RSS
The U.S. unemployment rate has hovered around 10% for months - with no real signs of improvement. As American workers grow increasingly impatient, the U.S. government is running out of options to help the job market.
But with midterm elections approaching, U.S. President Barack Obama is trying to show voters there's hope in resolving the stubbornly high unemployment rate. On Monday, he unveiled a six-year infrastructure plan that would invest billions in transportation projects and create a "substantial" number of jobs.
The government would supply $50 billion off the bat to rebuild 150,000 miles of roads, 4,000 miles of rail and 150 miles of runway, plus modernize the air traffic control system. The plan also sets up a government-run infrastructure bank to finance the projects, combining tax dollars with private investment for funding.
But with midterm elections approaching, U.S. President Barack Obama is trying to show voters there's hope in resolving the stubbornly high unemployment rate. On Monday, he unveiled a six-year infrastructure plan that would invest billions in transportation projects and create a "substantial" number of jobs.
The government would supply $50 billion off the bat to rebuild 150,000 miles of roads, 4,000 miles of rail and 150 miles of runway, plus modernize the air traffic control system. The plan also sets up a government-run infrastructure bank to finance the projects, combining tax dollars with private investment for funding.
| New Report |
| The Next "Lehman Moment" Is Coming Fast |
| Sign up now to get this FREE report from Shah Gilani. Enter Email Address Here: |
"[The bank] will change the way Washington spends your tax dollars, reforming the haphazard and patchwork way we fund and maintain our infrastructure to focus less on wasteful earmarks and outdated formulas, and more on competition and innovation that gives us the best bang for the buck," President Obama said.
Experts estimate the total six-year cost could run from $350 billion to $500 billion, but President Obama promised the expenses would not be tacked on to the record-high U.S. deficit. To pay for the plan he proposed eliminating business tax cuts and subsidies for the oil-and-gas industry, saving $200 billion over two years.
But wary voters are likely to question any program that could increase government spending, despite President Obama's pledge to find the money.
Republicans, eager to shoot down anything that could garner support for Democrats before midterm elections, have been quick to attack the plan. Senate Republican leader Mitch McConnell, R-KY, referred to it as a "last-minute, cobbled-together stimulus bill."
"We don't need more government 'stimulus' spending - we need to end Washington Democrats' out-of-control spending spree, stop their tax hikes, and create jobs by eliminating the job-killing uncertainty that is hampering our small businesses," said Republican House of Representatives leader John Boehner, R-OH.
Republicans are poised to gain a substantial number of seats in Congress in November's elections, and have been loudly criticizing President Obama's unsuccessful stimulus spending and failed attempts to lower unemployment.
Transportation experts say 35,000 jobs are created for every $1 billion that's invested in transportation construction. That means that this plan could offer a significant boost to employment, although not until 2011.
U.S. unemployment remains at 9.6% - a rate that some economists fear could continue to grow. Bank of America Merrill Lynch (NYSE: BAC) analysts expect unemployment to peak at 10.1% next year.
Many experts agree that President Obama has few options to choose from to lift the weak job market.
President Obama will announce some additional measures on Wednesday, including one that will permanently extend a tax credit for business research and development, costing $100 billion over 10 years. He also is considering tax cuts for some businesses to encourage hiring, and extending long-term unemployment insurance again to protect those having trouble finding work.
But without Republican and voter support, it could be too late for President Obama to get very far with any of his proposals.
"After the administration pledged that a trillion dollars in borrowed stimulus money would create 4 million jobs and keep the unemployment rate under 8%, their latest plan for another stimulus should be met with justifiable skepticism," said Rep. Mitch McConnell.
This brings us to next week's Money Morning "Question of the Week How do you feel about the U.S. government's proposals to boost hiring? Do you like the proposed transportation plan? Which measures are most likely to fall short of the government's promises and which do you think can succeed? What else would you like to see the government do to lower the unemployment rate?
Send your thoughts, questions and concerns to mailbag@moneymappress.com.
[Editor's Note: Is there a topic you want to see covered as a "Question of the Week" feature? Then let us know by e-mailing Money Morning at mailbag@moneymappress.com. Make sure to reference "question of the week suggestion" in the subject line.
We reserve the right to edit responses for length, grammar and clarity.
Thanks to everyone who took the time to participate - via e-mail or by posting their comments directly on the Money Morning Web site.]
News and Related Story Links:
Experts estimate the total six-year cost could run from $350 billion to $500 billion, but President Obama promised the expenses would not be tacked on to the record-high U.S. deficit. To pay for the plan he proposed eliminating business tax cuts and subsidies for the oil-and-gas industry, saving $200 billion over two years.
But wary voters are likely to question any program that could increase government spending, despite President Obama's pledge to find the money.
Republicans, eager to shoot down anything that could garner support for Democrats before midterm elections, have been quick to attack the plan. Senate Republican leader Mitch McConnell, R-KY, referred to it as a "last-minute, cobbled-together stimulus bill."
