Macroeconomists have their say: Experts see limited impact from Obama plan

[Cali_Democrat]

Looking at the details of the plan, it just doesn't appear to be enough. I think a bolder, more ambitious proposal was necessary.

The problem is that simply extending what already exists isn't going to solve the structural unemployment crisis. These programs already exist and unemployment is still extremely high.

Experts see limited impact from Obama plan
By The New York Times, Herald-Tribune
Thursday, September 8, 2011

The likely centerpiece of President Obama’s job creation plan, a proposal to further reduce Social Security taxes, is emblematic of a broader package of modest, pragmatic measures that economists say will at best make a small dent in the nation’s economic problems.

...

The tax cuts, which would deprive the government of more than $100 billion in annual revenue, are the largest items in a plan also expected to include proposals for other cuts in business taxes, an increase in federal spending on roads, schools and other public infrastructure, and fresh aid for states to limit ongoing layoffs of government workers.

...

But in this case, the White House mostly is proposing to extend an existing tax cut, maintaining rather than expanding the spending power of American workers. The plan, in other words, is primarily defensive. The forecasting firm Macroeconomic Advisers estimates a tax cut extension might create about 33,000 jobs each month next year — insufficient to reduce unemployment.

...

“Because none of these ideas address the main impediment to hiring — persistently insufficient final demand — our expectations for the success of the jobs bill are, well, not so great,” Macroeconomic Advisers said.

Read more...http://htpolitics.com/2011/09/08/experts-see-limited-impact-from-obama-plan/

[ClarkUSA]

1. Economists Support Obama Jobs Plan, Say It Will Put 1-2 Million Unemployed Back To Work Next Year

That was the assessment Thursday night from economists, who offered mainly positive reviews of President Barack Obama's $447 billion plan to stimulate job creation... mainly because a Social Security tax cut for workers would be deepened and extended to small businesses.

"Payroll tax cuts are very powerful," said Allen Sinai, chief economist of Decision Economics. "They provide a boost to direct income and, in turn, spending, which is important to growth." Mark Zandi, chief economist at Moody's Analytics, estimated that the president's plan would boost economic growth by 2 percentage points, add 2 million jobs and reduce unemployment by a full percentage point next year compared with existing law.

The heart of Obama's plan is an expansion of the Social Security tax cut, which took effect this year and is scheduled to expire by year's end. The tax cut now applies only to workers; it reduces their Social Security tax from 6.2 percent to 4.2 percent. Employers still pay the 6.2 percent rate... Under his bigger tax cut, an extra $1,550 would go to taxpayers earning $50,000 a year. The Social Security tax is imposed on the first $106,800 of taxable income. That means the maximum savings would be about $3,300 for an individual and $6,600 for a couple.... Zandi calls this a "creative" way to help small companies, which have struggled more than larger ones to recover from the Great Recession of 2007-2009. During recoveries, small businesses normally drive job creation... Susan Wachter, a finance professor at the University of Pennsylvania's Wharton School, figures that the Social Security tax cuts alone would add 1 percentage point to economic growth and create 1 million jobs next year.

The president's plan also takes a shot at long-term unemployment: Companies would get a $4,000 tax break for hiring people who have been unemployed for more than six months. As of August, the government says, 43 percent of unemployed Americans have been out of work for six months or more. The plan would also extend emergency unemployment benefits; ramp up spending on public works projects; and provide aid to keep state and local governments from laying off teachers.

Consumer spending accounts for about 70 percent of the economy.

http://finance.yahoo.com/news/Economists-show-support-for-apf-2760144223.html?x=0

[villager]

2. dutifully unrecc'd by those for whom mere questioning cannot be brooked...

n/t

[Tarheel_Dem]

6. Guilty as charged! Now, if I could only unrec your post....

;)

[villager]

11. Or I yours!

We'd be like the Alphonse & Gaston of enmity!

;-)

[TheWraith]

16. Or by the people who trust Yahoo News more than a local Sarasota Republican blog.

You did check the source on this, right? It's a Republican-friendly website covering politics in Sarasota, Florida.

[Cali_Democrat]

18. The source is actually the New York Times

They first ran this article yesterday.

[jefferson_dem]

3. Hmmm...Moody's says the plan would put nearly 2M people to work and grow the economy by 2%.

:)

[Cali_Democrat]

4. Moody's?

Weren't they the same folks that stamped those mortgage backed securities with AAA rating? ;)

[bornskeptic]

10. No. Moody's rating agency and Moody's Analytics operate totally independently.

Moody''s Analytics is the gold standard of economic forecasting. Mark Zandi is the best there is.

[Cali_Democrat]

19. Are they owned by the same company?

What's the name of their parent company? Check it out and get back to me. ;)

[ProSense]

5. Hmmmm?

Macroeconomic Advisers: American Jobs Act: A Significant Boost to GDP and Employment

This was mentioned in Steve Benen's piece: Economists: Obama’s plan would work (if it passes)

[FrenchieCat]

7. I read the entire article, which appears to be speculative analysis

as I read sentences that read...."Analysts also speculate that some consumers may not know they are getting the money."

and... "The nonpartisan office, which analyzes fiscal policies for Congress, reported that every dollar in reduced taxes on employers would generate up to $1.20 in economic activity, while every dollar in reduced taxes on workers would generate only up to 90 cents of activity because workers will tend to save a portion of their additional income. :wtf:
(folks need to make up their mind! Who is trying to "save" in an economy where most can barely make ends meet...which is it?)

and.... "A number of independent economists disagree with this conclusion, arguing that tax cuts for workers are more effective, because companies are even less likely to spend the money. Large corporations in particular are already sitting on record piles of cash, generally reporting that they are unwilling to invest in new workers or equipment because of a lack of demand." - Problem is that these incentives are not aimed at large companies, which is why it is limited to payrolls under 5 million dollars, which is not a whole lot of payroll....


and...."Some advocates who warned last year that temporary tax cuts have a way of becoming permanent see the possibility of an extension as confirming those fears.
Well, we'll have to see that we don't make it permanent or that we vote Democrats into congress in large numbers and advocate that they repeal the current SS cap.

[TheKentuckian]

23. What analysis of the plan isn't speculative? Unless, someone has a time machine

and a way to make sure they stay in the same continuity, logically any and all expectations are speculation here.

Also, let's not kid ourselves, five million in payrolls is not going to be easily confused with "mom and pop" business. Companies of that scope are going to have substantial revenues and are sitting on their money too.

As for your last section, we still have the Bush tax cuts after taking Congress in 2006 and gaining the White House and bolster majorities in 2008 and having passed the law's sunset so speaking of speculative analysis...

[xchrom]

8. Recommend

[JoePhilly]

9. Who are these "Macroeconomic Advisers" ... sounds like "Freedom works".

name them.

[Swede]

12. It's against DU rules to call out members.

But you'll find a lot of them in GD.

[Tarheel_Dem]

15. GD's full of 'em, you say?

:spray:

[JoePhilly]

21. Wasn't referring to DU members ... the article refers to a group called

"Macroeconomic Advisers".

[mkultra]

13. Debunked

[Tarheel_Dem]

14. But the "experts" said so! Why do you hate the "experts"? Why do you hate America?

If you don't believe the "experts", then the terrorists win! Kick for the "experts". :patriot:

[mkultra]

17. Why do I hate freedom?

[Tarheel_Dem]

20. >>>>

:rofl:

[DCBob]

22. and what impact would the prefered GOPer "plan" have??