Will The President’s Jobs Plan Work?
Jay Kaplan
President Obama is barnstorming the country to promote his American Jobs Act bill
with the premise that spending money now will pay off later for the country.
According to CU-Boulder economist Jay Kaplan, the president’s claim is based on
basic economic principles.
CUT 1 “The general economic principle is that the most effective way to create
additional economic activity is through government spending rather than tax cuts.
So government spending is always going to be more effective in creating jobs. (:14)
So to the fact that his job bill addresses some spending on infrastructure, and even
extending benefits for the unemployed, that puts money in people’s pockets that
they’ll spend.” (:25)
Kaplan says, from a basic economic standpoint, that tax cuts during a recession are
not advised. But, he says, the president’s $447 billion jobs package has a tax cut that
might work.
CUT 2 “If he’s going to cut taxes the payroll side is a good way to go because
everyone who works pays payroll taxes. So it’s much more affective in putting
money in the pockets of lower income and working class Americans, then say a
Federal income tax cut where the lower class and the middle class don’t pay much of
that in comparison to the payroll tax.” (:20)
To help pay for the jobs package the president has proposed eliminating many tax
loopholes and write-offs for individuals earning more than $200,000 and families
earning more than $250,000. And while Republican leaders have voiced approval of
tax breaks and overhauling the tax laws, they still disagree that new spending will
help solve the nation’s economic problems.
The president sent the jobs bill to Congress Sept. 12, but so far there has not been a
vote on it.
-CU-