America to Congress and Mr. Obama: We Have No Confidence
After the US President announced a jobs plan to a joint session of Congress, the voters decided that: We have no confidence this will work. Why?
First, the first two stimulus plans failed to lower unemployment below 9%. Then, only 2 of the last twelve quarters showed a rise in employment. Finally, the debt ceiling debacle cascaded in a no-confidence vote in both parties. Now, the “American Jobs Act” is to spend $ 202 billion in spending while giving $ 245 billion tax cuts means that in reality, nothing will happen.
That is the truth that many are realizing. To stimulate the economy, we are spending $ 447 billion while not able to pay for this act. Americans, on all sides of the political spectrum, are beginning to calculate the cost. What is really sad is the true cost. You need to double the cost of the tax cuts to $ 490 billion, because there is not a plan in place to offset the expense of this bill.
However, the American citizen is not fooled by this because the jobs targeted in the bill are specialized. The primary target is schools, infrastructure and transportation. For schools, it is repairing buildings and hiring teachers (a job requiring a degree and certification). Infrastructure requires skills that are centralized to union-centric and experience workers. The same goes for transportation. In each of these areas, there is some room for inexperienced employees, but only a small portion. Plus, add in the extension of unemployment benefits.
Before, when the President talked tax hikes and spending cuts, here comes a bill that goes against his fiscal spending conservatism stated over the last several months. Although the political parties are happy, the American people are not. Now, how does this relate to economics?
The fact of the matter is that any government spending can stimulate the economy, but, only when three factors are involved: a broad-based spending package that benefits all industries, tax cuts that are generous to the middle and lower income taxpayer, and a confidence in the spending package to do the job.
At this point, it looks to be a rough economic cycle for the taxpayer and the US government.
- The Latest Jobs Plan (online.wsj.com)
- Many economists say Obama jobs plan will help (usatoday.com)
- Obama’s jobs plan isn’t enough (salon.com)
- Obama talks tax hikes, spending cuts to pay for job plan (thestar.com)
The Average Joe Economic Show by Brandon Holm (Host) is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.
Based on a work at averagejoeecon.info.
