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Economists: Jobs fix won't be quick
4:29am EST
Embattled Bernanke edges closer to a second term
Sun, Jan 24 2010
UPDATE 3-Embattled Bernanke edges closer to a second term
Sun, Jan 24 2010
Obama attacks on banks fall flat but may persist
Wed, Jan 20 2010
Most PopularMost Shared1.Apple pitches $499 iPad, takes on Amazon | Video
9:09am EST
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3:36am EST
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27 Jan 2010
5.Obama's big speech: did he get his groove back?
8:00am EST The best running shoe may be nature's own: study 27 Jan 2010 Apple unveils iPad, bets on new device class | Video 27 Jan 2010 Apple pitches $499 iPad, takes on Amazon | Video 9:09am EST Is clean tech China's moon shot? 27 Jan 2010 Super Bowl ad stokes U.S. abortion controversy 26 Jan 2010
Economists: Jobs fix won't be quick
Jeanne Cummings
Thu Jan 28, 2010 9:29am ESTFactboxPossible elements of jobs package
Mon, Dec 7 2009Related NewsPresident Obama pivots to jobs as key theme
Fri, Jan 8 2010
Obama pushes plans for more job creation
Tue, Dec 8 2009POLITICO (Washington) - President Barack Obama's job-creation program could produce a short-term political boost, but it's unlikely to significantly stem job losses and reduce the unemployment rate anytime soon, according to economists.
"People are out of work. They are hurting. They need our help. I want a jobs bill on my desk without delay," the president said during his State of the Union speech.
But even he acknowledged, that "the truth is, these steps won't make up for the 7 million jobs we've lost over the last two years."
Specifically, the president wants to give a tax break to businesses that hire workers, eliminate the capital gains tax on small business investments and use $30 billion in Troubled Asset Relief Program money to encourage community banks to lend to small businesses.
The president's package also would pump more government money into "green jobs" and infrastructure projects and extend unemployment benefits to those still out of work.
While Obama's emphasis on small business is new, many economists see the overall package as simply an extension of the $787 billion stimulus bill passed last year — and not a robust one, at that.
"He's trying to turn his microeconomic policies into some macroeconomic solution. He's grasping at straws," said Peter Morici, an economist at the University of Maryland.
"We are just going to have to ride this out over the next six months. If things don't get better in trade with China, we aren't getting out of this," he added.
Gus Faucher, director of macroeconomics at Moody's Economy.com, is not so negative, but he's not exuberant either.
"I think the package will make a difference around the edges," Faucher said. "But, at the end of the day, it will take a strong economic expansion to get job growth going again."
And Anne Kim, the economic program director for The Third Way, a moderate Democratic think tank, said the White House really isn't trying to secure a near-term boost in jobs.
"There is only so much anyone can do about the unemployment rate, and it's largely out of the government's control," said Kim.
"What they're aiming for is to lay out a long-term economic strategy and an agenda that re-engages middle-class Americans and persuades them that their best prospects for a better future lie with President Obama and Democrats," she added.
In a conference call with reporters before the speech, senior White House aides conceded that the jobs package has a familiar feel.
But National Economic Council Deputy Director Jason Furman said many of the problems — from job creation to government spending — "are all exactly the same as last year. A lot of the responses are building on what was done over the last year."
The newest emphasis in the package is its focus on small businesses, which are the largest generators of new jobs.
Many entrepreneurs and locally operated businesses have complained bitterly that they can't gain access to credit, despite the billions taxpayers poured into big banks to stabilize them last year.
By using TARP repayments from big banks to help small businesses, the White House hopes to show that Main Street is benefiting from the administration's efforts as well as Wall Street.
"Through sheer grit and determination, these companies have weathered the recession and are ready to grow. But when you talk to small business owners in places like Allentown, Pa., or Elyria, Ohio, you find out that even though banks on Wall Street are lending again, they are mostly lending to bigger companies. But financing remains difficult for small business owners across the country," Obama said.
As for the tax break for new hires, Morici questions whether it will have much impact without broader evidence that the economy is in full recovery. "Without customers, these guys aren't going to be hiring anyway," he said.
Robert Shapiro, a former Clinton administration economic adviser, said in a recent posting on the website of his firm, Sonecon, that the White House should focus on cutting the payroll taxes of employers who increase their work force.
Such a tax would be singularly focused on new jobs and could help avoid the nettlesome problem of defining which new hires would qualify for a tax break under the Obama proposal.
"Its projected power to boost follows directly from its success in creating jobs, since the new workers would spend virtually everything they earn," Shapiro argued.
