A Jobs Bill that Bankrupts America’s Economy

Armstrong Williams
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Posted: Oct 18, 2011 10:47 AM

 

Representative Jessie Jackson Jr. (D-Il) and many of the out-of-touch Democrats in Congress are proposing a jobs plan that will literally bankrupt not only the Federal government, but also America’s economy.  These elite, misguided Democrats are proposing $40,000 jobs for all the 15 million unemployed Americans. The cost of that would be a mind-boggling $600 billion.  What about the 10 million discouraged workers excluded from the unemployment statistics because they stopped looking for work?  That is another $400 billion. The total cost for the official unemployed and the discouraged unemployed would be $1 trillion. Add this to the Federal deficit of $1.2 trillion and the total deficit increases to $2.2 trillion, and it becomes a crushing 14% of the nation’s GDP.

But wait, that is the tip of the iceberg.  What about the Americans who make less than $40,000 per year; the equivalent of $19.25 an hour?  65% of American workers make less than $40,000 per year. Do they not have an incentive to quit their jobs and become unemployed to increase their income?  There are approximately 211 million workers in the US and 137 million make less than $40,000.  For the ease of arithmetic, let us assume 100 million workers quit their jobs for these new government jobs. The cost to the taxpayer would be an additional $4 trillion. The total cost of Jackson’s program to the government would be a whopping $6.2 trillion or 44% of GDP.  Is the Federal government bankrupt yet?  Almost half the GDP would go to highly paid government jobs for the unemployed.

Of course, the nation’s total economy would collapse long before Jackson’s and the Democrats jobs plan got very far.  All but the most expensive restaurants, supermarkets, gas stations, clothing stores, factories and farms would go out of business.  Most of their employees making less than $40,000 would quit their low paying jobs for the high paying government unemployment jobs. Since these businesses could not afford to replace their lost employees at the newly designated minimum wage of $40,000, these businesses would lose money.  They would be unable to pay their liabilities to vendors and banks; they would go out of business.  There go the jobs of people making more than $40,000. At that point most Americans would be applying for unemployment jobs. The cost of unemployment jobs to the government would require the entire GDP.

Uncle Sam would not be spared from this carnage.  Without these businesses making a profit and their highly paid employees now without jobs, there would be few, if any, tax paying entities remaining to shoulder this crushing tax burden resulting from the government hiring the unemployed at $40,000 per year.

Of course, the Federal Reserve Bank would come to the rescue of the economy as it always does when it senses a potential financial disaster.  The Fed’s time-honored solution to most financial problems is to print money.  In this case, if it wanted to save the economy, it would print enough money so that $40,000 in real terms would be less than today’s minimum wage of $7.25 an hour or about $14,500 per year.  This would require the Fed to triple the money supply.  Therefore every dollar that you hold today would be worth $.33 if Jackson’s Job plan were to be “saved” by the Fed.

Fortunately, not even the Liberal Democrats in Congress are stupid enough to take Jackson and his cohorts’ proposal seriously.  Elementary math and common sense leads to the inescapable conclusion that $40,000 jobs for the unemployed would be an unmitigated economic disaster. Unfortunately, members of Congress do not apply the logic of this Jackson’s ridicules jobs proposal to serious proposals of extending unemployment benefits and raising the minimum wage.  If they did, they would understand that extending unemployment benefits and having high minimum wages also has a negative impact on the economy.  The politically incorrect flip side of this argument is that reduced unemployment benefits and lower minimum wages would have a positive impact on the economy.