The President's Jobs Proposal

http://online.wsj.com/article_email/SB10001424053111904103404576560940420785126-lMyQjAxMTAxMDEwMDExNDAyWj.html?mod=wsj_share_email

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"Steve Jobs' legacy, like Henry Ford's, is very much a new, wider, richer, more opportunity-filled world for the common man." (John Steele Gordon)

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I've attached a current article from the Wall Street Journal on the new proposals aimed at helping with the job situation. It includes a chart ("Weighing Prospects") that summarizes some of the reactions from economists.

Mark Zandi, at Moody's Analytics, wrote a brilliant book that was literally contemporary to the worldwide financial crisis as it was occuring: one of my students, at the time, asked to use it as part of her thesis. He is, as well, one of the few contemporary economists that have advised both parties in Congress (this, of course, does not mean that they take his advice).

Moody's suggests that full enactment of the proposals will boost GDP growth by 2 percentage points next year. This would add 1.9 million jobs and shave a percentage point off the unemployment rate (currently at 9.1%, with the BLS U6 rate - which includes those who would like to work, but have given up, or are working part time - at 16%/17%). One of Zandi's more relavent perspectives that, again, both major political parties quote, is what I call the flow thru ratio: what does a dollar spent into the economy do for employment? According to Zandi, a dollar spent on an "employee" tax holiday generates $1.25 toward GDP. That same dollar toward an "employer" tax cut generates $1.04 for every dollar spent.

Back to the "Weighing Prospects" chart, I can't resist commenting on the inclusion of the BOA Merrill opinion. This, as BOA is trying to figure out whether they are going to lay off 40,000 employees in the near term. This from an organization that bought Merrill Lynch (was there any value there, were they forced into that purchase?). This from an organization so incompetent that they couldn't wait to buy Countrywide days before Countrywide was going over a cliff.

Last point: both Paul Krugman and Warren Buffet said that the U.S. efforts at "stimulus" in reaction to the worldwide financial crisis would not be enough. They were right. They usually are.