post put up yesterday entitled Progressive Racism, Careeris, and Delusion. The post is great, but the comments section has some fantastic stuff. I was surprised not to see a comment from you as this is right in your wheelhouse. If you get time, take a read.

  9. well, grantin houston, it is tough times. And, The GOP has no intention of doing anything useful.
    And, far too many people are making excuses for them.

  10. Thanks, but no thanks Sherman.
    I will put it plain and simple:
    I am not buying what you are selling.

    Have a nice day.

  11. Former Sec.of Labor Robert Reich supports this bill…

    Government can hire people directly to maintain the nation’s parks and playgrounds and to help in schools and hospitals. It can funnel money to help cash-starved states and local government so they don’t have to continue to slash payrolls and public services. And it can hire indirectly – contracting with companies to build schools, revamp public transportation and rebuild the nation’s crumbling highways, bridges and ports.

    Not only does this create jobs but also puts money in the hands of all the people who get the jobs, so they can turn around and buy the goods and services they need – generating more jobs. Not exactly rocket science.

  12. Even the Democratic congress doesn’t agree with it so that shows the support this bill has. It did’t work at twice the price, why would anyone expect it to work now. There are a lot of non-road workers who are unemployed and the teacher unemployment rate is way below the national average.

    Why not call this bill what it is “The Obama Re-election fund”

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s