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FirstQuaker -> RE: Opinions on President Obama's Jobs Speech... (9/9/2011 10:13:28 AM)
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An analysis of what they think Obama said and it's likely effects is here -
Analysis: Obama jobs plan reinvigorates growth outlook
quote:
It might not exactly deliver the "jolt" Obama claimed in his speech to Congress Thursday night, but it would be enough to make a difference.
The basic idea is to give a sufficient boost to get the stalled recovery over the hump where households, banks and businesses have paid down more of their debt loads and regained the confidence to start spending, lending and hiring again. Once demand picks up, the private sector will kick in and begin hiring, and the fiscal props can fall away.
It would deliver the economic medicine prescribed in recent weeks by Federal Reserve Chairman Ben Bernanke and the International Monetary Fund to prevent a worrisome slowdown in global economic growth from turning into recession. Treasury Secretary Timothy Geithner also can assure his fellow finance officials at the G7 meeting of top industrial nations in Marseilles on Friday the United States is pulling its weight.
The wild card of course is whether a Republican-dominated House of Representatives will agree to the full $447 billion package, an unlikely prospect given their criticism that the $830 billion stimulus program of February 2009 failed to deliver lift-off for the economy and added to the huge budget deficit.
It looks (from the various news sources I have seen this morning) like all the corporate democrats and corporate republicans are jumping on board, which isn't necessarily a good sign.
This is assuming the US congress actually passes a similar thing to what Obama said, which usually isn't the case..
quote:
Analysts at Capital Economics estimated that Obama's plan is equivalent to 3 percent of U.S. GDP and should be enough to add significantly to 2012 growth if passed in full by Congress.
The biggest single boost could come from a $250 billion reduction in payroll taxes. Obama proposes extending an existing 2 percent cut in the payroll tax and increasing its size to 3.1 percent for workers, and adding a cut for employers.
"These payroll tax reductions are the proposals that have the greatest chance of getting passed by Congress because it will be harder for Republicans to vote against proposed tax cuts," said Paul Ashworth, chief U.S. economist for Capital Economics.
The tax cuts could add as much as $375 billion to economic output to the $14 trillion U.S. economy, based upon Congressional Budget Office estimates in August of the economic impact that fiscal stimulus programs can have on GDP. But not all of that would be fresh stimulus money, since a $112 billion payroll tax cut is already in place and would simply be extended. Additionally, the full impact would be lessened because it does not target lower income workers.
And the techneers are running computer models, or so they claim -
quote:
Economists were re-running computer models late on Thursday to update their figures. Based on a smaller $300 billion stimulus package that Obama unveiled, Ian Shepherdson, U.S. economist at High Frequency Economics, had estimated a 1.3 percent boost to GDP and 1.7 million jobs over the life of the programs.
Their initial reaction was if it were adopted in full, which is quite unlikely, the plan would lower the 9.1 percent unemployment rate closer to 8 percent in 2012 and give a welcome boost to an economy that grew at a 1 percent annual rate in the second quarter. But it is does not guarantee solid recovery.
I will note this new economic slowdown is in fact world-wide, it is not just the US that needs to be working on it.
Canada, for instance has had everything but resources go flat, the UK is flat, the Euro zone is generally flat, etc.
Even the Chinese are speaking of a slowdown.
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