Start the conversation
Comment on This Story
Or to contact Money Morning Customer Service, click here.
Even if passed intact, U.S. President Barack Obama's jobs plan, though ambitious, would at most nudge down unemployment by a single percentage point over the next year.
Furthermore, the Republican-controlled House of Representatives will surely object to several provisions in the American Jobs Act – particularly the total $447 billion price tag – further diluting its impact.
President Obama's jobs plan includes:
- Tax breaks for both individuals and businesses.
- Financial aid to states aimed at repairing schools and retaining public sector jobs such as policemen and teachers.
- An extension of unemployment insurance.
- And money to repair and upgrade transportation infrastructure, such as highways, railroads, and airports.
Wall Street, already worried about events unfolding in Europe, seemed less than impressed by the proposals. Stocks started down Friday, the morning after President Obama's jobs speech, and meandered lower throughout the session. The Dow Jones Industrial Average slipped 2.69%, while the Standard & Poor's 500 Index dropped 2.67%.
"There was nothing in the president's speech that would inspire the stock market one iota forward, and I think we can see that reflected already this morning," Money Morning Capital Waves strategist Shah Gilani said on the Fox Business Network program "Varney & Company."
Pressure to Act
Congress will feel pressure to at least pass a watered-down version of Obama's jobs plan if only because both parties are wary of the public anger over the gridlock and bickering that took place during the summer's debt ceiling debate.
In fact, some Republican lawmakers did sound more conciliatory than usual.
"I heard plenty in the president's speech last night where I think that there is a lot of room for commonality and we can get something done quickly," said House Majority Leader Rep. Eric Cantor, R-VA, in an interview on CNN's "American Morning."
Cantor suggested the two parties "set aside" some of the issues on which they strongly disagree, such as the proposed "infrastructure bank," and concentrate on the few areas of mutual agreement, such as tax breaks for small businesses and infrastructure spending.
The cooperative tone was not universal, however. Senate Minority Leader Mitch McConnell, R-KY, knocked President Obama's speech Thursday morning – hours before it was delivered.
"This isn't a jobs plan; it's a re-election plan," McConnell said on the Senate floor.
Analysts predicted Congressional Republicans would try to cherry-pick the parts of the American Jobs Act that fit their governing philosophy while rejecting the rest.
"These payroll tax reductions are the proposals that have the greatest chance of getting passed by Congress because it will be harder for Republicans to vote against proposed tax cuts," Paul Ashworth, chief U.S. economist for Capital Economics, told Reuters.
Republicans are almost certain to reject proposals such as the aid to state and local governments and extending unemployment insurance. Back in June of 2010 Senate Republicans blocked an extension of unemployment benefits, saying it would add to the federal deficit.
And that was before the election of dozens of fiscally conservative Tea-Party Republicans, who tend to object to new spending of any kind for any reason.
Paid For … Or Not?
Obama said in his speech that his proposals would be paid for, although he later explained that would mean adding another $500 billion to the $1.5 trillion in savings that the Congressional "super committee" is charged with trimming from the federal budget. Those recommendations are due Nov. 23.
The president said he would submit a new deficit-reduction plan on Sept. 19 that would include spending cuts, adjustments to Medicare and Medicaid, and closing tax loopholes for corporations as well as wealthy individuals.
Making the jobs creation bill part of the contentious deficit reduction battle may come back to haunt President Obama, who might need to sacrifice many of his proposals just to get anything passed.
For all its good intentions, not enough of Obama's jobs plan will survive to make much of a difference.
"Nothing that's likely to get done is going to have a meaningful impact in terms of lowering the unemployment rate and creating jobs," Neil Dutta, an economist with Bank of America Merrill Lynch told Reuters.
