Friday, October 21, 2011

The GOP's Comically Inept "Jobs Plan".

Look, there's no reason to defend President Obama's performance on the economy. Not when the unemployment rate stands at 9.1%. Period. His signature economic initiative (the Stimulus Package) worked as it should have, but when the money ran out, the economy was back in the same shape. Spending another half a trillion would likely result in a similar temporary boom, followed by a similar bust once the funds run dry. You can't just keep spending to temporarily create jobs, so there's no real reason to expect the jobs numbers to be dramatically different next Fall.

So basically, the jobs number is Obama's Achilles heel, and one the GOP hopes to use to oust him come 2012. That said, what solution has the GOP offered to our employment clusterf*ck?!?

Other than attacking Obama and promising to cut basically every tax in existence, not much. Economic history has proven that the link between low taxes and employment is negligible at best. High taxes during Clinton's terms didn't seem to hurt. Low taxes didn't do much to stave off the effects of the recession that occurred on Bush's watch. Lower taxes (in some cases historically low) under Obama haven't helped either. There's no tangible co-relation. None.

So, what does the GOP "leadership" propose? A comical mishmash of ideological BS, reduced regulations, and of yeah, tax cuts. The Washington Post (yeah, I know, they're liberal. Whatever) looked at their plan point by point to examine it's potential effectiveness. The results, well, they were less than stellar.
Senate Republicans, including Rand Paul (Ky.), John McCain (Ariz.) and Rob Portman (Ohio), last week unveiled what they labeled as their alternative to Obama’s plan. Their plan was mostly a mish-mash of previous offered bills, such as that hardy perennial--a balanced budget amendment to the constitution. (Some experts would argue that such a requirement could hurt employment if government spending dropped too quickly.) During the news conference, and in a news release, Paul claimed the GOP plan would create 5 million jobs.

Moira Bagley, a spokesman for Paul, said the figure was derived from three proposals: individual and corporate tax cuts that reduced the top tax rate of 25 percent, which the Heritage Foundation said would boost employment by 1.6 million jobs over the next decade; a tax holiday allowing U.S. companies to return cash held overseas, which a Chamber of Commerce study said would create 2.9 million jobs in two years; and a study by energy consultant Wood MacKenzie, which said allowing access to domestic energy resources and imports of Canadian oil would generate more than 1 million jobs by 2018.

There are several problems with these figures.

First of all, the tax reductions and the energy proposals are going to do very little in the near term. The Heritage study looks at the impact over ten years. And, let’s face it, a project as big as reducing tax rates will take months, if not years, of legislative battles. Such a tax plan certainly won’t do anything to avert a recession right now. (In any case, we raised serious questions about aspects of the Heritage analysis when it was released earlier this year in conjunction with the House Republican budget plan.)

The same problem holds true for the energy proposal—a long-term fix that will not bring much near term help. Incidentally, this same study, which has been promoted by the American Petroleum Institute, was recently the subject of a front-page Washington Post article about the “fuzzy math” on jobs used by corporate lobbying interests.

That leaves the Chamber of Commerce study on a proposed tax holiday, officially known as repatriation. It certainly has a big figure—2.9 million jobs—and it was written by a credible economist, Douglas Holtz-Eakin, former director of the Congressional Budget Office. But this is not a slam-dunk issue; some experts say the last time this was tried, in 2004 and 2005, firms simply gave the money to shareholders as dividends or bought back stock, rather than creating jobs.

The result was a very wide range, of which 2.9 million jobs was the midpoint. “Quite frankly, it is educated guesswork at best,” Holtz-Eakin said in an interview.

It’s certainly ironic that Senate Republicans cite a study that uses the same methodology that calculated successful job growth in the stimulus bill. Republican lawmakers frequently decry the stimulus as a failure, but the CBO found that it added or saved between 1.9 million and 4.9 million jobs in 2010.
We should just be honest with ourselves for once. Those manufacturing jobs that slowly, but surely, went overseas over the past decade are gone. They are not coming back. Ever. Period. An honest politician would be preparing America for persistent 8%+ unemployment indefinitely. Of course, honesty, Democrat or Republican, doesn't get you elected.

Obama, to his credit, has tried to create new job sectors in green jobs and the health care industry. Neither of these has exactly taken off, but at least they're ideas. Spouting talking points about the oppression of higher taxes on "job creators" and scaling back regulations on the very companies that got us into our current predicament isn't tangible. It certainly will not be effective either.

Yeah, let's face it. We're screwed.

Question: What do you think of the GOP's "jobs plan"? Who has the better solution, Obama (short term, but costly stimulus) or the Republicans (basically, nothing)?!?

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