"We don't need more government 'stimulus' spending - we need to end Washington Democrats' out-of-control spending spree, stop their tax hikes, and create jobs by eliminating the job-killing uncertainty that is hampering our small businesses," said Republican House of Representatives leader John Boehner, R-OH.
Republicans are poised to gain a substantial number of seats in Congress in November's elections, and have been loudly criticizing President Obama's unsuccessful stimulus spending and failed attempts to lower unemployment.
Transportation experts say 35,000 jobs are created for every $1 billion that's invested in transportation construction. That means that this plan could offer a significant boost to employment, although not until 2011.
U.S. unemployment remains at 9.6% - a rate that some economists fear could continue to grow. Bank of America Merrill Lynch (NYSE: BAC) analysts expect unemployment to peak at 10.1% next year.
Many experts agree that President Obama has few options to choose from to lift the weak job market.
President Obama will announce some additional measures on Wednesday, including one that will permanently extend a tax credit for business research and development, costing $100 billion over 10 years. He also is considering tax cuts for some businesses to encourage hiring, and extending long-term unemployment insurance again to protect those having trouble finding work.
But without Republican and voter support, it could be too late for President Obama to get very far with any of his proposals.
"After the administration pledged that a trillion dollars in borrowed stimulus money would create 4 million jobs and keep the unemployment rate under 8%, their latest plan for another stimulus should be met with justifiable skepticism," said Rep. Mitch McConnell.
This brings us to next week's Money Morning "Question of the Week How do you feel about the U.S. government's proposals to boost hiring? Do you like the proposed transportation plan? Which measures are most likely to fall short of the government's promises and which do you think can succeed? What else would you like to see the government do to lower the unemployment rate?
Send your thoughts, questions and concerns to mailbag@moneymappress.com.
[Editor's Note: Is there a topic you want to see covered as a "Question of the Week" feature? Then let us know by e-mailing Money Morning at mailbag@moneymappress.com. Make sure to reference "question of the week suggestion" in the subject line.
We reserve the right to edit responses for length, grammar and clarity.
Thanks to everyone who took the time to participate - via e-mail or by posting their comments directly on the Money Morning Web site.]
News and Related Story Links:
- The New York Times:
Obama Offers a Transit Plan to Create Jobs
- Money Morning:
Slight Job Gains Won't Shrink the High Unemployment Rate
- Money Morning News Archive:
Question of the Week Feature
More on this topic
(What's this?)
More Evidence the Government is Lying About the Economy
(Learn Mining News, 2/6/12)
The Hard Truth About the Unemployment Rate
(Wall Street Daily, 2/7/12)
Can Monthly Jobs Data Make You a Better Investor?
(Investment U, 2/7/12)
Unemployment Tumbles in January
(Wall Street Daily, 2/6/12)
Tags: Government Spending, Kerri Shannon, Money Morning Mail Bag, Private Sector, U.S. Unemployment
BO's plan to inject $50B is just more government spending which in reality is either creating jobs with borrowed money or money taken out of the private sector.
The first stimulus package was suppose to have had a highway, bridge, rail, et cetera component. All of that has not yet been spent so why more than for political purposes to again try to hoodwink the American public into thinking that 'Government" is taking care of them.
If people have not yet figured out that government can not do anything better than the private sector, maybe except the military, then OK, let's let him have another $50B so even more can be wasted and more people might begin to figure out that BO's plan to inject $50B is just more government spending which in reality is either creating jobs with borrowed money or money taken out of the private sector.
If people have not yet figured out that government can not do anything better than the private sector, maybe except the military, then OK, let's let him have another $50B so even more can be wasted and more people might begin to figure out that Keynesian economics does not work.
If BO would freeze government spending, roll back government spending to 2007 levels and then get out of the way, IE stop cap and trade, cancel Obamacare, extend Bush’s tax cuts, something that he will never do because what he really wants is for the government to run everything, our economy would take off. Until we vote the Dem’s out of power in congress so a collar can be put around our Socialist loving President, its going to more of the same. Wake up America, we are in perilous times and the only way to stop BO from grapping even more power from we the people is to use the power of the voting box. I say this as contacting our representatives certainly doesn’t seem to do much anymore, so its time to clean house and get people who understand the plight of the small business man, the average wage earner and the like into congress. Of course, on a bigger picture the size of government should be reduced and we the people be allowed to keep more of our money.
Oh well, one can at least hope.
Any job creation is better than none, the first stimulus included more than roads and bridges, it included heathcare reform etc. A lot of good jobs have already been created both in the private and government sector. Construction requires manufacturing and trucking as well as paperwork etc. Healthcare reform will also create jobs ,new schools are going up, and teachers will be needed. Any boost in hiring will also boost spending and investing. To have millions of unemployed draining the system, due to renewel of benefits and lack of paying their share of taxes, will not help heal the economy. We must jumpstart jobs, it is in our best interest to do so for long term growth.Any politician who has no plan for jobs should be voted out. JOBS are needed most. Any government spending that doesn't benefit "we the people" needs to go. It's our taxes that pay their salary, but only the democrats seem care if WE make a salary. The Republicans care about what benefits them.