News and Related Story Links:
- Money Morning:
Obama May Soon Join America's Unemployed - Money Morning:
Threat of Stagflation Looms as Prices Rise Despite Bad Economy - Money Morning:
The Debt-Ceiling Debacle: Another Way Politicians Could Ruin America - Money Morning:
New Poll Says Washington Has Done a Lousy Job During the Debt-Ceiling Debate – But What Do You Think? - White House Website:
Text of President Obama's Address to Congress - Reuters:
Factbox: Key elements of Obama's $447 billion jobs plan - Washington Post:
House Republicans remain silent for most of Obama's speech - The Wall Street Journal:
Obama's Bid to Spur Growth
About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.
Let him "barely dent umemployment" It will make a difference to those people.
President Clinton added 12.5 Million new jobs through a plan less comprhensive than what Obama is proposing.
This article is stupid.
President Clinton had a republican congress, 12+ years of republican tax policy coming to fruition in new technologies from the free market (cell phones, faster smaller computers…) and a budget written by Newt Gingrich.
I find it disheartening that the only plan Obama could come up with involved throwing another 447 billion dollars down the bottomless pit of debt we are already in. I think that it is hypocritical to say to the American public that we have spent beyond our means, that we should be wiser about our money and that now is the time to tighten our belts all while that the organization that is supposed to represent us (the elected officials) does the exact opposite. Perhaps they think we are fools? It would seem to be the case since we keep re-electing the exact same people that caused these problems in the first place…. A clear example of mass insanity.
Would it be too much to ask to reduce the deficit before we start spending? Would it be too much to say.. Perhaps we could stop throwing money into foreign wars. Reduce foreign Aid because clearly, we aren't buying allies… Perhaps instead of having the Army, Navy, Airforce, Marines, Coast Guard, Border Patrol, CIA, FBI AND Homeland Security all doing essentially the same thing, we consolidate a little? There has been little evidence that any of these organizations are effectively reducing terrorism and quite frankly, the whole Patriot Act is just a reduction of our personal liberties in exchange for feeding the mass hysteria. But hey, fears must be fed with cash cash cash… Would it be possible to further reduce the amount of bases we have spread all over the world that continues to support every service member, and their wives/husbands and their kids and their educators and their hospitals and their social programs with more of our badly needed money?
Higher education has also proven itself to be a bottomless money pit. Could we please stop funding 1 and 2 year college dropouts with wasted Pell grants every semester, every year? Those kids are not getting degrees and just funnel more money into private institutions that aren't educating our future generations. they are just pocketing the profits.
I read a lot of comments about people wanting more money for more social programs all while KNOWING that the money is not being used in an effective manner and that the vast majority of the funds proposed does not make it into the programs it was meant to support. Mismanagement… fraud… waste…bloated bureaucracy… are all blatantly apparent…. and yet, the solution is still spend spend spend. It boggles the rational mind. I fear the country will go bankrupt before it finally dawns on people that spending is not the solution to the problem. Am I alone?
I agree whole heartedly! How about cutting a few regulations while they are at it. We were just alerted to the fact that the new book of regulations regarding street signs is over 800 pages long. How's that grab you?
Spot on Barbie, and no, i am sure you are not alone, just glad i dont live there, problem is everyone has ther own agenda even this Site , trouble is your whole political system is a joke but who thinks it is funny, only the fat cats who have created all of the above points you note in your article.
Thank you.
Gil.
Clinton didn't "add" any jobs. He happened to be president during the economic golden age of the internet's birth in the public arena. So much money poured into software, servers, networking and millions of new web businesses that it couldn't help but splash throughout the rest of the economy, creating jobs and wealth all over North America. It was like the jobs boom that occurred during the birth of the auto industry. Neither of these were created by politicians or government policies. They were created by entrepreneurs who wanted to build something and not just flip real estate or shuffle paper on Wall street.