Expansion of the stimulus spending program on infrastructure and green jobs could have more impact, but economists say it's unclear how quickly that money could be approved by Congress and pushed out into the market.
The vast majority of the big infrastructure projects approved under last year's stimulus programs are just now getting started. The White House has indicated that the bidding process could be accelerated for a second round this year because there wasn't enough money for all the worthy projects.
If that's the case, a quick turnaround could do some good by expanding the ongoing hiring of workers for the roads and bridge construction projects that economists say have indeed helped to bend the job loss rate.
But the benefit from the green jobs program — nicknamed by some as "cash for caulkers" because of its emphasis on home retrofitting — may not be as effective.
To be sure, the green job initiative has led to job creation. The wind industry recently told the New York Times that stimulus cash was vital to helping it endure the economic downturn.
And there is plenty of anecdotal evidence of business expansions prompted by the money being pumped into weatherizing houses and other projects. Evergreen Recycling, a Las Vegas firm, hired 60 people with the help of stimulus funds.
But Faucher said "green jobs are a small piece of the puzzle. We can't count on that to spur significant job growth."
He said a more efficient and effective way the White House and Congress could influence the unemployment rate would be to ship billions in aide to state and local governments, which are on the verge of laying off hundreds of thousands of workers.
In a recent interview with POLITICO, National Economic Council Chairman Larry Summers was lukewarm to that proposal, noting that some states didn't use stimulus dollars last year to save jobs but put it in "rainy day" accounts.
"This is the rainy day, so hopefully they will start using them," said Faucher.
One Obama proposal that the economists all agreed would be prudent is the expansion of unemployment benefits.
"Jobless people can be counted on to spend everything extra they receive," said Shapiro. "It also has the virtue of doing some good for millions of people."
(c) Capitol News Company, LLC 2010
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More from Reuters Ford posts first full-year net profit since 2005
DETROIT (Reuters) - Ford Motor Co reported 2009 earnings of $2.7 billion on Thursday, its first full-year profit since 2005, and said it expects a 2010 profit amid market share gains and a slow U.S. auto sales recovery.
Durable goods orders climb while jobless claims dip
Toyota extends massive safety recall to Europe | Video
AT&T earnings up 26 percent, driven by wireless
P&G, Colgate top expectations as consumers spend more
Nokia, Motorola boast rising smartphone sales
» More Top NewsWall St lobs volley at Obama
Executives say the president is waging "a populist battle against the banks" and question whether proposals will ever become law. Full Article | Full Coverage
Financial regulatory reform falls apart
Banks double down on risk
Live Coverage: World Economic Forum
Davos 2010Analysis:
Is the iPad a Kindle-killer?
The tech world is buzzing with the launch of Apple's sleek new iPad. Does this spell the end for Kindle? Full Article
Slideshow: Meet the iPad
AT&T retains Apple glitz with iPad deal
Leftover Apple...
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YOU'RE VIEWING:
United StatesUSAfricaAFArabicArgentinaARBrazilBRCanadaCAChinaFranceFRGermanyDEIndiaINItalyITJapanLatin AmericaLTAMMexicoMXRussiaRUSpainESUnited KingdomUKMarketsU.S. MarketsGlobal MarketsIndicesDealsM&APrivate CapitalRegulationSmall BusinessGreen BusinessEconomyStocksHot StocksFundsCurrenciesCommoditiesFuturesBondsAnalyst ResearchAlertsPortfolio» All MarketsU.S. & World NewsU.S.WorldTechnologyPoliticsHealthHousing MarketHealthcare ReformMediaG20ScienceLifestyleEntertainmentOddly EnoughSportsFilmMusicTelevisionFashion» All U.S. & World NewsToday's Hot TopicsDavosAppleBank RegulationToyotaHaiti EarthquakeState of the UnionDOW ----NASDAQ ----S&P 500-2.341,095.16» All IndicesMultimediaPicturesVideosAround the GlobeCountries in FocusBrazilAfghanistan & PakistanChinaIranJapanRussia» All CountriesEnergy-0.79%Integrated Oil & Gas, Coal
Basic Materials-1.18%Precious Metals & Minerals, Aluminum
Industrials-0.34%Engineering & Construction, Environmental Services
Cyclical Goods & Services-0.35%Auto & Truck Manufacturers, Consumer Electronics
Non-Cyclical Goods & Services+0.06%Beverages Brewers, Tobacco, Food Processing
Financials-0.35%Banks, Investment Services, Insurance Life & Health
Healthcare-0.04%Advanced Med. Equipment, Biotechnology, Pharmaceuticals
Technology+0.13%Computer Hardware, Software, Semiconductors
Telecoms-0.32%Integrated Telecoms, Wireless Telecoms
Utilities-0.78%Electric, Natural Gas, Water & Others
Sector Percentage changes powered by Thomson Reuters Indices.
