Economy

Rep. Engel – GOP Needs to Work With Democrats & Obama Instead of Obstructing

Congressman Eliot Engel (D-NY-17) issued the following statement following President Obama’s jobs proposal, delivered this evening to a joint session of Congress.  

   

“The Republican House promised a ‘laser-like’ focus on jobs during the 2010 campaign, and they have failed to produce a single jobs bill.  After the Republican Senate filibustered every jobs bill in 2010, this doesn’t come as a surprise.  However, this is too important of an issue to be bogged down in the partisan politics of the past.  Out-of-work Americans know no political affiliation.   

   

“There are many ways we can save and create jobs, if we choose to work together.  There is common ground, but both sides need to have the political courage to find it.  I call on my colleagues to remember why we are here in Washington, and to keep the millions of American families and businesses struggling to make ends meet in mind when we discuss these proposals.  

   

“These last few years have been very tough for the American people, dating back to when the economy began its collapse during the last two years of the Bush Administration.  Hundreds of thousands of Americans lost their job during that span of time.  People lost their homes, their livelihood and their belief in the American Dream.  President Obama and the Democratic Congress stopped the freefall in 2009, but the damage was far greater than anyone realized at the time.  Since then, the recovery has faltered and far too many people are still looking for work.  Sadly, they cannot look to Congress for help because recently we have shown them no reason to believe we can get past our own harmful rhetoric.  

   

“The Recovery Act of 2009 halted the downward spiral of our economy and helped keep things from turning far worse.  Of the $787 billion included in the Recovery Act, $299 billion went to tax cuts, almost half of the entire amount spent.  The tax benefits come in various forms, including the Making Work Pay tax credit, COBRA Continuation Coverage Assistance, and tax incentives for businesses, in addition to the $70 billion which went to the Alternative Minimum Tax fix.  I find it hard to believe my Republican colleagues continue to say the Recovery Act was a failure, despite tax cuts which help the middle class.  

   

“Meanwhile, only 15% went to infrastructure and science, which to me was too little.  I applaud the President for his commitment to addressing this disparity, and choosing to invest in our crumbling roads and bridges.  Investment in our infrastructure also means an investment in our workforce. Worldwide, the United States ranks 23rd in quality of its overall infrastructure.  Not only is there a dangerous safety issue at hand, which will only get worse, but there are also hundreds of thousands of jobs at stake. We cannot be pennywise and pound foolish.  China currently spends nine percent of its Gross Domestic Product (GDP) per year on infrastructure investments, and India spends five percent.  The United States invests only 1.9 percent.  This is not the way to be competitive in the 21st century.  

   

“For example, the Center for Budget and Policy Priorities says that a $50 billion investment in school renovation could create half a million jobs in 1-2 years.  If we fail to reauthorize the transportation bill, we would lose 4,000 jobs instantly, $1 billion in revenue in the first 10 days, and approximately one million jobs in the first year.  Both the AFL-CIO and the Chamber of Commerce agree with President Obama’s plan.  According to the U.S. Department of Transportation, 42 jobs are created for every $1 million in transportation construction funding. 

“A recent report released by the American Society of Civil Engineers found that the crumbling surface transportation infrastructure will cost the economy more than 877,000 jobs. Failure to increase investment in surface transportation over the next ten years will have significant economic implications – resulting in U.S. businesses paying an additional $430 billion in transportation costs, household incomes falling by more than $7,000, and U.S. exports falling by $28 billion.

“The Recovery Act invested in medical research, not only continuing the quest to cure cancer, Alzheimer’s, diabetes and other diseases, but bolstering employment in the health care industry.  In my district alone, over 21,000 people are employed by hospitals, with over 370,000 statewide.  The GOP deficit reduction proposal would slash Graduate Medical Education and eliminate thousands of jobs in New York, and many more across the nation.” 

“Tonight needs to be a defining moment for the 112th Congress.  We can put partisan politics aside and work to put America back to work, or we can remain on the sidelines and continue to throw rhetorical bombs at each other.  This will only prolong the suffering of our fellow unemployed Americans.  I am committed to reaching out to my colleagues to work together and help end the misery.”

Obama Jobs Creation Package Could Easily Top $300 Billion

WASHINGTON –  President Obama is expected to propose at least $300 billion in federal spending and tax cuts Thursday night to get Americans working again, including several items already suggested -- like a payroll tax cut extension through 2012 that would be worth about $110 billion.

Obama will lay out his plans during an early prime-time speech at 7 p.m. ET, scheduled to precede the Green Bay Packers-New Orleans Saints regular season opener. Republicans, who assailed some of the president's plans on Tuesday, as Congress returned, have not scheduled a rebuttal to follow the speech.

 

Among some of the items that would quickly add up are the payroll tax cut extension as well as $60 billion for extending unemployment benefits for another year; a highway bill worth $90 billion that the president proposed last month to extend but which has not gone anywhere; a $40 billion job training program; and a targeted payroll tax cut for employers to encourage new hiring worth about $30 billion. Other items could be extending a deal negotiated in 2011 to accelerate depreciation on new equipment and other tax breaks for businesses or perhaps a housing and mortgage fix.

Obama has also called for public works projects, such as school construction. Advocates of that plan have called for spending of $50 billion, but the White House proposal is expected to be smaller.



Read the Article on Fox News

August Jobs Report: Pressure on Obama Mounts

By David Magee-International Business Times

Amid a dismal August jobs report Friday that showed a net zero jobs were created in the U.S. last month, fueling concerns that the nation is heading for another recession, pressure mounts on President Barack Obama ahead of his major jobs speech before Congress on Sept. 8.

Obama is likely to try to establish the political stakes for solving America's unemployment problem, and he's likely to politically live or die by the results. But he's got little option, since economists had been expecting to show a net of 75,000 jobs created in August.