Agree with all the points that Barbie made on 9/12 and can add that the USDA department and farm programs need a complete ovehaul except maybe for food stamps and food and grain quality inspection the USDA department could be closed down. Question is why is the government still bidding and taking grain producing farmland out of grain production with high prices paid for grain and the shortage of grains worldwide? The end of the CRP program would help reduce the deficit by eliminating the government payment for the leases and bringing back the land either into grain production or beef production which would be a tax generating situation and on top of that would increase employment in small town rural US with an upward bias to employment in more populated areas of the country. The other part of the USDA /farm program involving direct subsidy payments to farmers and farm landowners brings into question (with the debt this country has and the high grain prices) the need for the subsidy payments. Most studies I have seen in regard to the ag subsidy payments the bulk of the said subsidy payments now go to high net worth farm operators/farmland owners and a large per cent of the the amount paid out goes to a few individuals/corporations. The problem is this in only one example of the ineffectiveness of most government programs(morphed into something they were not meant to be-money goes to where it is best treated and in the case of government programs at the expense of the taxpayer)!
All our problems began when Clinton was president. We could have had Bin Ladin 10 times but he refused the CIA to get rid of him.
What a lot of people seem to have missed is that "they" "missed the boat" when this whole debarcle started. In the capatlist system in which we live when people or companies go broke the only way to get rid of the debt is to liquidate it, "they" passed it on to the taxpayers, we were silly enough to take it !
Until the debt is liquidated, as we don't have a hope in hell of ever repaying it, nothing will change, this will of cause create a depression, painfull as it maybe, it may give people time to consider their spending habits and the nations spending habits. There are still a few people around who lived through the last great depression or were born shortly after who can vouch for the fact that it certainly changed the nations spending habits.
Bob.
Why not spend just a fraction of the $45 BILLION DOLLAR cost slated for unemployment to open the jobs 8 million illegal workers "still have" while 14-22 million unemployed legal immigrants and citizens can't find one? THAT'S 8 MILLION JOBS RIGHT THERE!!
What it costs to continue allowing illegal immigrants to work our jobs:
The costs are a lot higher than you think, and you pay more than you think, directly, indirectly or both!
1.Unemployment benefits extensions cost billions(Obama's latest jobs plan over 40 billion dollars), plus interest, and that would almost be cut in half just by opening up 8 million jobs illegals have so 14-22 million unemployed legal immigrants and citizens can apply and 8 million of them can get back to work!
2-Subsequent costs such as food assistance which has also escalated due to the huge increase in applicants!
3-Subsequent utility or shelter assistance, resources cannot keep up with overwhelming needs so even more of our people struggle!
4-Home loss! Unemployment benefits that cost billions and almost half is borrowed and incurs interest, is not sustainable! And not everybody qualifies for them on top of that!! Part-timers and business owners are two groups!!
5-Obama admitted that "illegals go to the ER and we pay for it"! What happened to cutting our costs, especially ones that are preventable???
6-No money for our unemployed to pay for health care so they end up at the ER! Illegals are not just low paid workers, many overstayed their visa and remain in their job!! Many jobs in construction and other fields pay well enough to afford their own benefits, get it through their employer or a combination!
7-Identity theft! The cost is in the billions and mostly preventable as far as jobs go. Mandating E-Verify for all jobs will take care of that if the remaining photos are added to it! Don't forget the security issues, the 9/11 tragedy could have been hampered if severe consequences were imposed and followed through on. Years in jail and very heavy fines are two consequences for most over-stayers, so fewer illegals would be out there to help them! Add the same for those that aid and abet them!! Catching terrorist is much easier when you don't have 11-20 million other illegals to hide among!!
8–When states lose revenue and have to help our unemployed, they cut programs and contracting which hurts business growth and reduces the need for more workers! That cycles back to less revenue, more cuts and more job loss!!
9-Businesses lose sales revenue due to our unemployed's inability to spend and end up laying off workers instead of growing and hiring!
10-Hospitals pass their costs onto us whether we have insurance or not! It passes to businesses that passes it to us and it passes from business-to-businesses, to businesses-to-businesses and so on which causes everything to go up! Even at discounted rates for federal and state government purchasing, the costs would be lower if illegals were forced to go home and not flock to our ER's and take much-needed jobs and limited resources they get through fraud and legal means!
Legal immigrants and citizens need and deserve the jobs and resources that illegals have and we all deserve the reduction of the forced costs we currently "have" to pay but is mostly preventable!!