The recently enacted $787 billion economic stimulus plan designed to create jobs includes about $300 billion in tax cuts for individuals and businesses, which will not create jobs because companies are not hiring and consumers are saving their money, not making purchases they can postpone. The Commerce Department recently reported a U.S. savings rate of 5%, which is the highest since 1995.
A significant portion of the remaining $487 billion goes to social programs, which will help the needy in some instances, but will not create jobs in the private sector where they are needed. Examples are $50 million to the National Endowment for the Arts; $380 million for Women, Infants & Children’s welfare; $2.4 billion for neighborhood stabilization; $160 million for “paid volunteers” (???) for Community Service; $20 billion for food stamps; $150 million for the Smithsonian; and $55 million for the Historic Preservation Funds.
The Administration’s projection of creating 3.5 million jobs by the end of 2010 is optimistically off target because it is based on an average unemployment rate of 8.1 percent for 2009, which was hit in February, and it is rising. It now appears the economic stimulus plan will create about 2.5 million jobs, which doesn’t come close to replacing the 4.4 million jobs lost in this recession, plus the 500,000 to 600,000 more jobs lost each passing month.
For 2009 the Obama Administration predicts a 1.2 percent decline in Gross Domestic Product (GDP), but a majority of economists predict a 2.0 percent decrease in GDP; and in 2010 it’s a 3.2 percent projected increase by the Administration, but a 2.0% increase predicted by the economists. For the 4th quarter of 2008 the Bush Administration projected a 3.8 percent decrease in GDP, but the actual decrease was 6.2 percent. Essentially, the Administrations are generating economic policies based on optimistic projections of our GDP, but prudence might dictate more conservative projections.
Maybe the President should end his ongoing campaign mode of governing, curtail his continuous campaign and media appearances, start operating as the chief executive of this country, and concentrate on creating good paying American jobs as his primary objective.
Donald A. Moskowitz