Pres. Obama’s Jobs Plan Won’t Create Jobs (Shocker)
That’s because the plan does not do what is needed in this economy: provide certainty. Employers need to know what their tax rate will be in the coming years, and what kind of regulations are coming down the pike. Right now they’re being threatened with higher taxes and crushing regulations starting in 2013. Why would anyone hire in that climate?
The other uncertainty surrounding businesses is a lack of demand. Businesses don’t know when demand will pick up (and continue). It’s a catch-22. Businesses don’t want to hire until consumers regain confidence and consumers won’t regain confidence until businesses start hiring.
President Obama’s jobs plan fixes none of these issues. The only demand it creates is by handing out cash to hire construction workers or teachers that will just lose their jobs once the money runs out. It might inject some money into the economy in the short term, but won’t create lasting demand as the jobs will be lost once the money is gone. We’ll be right back where we are now – only a few hundred billion dollars deeper in debt.
We have also seen how Wall Street has reacted to the jobs plan. Not well. All the major indexes are down substantially because the speech and plan did nothing to spark any optimism in America’s economy. But don’t expect the liberal media to claim it has anything to do with the President’s jobs plan, even though the drop started the morning after the speech.
The only part of the plan designed to incentivize actual private sector businesses into hiring is the $4,000 tax credit for businesses that hire the unemployed. However, job creators are saying that won’t affect their hiring at all.
Concert Pharmaceuticals chief executive Roger Tung said his company would save $150,000 a year from the employer-based payroll tax cut. But, he said, that won’t cover the cost to hire even one employee. President Obama says he wants to spur the high-tech jobs of the future, but it is obvious his plan won’t do it.
The problem from this plan comes from the Keynesian economic theory it was based off. This administration believes that by creating temporary jobs, and those who receive those jobs spend that money, that the businesses receiving that money will be able to hire more people. Unfortunately, this plan only creates temporary demand, and businesses need lasting demand in order to feel comfortable hiring.
President Obama will submit the legislative text of his plan tonight. We’ll see what the true cost of the plan is after the CBO scores it. We don’t know whether it will hold true to its $447 billion price tag, but what we do know is that nothing in this bill will actually spur the kind of hiring necessary to get our economy back on track.