Barack Obama is flitting around the country imploring "Pass the Bill." The bill he's referring to is the American Jobs Act – aka: the Son-of-Stimulus. The plan calls for $447 billion in temporary spending and $1.5 trillion in permanent taxes. The President sprinkles all his speeches with frequent claims that his plan will create 1.9 million jobs.
However, any bump from all that spending will quickly be offset by the burden of all those taxes. In fact, by 2013 Son-of-Stimulus will create a "drag on the economy," and by 2015 we will be stuck in "the same place" as if Obama's plan were ignored.
And that, my friends, isn't the conclusion of one of Obama's growing number of critics. That's the conclusion of Mark Zandi, chief economist for Moody's Analytics. Most significantly, Zandi is the private industry analyst hand-picked by Barack Obama to help sell Son-of-Stimulus to Congress and the American people.
If "drag on the economy" is the nicest thing his own economic expert can say about the plan, it pretty well sums up why Son-of-Stimulus is likely headed for the trash bin on Capitol Hill.
"You should pass it right now!" Obama beseeched Congress on September 8. That was before there was a bill to read, and before he mentioned eleven days later that all those new taxes were also part of his plan. And, it was before anybody had a chance to figure out what "it" actually was. Now we know why he was in such a hurry. It was like, "We have to pass it, so you can find out what's in it," all over again.
The Administration's in-house track record for predicting job growth or anything else related to the economy is so bad that for Son-of-Stimulus, they sub-contracted the guessing to Zandi who has been a reliable cheerleader for the White House. He's the one who originally came up with the 1.9 million jobs estimate, but Zandi is already back-peddling.
"I didn't know when I did that simulation how the president proposed to pay for it," Zandi now explains – which begs the question how in the world he could perform a credible analysis without all the details, and why he was willing to put his name on it? The White House apparently just told Zandi, "Trust us on this one," all the temporary spending will be "paid for." The White House never mentioned, and Zandi failed to ask, exactly what "paid for" actually looked like.
Sounding more than just a little red-faced, Zandi has amended his initial projections after learning of the $1.5 trillion of new taxes announced as part of Son-of-Stimulus on September 19. The economist amended his initial conclusions and has advised Congress that, "Beginning in 2013 and certainly into 2014, the plan is a drag on the economy because the stimulus starts fading away. So by 2015, the economy is in the same place as now, as if there were no jobs package."
Well, not exactly, Mr. Zandi.
We have no reason to disagree that neither unemployment or economic growth would be positively impacted in any significant way by Son-of-Stimulus. However, the government would have blown another half trillion dollars of borrowed money, all added to the debt, while raising taxes permanently by $150 billion per year forever. If that amounts to the "same place" to Mr. Zandi, or to the White House it explains in part why they haven't a clue how to get us out of this mess – or, to even stop making it worse.
John Ransom | Create Your Badge
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