McCain’s Jobless Jobs Plan
New jobs report shows that months of moderate job losses have been followed up by a month of large job losses. All this is from before the current financial crisis began to have its impact felt. Long story short, the next month is likely to be even worse than September was. And that, in turn, raises the risk of a dangerous cycle wherein the fact that other people are losing their jobs causes additional job losses. Nobody can get a car loan, so car companies lay workers off, so the newly jobless can’t afford new furniture so the folks who deliver furniture lose their jobs, too.
Normally over the past few decades we would count on the Federal Reserve to snap the cycle by lowering interest rates. But we’ve gone about as low as we can go already. We need fiscal policy to step in. Fortunately, CAP’s Brian Levine has a new paper out today on the McCain jobs plan:
Sen. John McCain’s economic agenda is founded on huge tax cuts for corporations. In January, McCain unveiled his “economic stimulus” plan, which consists of a cut in the corporate tax rate, a permanent research and development tax credit, and a provision allowing full expensing of business equipment. All of these proposals are important parts of his “Jobs for America” plan, which he unveiled in July. Our analysis of these plans, based on data from Moody’s Economy.com and the Tax Policy Center, concludes that:
- The three proposals in Sen. McCain’s economic stimulus plan would create only about 450,000 jobs in 2009, at a cost of $280 billion.
- In contrast, a well-designed economic stimulus plan, costing the same amount, would create 2 million jobs—more than four times as many jobs for the same amount of resources.
- The United States needs to generate 1.5 million jobs a year just to keep up with the new workers entering the labor force.
For a look at what a “well-designed economic stimulus plan” would look like, see here.
25 Responses to “McCain’s Jobless Jobs Plan”
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October 3rd, 2008 at 11:02 am
While the September numbers look worrisome, it should be noted that monthly job loss figures often get significantly adjusted a few months after being released. Of course, the already bad September numbers could get adjusted downward to make them even worse.
October 3rd, 2008 at 11:02 am
“We need fiscal policy to step in.”
Or you could just have a recession. It’s not the end of the world.
October 3rd, 2008 at 11:11 am
I love how the Republicans think they can sell the same economic policies as generating growth and jobs after the last 8 years. They really don’t give Americans any credit at all.
October 3rd, 2008 at 11:16 am
The ‘out today’ link doesn’t work.
I’d like to see how CAP came up with these job numbers. This sort of calculation isn’t, almost all times I’ve seen it, well founded. But if it is just current consumption boost vs. corporate income tax cuts you could get into the realm of where the CAP numbers are. But I’d like to see the details.
October 3rd, 2008 at 11:28 am
the reason that keynesians believe in budget balance over the business cycle is to have powder dry for just this counter-cyclical reason.
but we haven’t had budget balance over the business cycle: we’ve had massive fiscal irresponsibility.
so the powder isn’t dry and our credit rating as a nation, while still hanging in at AAA (so to speak), isn’t guaranteed to remain there, which, as a practical matter, means fiscal stimulus might have to be paid for at the cost of higher long-term interest rates.
which don’t help.
which is why some of us have said for a long time that the logical outcome of Bush League Economics is just this kind of problematic circumstances where we don’t have a lot in the way of policy tools.
DR, i sincerely, honestly, completely hope that you get laid off of your job, whatever it may be, that you lose your health insurance, and that your credit cards pull the plug.
recessions may, like forest fires, have salutary effects on the economic ecosystem, but yes, for many people, a recession is the end of the world and such a cavalier response suggests a tremendous lack of understanding and empathy.
October 3rd, 2008 at 11:28 am
And meanwhile:
FROM: http://www.itulip.com/forums/showthread.php?t=5655 and
http://www.youtube.com/watch?v=HaG9d_4zij8
Rep Brad Sherman went on record in the house and via cspan
saying house members threatened with martial law in the USA
if bailout fails….
So, what will happen if the bailout passes, but fails to help?
