By Allison Schoenauer
Elm Staff Writer
Last week, President Barack Obama proposed a bill to Congress called the American Jobs Act. This act maps out a short-term plan to re-invigorate the United States economy through a combination of tax cuts, incentivized changes to public school and banking systems, and changes to unemployment benefits. The bill is over two hundred pages long and the entire project, if passed, will cost $447 billion.
If your mind was blown by anything written in that last sentence, don’t worry. So was mine.
It’s hard to imagine what $447 billion dollars looks like. It’s like trying to imagine what color air is. It has no perceivable color. But Obama promised in the speech given Monday, Sept. 12 that the bill will be “fully paid for” and there would be little to no deficit increase in 2013. So how is the government going to theoretically pay for this theoretic bill?
The Jobs Act is part of a larger deficit reduction plan, which is designed to invigorate the job market. Simultaneously, a deficit plan will be enacted that will put the economy back on the rise, making the Jobs Act pay for itself.
Amanda Regan, president of Washington College’s College Republicans, has her doubts. “Of course I believe that the country needs to create more jobs,” she said. “However, I don’t buy into the President’s theory that it will pay for itself.”
She elaborated, “I understand that what President Obama means is that if people are employed that they are more likely to put the money that they are making back into the economy, but does he really expect that all $447 billion that this bill will cost will be reinvested in the economy?”
She has a point. If the plan works like it’s supposed to, then the average American will gain an extra $1,500 in 2012 from tax benefits, not to mention more people will have jobs and more sources of income. At the same time, they are recovering from a hard economic hit. But are people going to be putting their new money back into the economy? If you were an unemployed parent, would you spend the $4,000 to pay off the Jobs Bill or are you going to invest it to your kids’ education?
President Bill Clinton thinks so.
In a recent interview with Meet the Press, the 42nd president said, “If [the plan] is adopted, in 2012 GDP [or gross domestic product] growth will be somewhere between 1.3 percent and 2 percent higher than it otherwise would be. Unemployment will drop a percent, maybe more than a percent than it otherwise would.” So our standards of living will rise and more people will have jobs. Good. That would mean the bill is working like it should—creating jobs incentivizing employers to hire more people.
In the same interview, Clinton said, “It takes about five years” to recover from a recession. 2012 would make five years since the recession first started. So, by Clinton’s estimation, enough people would have saved up enough money so that when they enter the windfall that comes with the Jobs Bill, they are going to spend this money, and the economy will pick back up.
It seems presumptuous that we can guess that these benefits will come immediately and we will see the effects almost instantly. If the bill is passed this year, we can get statistics to show us how effective it is, see how many people have been employed under the jobs created by this bill, but we won’t see the full effect of the bill, and how it is affecting the economy, until 2013.
It won’t be until a year later, after people have accrued an amount of money to be put away for savings, that people will become comfortable with spending money again on things that are not a necessity. So this bill will, most likely, be successful, it’s just not going to be seen for another two years and, by then, there might be a new administration at the helm to take credit for the success.