Obama Plan Prevents 2012 Recession: Economists

Jun 2011
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From Bloomberg:

"President Barack Obama’s $447 billion jobs plan would help avoid a return to recession by maintaining growth and pushing down the unemployment rate next year, according to economists surveyed by Bloomberg News.

The legislation, submitted to Congress this month, would increase gross domestic product by 0.6 percent next year and add or keep 275,000 workers on payrolls, the median estimates in the survey of 34 economists showed. The program would also lower the jobless rate by 0.2 percentage point in 2012, economists said.

Economists in the survey are less optimistic than Treasury SecretaryTimothy F. Geithner, who has cited estimates for a 1.5 percent boost to gross domestic product. Even so, the program may bolster Obama’s re-election prospects by lowering a jobless rate that has stayed near 9 percent or more since April 2009.

The plan “prevents a contraction of the economy in the first quarter” of next year, said John Herrmann, a senior fixed-income strategist at State Street Global Markets LLC in Boston, who participated in the survey. “It leads to more retention of workers than net new hires.”

Some 13,000 jobs would be created in 2013, bringing the total to 288,000 over two years, according to the survey. Employers in the U.S. added 1.26 million workers in the past 12 months, Labor Department data show.

Obama’s plan, announced on Sept. 8, calls for cutting the payroll taxes paid by workers and small businesses while extending unemployment insurance. It also includes an increase in infrastructure spending and more aid for cash-strapped state governments.

‘What Happens?’

“The important thing to consider is: What happens if we don’t do anything?” said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida. He said the program “very well could” forestall a recession in early 2012.

“Most of all, it prevents a serious drag on the economy next year” from current programs expiring, said Brown, who estimates the Obama plan would add 0.5 percent to GDP in 2012.

A reduction in government spending, the end of the payroll- tax holiday and an expiration of extended unemployment benefits would cut GDP by 1.7 percent in 2012, according to JPMorgan Chase & Co. chief U.S. economist Michael Feroli in New York. Instead, the Obama proposal makes up for that potential loss and may add a net 0.1 percent to the economy, he estimates...."

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Politico is also reporting this article.


 

the watchman

Former Staff
Jul 2011
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Economists in the survey are less optimistic than Treasury SecretaryTimothy F. Geithner, who has cited estimates for a 1.5 percent boost to gross domestic product. Even so, the program may bolster Obama’s re-election prospects by lowering a jobless rate that has stayed near 9 percent or more since April 2009.
Which is why Republicans won't support it. I half-way want Obama to start complimenting Republicans on their looks, just to see if they'll punch themselves in the face. He can start with Joe Walsh.
 

anonymous

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Jun 2008
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A reduction in government spending, the end of the payroll- tax holiday and an expiration of extended unemployment benefits would cut GDP by 1.7 percent in 2012
The legislation, submitted to Congress this month, would increase gross domestic product by 0.6 percent next year and add or keep 275,000 workers on payrolls, the median estimates in the survey of 34 economists showed. The program would also lower the jobless rate by 0.2 percentage point in 2012, economists said.
Did I read this right? The budget he recently agreed to is going to cut GDP by 1.7% and this $477 billion plan will increase GDP by 0.6% with an addition of only 275,000 jobs reducing the unemployment by 0.2%? My question is where is the net gain for the economy?
 
Jun 2011
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Did I read this right? The budget he recently agreed to is going to cut GDP by 1.7% and this $477 billion plan will increase GDP by 0.6% with an addition of only 275,000 jobs reducing the unemployment by 0.2%? My question is where is the net gain for the economy?
The net gain is the simple-to-grasp fact that this will keep up from re-entering a recession. Or do you want to head back into a major recession?
 
Jul 2011
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Which is why Republicans won't support it.
Or you know, the unconstitutional and excessive spending, offset by unrealistic hopes of bipartisan agreement on the debt supercommittee and / or the President's plans to make taxes in this country even less fair.

But nah, let's just forget that there are substantive philosophical differences between left and right in this country.
 
Jun 2011
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Or you know, the unconstitutional and excessive spending, offset by unrealistic hopes of bipartisan agreement on the debt supercommittee and / or the President's plans to make taxes in this country even less fair.

But nah, let's just forget that there are substantive philosophical differences between left and right in this country.
Feel free to explain how spending is unconstitutional. And feel free to define excessive.
Like the 5 trillion in extra debt that GWB 43 racked up? Was that unconstitutional? Was that excessive?
And how does the President's plan make taxes less fair, esp. since middle class taxes are the lowest since the 1950s and the taxes for the rich are LOWER than the 1950s?
 

michaelr

Former Staff
Dec 2006
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Oh come on. This assumes that we are not in a recession, and well anyone believing that should keep their comments on economic issues to themselves.

250K a job, and Geithner calls that efficient.

Nice propaganda piece.
 

anonymous

Former Staff
Jun 2008
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The net gain is the simple-to-grasp fact that this will keep up from re-entering a recession. Or do you want to head back into a major recession?
Well, to me we never came out of this recession. Not by historical standards anyway. In fact we are fast approaching depression levels in housing declines and unemployment. With this fuzzy math we will continue the fall by spending monies that have yet to be materialized. In essence, we are already spending potential growth and therefore will see little growth at all. If anyone thinks a 0.6% increase in GDP will prevent another "recession" then maybe they do not really understand all the dynamics involved and are hoping for the best.
 
Jul 2011
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Feel free to explain how spending is unconstitutional.
Sure.

Show me in the Constitution where the federal government is given power or authority related to topic x,y,z...

And feel free to define excessive.
Sure. Do we have a surplus right now? If not, any additional spending is deficit spending, yeah?

Like the 5 trillion in extra debt that GWB 43 racked up? Was that unconstitutional? Was that excessive?
Quite a bit, yes. Expanding Medicare, expanding foreign aid, expanding science funding, bailing out companies that deserved to die...

And how does the President's plan make taxes less fair, esp. since middle class taxes are the lowest since the 1950s and the taxes for the rich are LOWER than the 1950s?
The Bush tax cuts commonly maligned as cuts for the rich lowered every bracket and made the overall taxation more flat.

The Obama plan keeps the Bush cuts for most and then slaps a higher burden at the top, making taxation even less equitable than if you were to abandon all the Bush era income tax cuts.

That is not progress.