October 3rd, 2008 at 11:31 am
kafka, i think we should be clear what “help” means in this context: it means “prevent a total freeze-up in the credit markets.”
it does not mean “prevent a recession,” which is already baked in: the questions are how long and severe, and this bill won’t do anything about that other than (we all hope) to restore normal credit flows.
October 3rd, 2008 at 11:35 am
I wonder, will the various economic figures for October be reported before the election on November 4th or held until afterward? The month ends on a Friday and agencies won’t likely tackle the numbers until Monday the 3d. A bad October probably wouldn’t sway many so close to balloting but McCain probably gets the benefit of the calendar on any new bad news. Unless of course indications are improvements lie in that pile of reports. Then I imagine a few Monday AM press conferences could be arranged.
October 3rd, 2008 at 11:44 am
Steve:
Nope
October 3rd, 2008 at 11:48 am
Pardon me, but does anyone here know of a Hari Seldon who knows that the Galactic Empire must collapse, and that this is unavoidable, but who has a plan to minimize the duration of the following Dark Ages?
Thanks.
October 3rd, 2008 at 12:51 pm
280 billion dollars is an awful lot of money. If it really would only create 450,000 jobs, that’s pretty pathetic at over $620,000 per job created. To put that in perspective, if you were simply to pay people directly to work at $7.50 an hour (lowest wage workers), that would cost about $15,000 per year. For 280 billion dollars you could directly pay 18 and 2/3 million people for one year of work. Heck, even their higher figure of 2 million jobs seems kind fo pathetic for that amount of money.
Now imagine what you could do for 700 billion dollars, the amount of the bailout package. That’s almost 2 and a half times 280 billion dollars.
October 3rd, 2008 at 1:06 pm
JMitzman, suddenly you realize why FDR created the WPA, the CCC, and similar opportunities for the government to just plain employ people.
however, we need to be clear: it’s not at all clear what the rescue package (it isn’t a “bailout” by the normal meaning of the term) means in terms of “expenditure;” there’s a huge number of variables here, but the $700B number was more paulson’s way of getting attention than a meaningful indicator of “expenditure.”
October 3rd, 2008 at 1:15 pm
btw, jmitzman, there’s also some confusion in the jobs created: programs that create jobs also help sustain jobs.
here’s a simple example: right now we have a construction industry that’s contracting. let’s say that it was possible for a major public works program of construction to begin tomorrow. not only would the industry stop contracting, it would expand: the expansion is the “jobs created.”
but stopping the contraction and maintaining existing jobs is also a virtue we get for the cost….
October 3rd, 2008 at 1:17 pm
Howard, as I understand Paulson’s scam package (or whatever you want to call it), 700 billion dollars is probably a lot less then the taxpayers (us) are going to end up paying for it.
October 3rd, 2008 at 2:31 pm
Jmitzman, in all seriousness, anyone who tells you they know the cost of this rescue is lying. it is unknowable, and even the range of costs is enormous, all the way down to no net expenditure at all.
that’s why the $700B is meaningless: it’s just a big number that paulson came up with, it’s not based on anything meaningful.
October 3rd, 2008 at 8:20 pm
#11 J Mitzman has a good point. Even under the well designed stimulus, each job created would cost the govt $140,000 Even if that worker was receiving the median income for that job, it would take about 15 years for that to be repaid through his/her income taxes, assuming the job was permanent & not temporary.
Like someone else here said, there was a reason FDR hired the workers directly.
October 3rd, 2008 at 8:38 pm
Of course, unless you have a productive project for the workers to do, you’re just wasting money.
If you want to argue that we have a need for more infrastructure, then suggest that the government emply people building it. But don’t tak about building more infrstructure jsut a a jobs program. It won’t do any good, it would just be a more expensive form of welfare.
Which is not to say that the rescue package is going to help at all either…
October 4th, 2008 at 11:25 am
that’s why the $700B is meaningless: it’s just a big number that paulson came up with, it’s not based on anything meaningful.
Don’t look at that number. Look at the amount they’re raising the debt ceiling.
That will be an accurate estimate of the amount they intend to increase the federal debt.
If they spend less than that it will be because they cut taxes and use the debt to pay for what taxes would have paid for.
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