Even that predicted increase was a low number, considering the U.S. is two years out of a recession. But the poor August report, the first time since World War II that the economy had a net zero jobs created for a month, ramps up the stakes even higher than originally anticipated.

Obama's forthcoming jobs strategy, expected to come with a controversial price tag, will determine whether Obama and Democrats or Boehner and Republicans can emerge from gridlock in a presidential election year with the stronger hand. Or, the move will potentially thrust Washington back into a grisly debt-ceiling-talks-like atmosphere,without a looming deadline to force an eventual result. Read the Article in International Business Times

 

The Unemployment Empty Promise

By Mike Brownfield

Sometime next week—we don’t quite know when—President Barack Obama is due to announce his latest jobs plan [1] designed to lift America out of its unemployment doldrums. And though we also don’t know the exact details of the plan, there’s a pretty good chance it will include several key components we’ve heard before, one of which is the extension of unemployment benefits.

Much like the President’s other likely initiatives, this idea isn’t a new one, and the White House has made the argument before that unemployment benefits are the best thing since sliced bread when it comes to stimulating the economy. In a White House briefing earlier this month, press secretary Jay Carney explained the rationale [2]:

[Extending unemployment benefits] is one of the most direct ways to infuse money into the economy because people who are unemployed and obviously aren’t earning a paycheck are going to spend the money that they get. They’re not going to save it; they’re going to spend it. And unemployment insurance, that money goes directly back into the economy dollar for dollar virtually.

So it is—and when it goes back in the economy, it means that everywhere that those people—everyplace that that money is spent has added business. And that creates growth and income for businesses that then lead them to making decisions about jobs—more hiring.

But according to a report by Heritage’s James Sherk and Karen A. Campbell [3], unemployment insurance actually leads to longer periods of unemployment and does not provide the promised stimulative effect. In their paper, they address a 2004 study which concluded that each dollar in additional unemployment insurance increased gross domestic product by $1.73. But, they say, that just isn’t so. Research shows that unemployment spending does not result in workers consuming more, and workers with extended unemployment insurance benefits remain unemployed longer. “A 13-week extension of unemployment benefits results in the average worker remaining unemployed for an additional two weeks,” they report.

Funnily enough, President Obama’s new top economist agrees. Yesterday, the President announced [1] that Princeton University economist Alan Krueger will replace Austan Goolsbee as the White House’s chief economic adviser. And though Krueger will play a prominent role in crafting the White House’s economic strategy, Heritage’s Lachlan Markay reports [4] that Krueger’s past research doesn’t mesh with the White House’s stance on the supposed stimulative benefits of extending unemployment insurance:

Krueger co-authored a paper [5] for the Handbook of Public Economics in 2002 that seems to undercut the economic argument for extending unemployment benefits. The paper found that those benefits tend to increase the length of unemployment by discouraging the search for a new job, and may actually encourage layoffs. Conversely, the paper also found that unemployed persons who are ineligible for benefits search harder for a job and are therefore unemployed for less time.

It’s anyone’s guess whether Krueger will change his tune now that he’s on the President’s team, but no matter. When the President launches his new jobs plan, and should he call for an extension of unemployment benefits, as expected, the reality remains the same, regardless of how Krueger addresses his earlier body of work: Unemployment benefits don’t stimulate the economy.

There certainly can be other reasons for extending unemployment benefits. Under the Obama economy, the average length of unemployment hit a new record last month, surpassing 40 weeks for the first time ever. But no one—Congress, the President, or the American people—should be under the delusion that economic stimulus and new jobs will result.

URLs in this post:

[1] announce his latest jobs plan: http://www.washingtonpost.com/politics/princeton-economist-tapped-to-head-council-of-economic-advisers/2011/08/29/gIQAhtlPoJ_story.html?hpid=z1

[2] explained the rationale: http://www.whitehouse.gov/the-press-office/2011/08/10/press-briefing-press-secretary-jay-carney-8102011

[3] report by Heritage’s James Sherk and Karen A. Campbell: http://www.heritage.org/research/reports/2008/11/extended-unemployment-insurance-no-economic-stimulus

[4] reports: http://blog.heritage.org/2011/08/29/white-houses-new-top-economist-unemployment-benefits-are-not-stimulus/

[5] co-authored a paper: http://ideas.repec.org/h/eee/pubchp/4-33.html

[6] has risen to 40: http://abcnews.go.com/US/irene-flooding-death-toll-rises-40/story?id=14409933

[7] Wall Street Journal report: http://online.wsj.com/article/SB10001424053111904199404576538721260166388.html?mod=WSJ_hp_LEFTTopStories

[8] published nearly 134,000 leaked diplomatic cables: http://www.nytimes.com/2011/08/30/us/30wikileaks.html?_r=1

[9] Mental illness.: http://www.smh.com.au/environment/mental-illness-rise-linked-to-climate-20110828-1jger.html

[10] Get the full story on Foundry.org.: http://blog.heritage.org/2011/08/29/top-hhs-official-likens-obamacare-to-civil-rights-act/


Federal Reserve Chief Offers No Signs of New Stimulus

The Federal Reserve chairman, Ben S. Bernanke, said Friday that the economy is recovering and the nation’s long-term prospects remain strong, an upbeat assessment that offered little indication of any plans for additional measures to boost short-term growth.

“With respect to longer-run prospects,” Mr. Bernanke said in his prepared remarks, “my own view is more optimistic.” He continued, “The growth fundamentals of the United States do not appear to have been permanently altered by the shocks of the past four years.”

“The country would be well-served by a better process for making fiscal decisions,” he said, noting that the political battle over raising the debt-ceiling had disrupted the financial markets “and probably the economy as well.” Read the article in the New York Times

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