Almost immediately after President Obama unveiled the American Jobs Act, some of its biggest fans were economists and economic forecasters. Moody’s Analytics estimated that the plan would boost economic growth by 2 percentage points and create 2 million jobs. Macroeconomic Advisers wasn’t quite as optimistic, but its analysis projected that the White House plan “would give a significant boost to GDP and employment over the near-term.”
Three weeks later, support for the American Jobs Act continues to be much stronger among economists than members of Congress. Indeed, I suspect the White House will be awfully pleased with this Bloomberg News headline this morning: “Obama Jobs Plan May Prevent 2012 Recession.”
President Barack Obama’s $447 billion jobs plan would help avoid a return to recession by maintaining growth and pushing down the unemployment rate next year, according to economists surveyed by Bloomberg News.
In fairness, the economists surveyed had widely divergent estimates, and some were far more optimistic about the proposal’s impact than others. But the overall consensus among the experts is that the Americans Jobs Act would create hundreds of thousands, if not millions, of jobs, and boost economic growth. Some projected a pretty significant boost: “Goldman Sachs Group Inc. estimated the plan would add 1.5 percent to the economy, while Macroeconomic Advisers LLC said 1.3 percent and UniCredit Research, up to 2 percent.”
Reactions to the Republican approach were far less kind.
A reduction in government spending, the end of the payroll- tax holiday and an expiration of extended unemployment benefits would cut GDP by 1.7 percent in 2012, according to JPMorgan Chase & Co. chief U.S. economist Michael Feroli in New York.
Feroli doesn’t expect big results from the White House proposal, but he nevertheless makes clear the Republican policy would quickly push the economy backwards.
As a practical matter, I don’t imagine this will make much of a difference to Congress. Republicans, after all, “do not accept the legitimacy of scholars and intellectual authorities,” even though they occasionally claim “every economist” agrees with the GOP agenda.
But the Bloomberg report once again brings the debate into focus. The economy is struggling, there are fears it may start to shrink, and the nation needs Washington to act. The president has presented a credible plan that, according to knowledgeable experts who get paid to answer these questions correctly, would give the economy a much-needed boost at an important time.
The choice for Congress seems to down to recovery and jobs vs. negligence and ignorance.