More IndustriesOil & Gas Exploration & ProductionSteelChemicals DiversifiedAerospace & DefenseAirlinesApparel & AccessoriesPublishingMedia DiversifiedHousehold ProductsReal Estate OperationsHealthcare Facilities» All IndustriesDavos 2010Follow the latest from the World Economic Forum in Davos, Switzerland, January 27-31. Full Coverage
Live coverage: WEFChina's moon shot?How to give an openingWatch Davos videoInsightApple says AT&T a "great" partner Tishman’s StuyTown capitulationIs Obama a party animal?U.S. commits to AfghanistanReuters East Antarctic bureau closesKashmir marks 20 years of conflictJoan Jett rocks SundanceCoupon use up 27 percent last yearApple plugs iPod into the sunRoller disco lives on in ChinaOpinionToyota gives Detroit an opening — and a warningAntony CurrieChina needs fertilizer more than steelRobert CyranGlobal financial regulatory reform falls apartFelix Salmon Felix SalmonMediaFileShop TalkDealZoneFaithWorldFront Row WashingtonMacroscopeReuters PhotographersGood, Bad & UglyOddly EnoughEnvironment ForumChanging ChinaEntrepreneurialPakistan: Now or Never?AxisMundi Jerusalem» All Analysis & OpinionLoginRegister Login or registerLatest from
My Topics0 Saved
Items0 Suggested
for You
0 Recent
Companies
CloseArticleSaveEmailPrintReprintsMore Reuters Results for:""peter morici""
Economists: Jobs fix won't be quick
4:29am EST
Embattled Bernanke edges closer to a second term
Sun, Jan 24 2010
UPDATE 3-Embattled Bernanke edges closer to a second term
Sun, Jan 24 2010
Obama attacks on banks fall flat but may persist
Wed, Jan 20 2010
Most PopularMost Shared1.Apple pitches $499 iPad, takes on Amazon | Video
9:09am EST
2.Apple unveils iPad, bets on new device class | Video
27 Jan 2010
3.Apple's iPad may underwhelm Hollywood
3:36am EST
4.DAVOS-Soros says Obama bank levy premature, backs other plans
27 Jan 2010
5.Obama's big speech: did he get his groove back?
8:00am EST The best running shoe may be nature's own: study 27 Jan 2010 Apple unveils iPad, bets on new device class | Video 27 Jan 2010 Apple pitches $499 iPad, takes on Amazon | Video 9:09am EST Is clean tech China's moon shot? 27 Jan 2010 Super Bowl ad stokes U.S. abortion controversy 26 Jan 2010
Economists: Jobs fix won't be quick
Jeanne Cummings
Thu Jan 28, 2010 9:29am ESTFactboxPossible elements of jobs package
Mon, Dec 7 2009Related NewsPresident Obama pivots to jobs as key theme
Fri, Jan 8 2010
Obama pushes plans for more job creation
Tue, Dec 8 2009POLITICO (Washington) - President Barack Obama's job-creation program could produce a short-term political boost, but it's unlikely to significantly stem job losses and reduce the unemployment rate anytime soon, according to economists.
"People are out of work. They are hurting. They need our help. I want a jobs bill on my desk without delay," the president said during his State of the Union speech.
But even he acknowledged, that "the truth is, these steps won't make up for the 7 million jobs we've lost over the last two years."
Specifically, the president wants to give a tax break to businesses that hire workers, eliminate the capital gains tax on small business investments and use $30 billion in Troubled Asset Relief Program money to encourage community banks to lend to small businesses.
The president's package also would pump more government money into "green jobs" and infrastructure projects and extend unemployment benefits to those still out of work.
While Obama's emphasis on small business is new, many economists see the overall package as simply an extension of the $787 billion stimulus bill passed last year — and not a robust one, at that.
"He's trying to turn his microeconomic policies into some macroeconomic solution. He's grasping at straws," said Peter Morici, an economist at the University of Maryland.
"We are just going to have to ride this out over the next six months. If things don't get better in trade with China, we aren't getting out of this," he added.
Gus Faucher, director of macroeconomics at Moody's Economy.com, is not so negative, but he's not exuberant either.
"I think the package will make a difference around the edges," Faucher said. "But, at the end of the day, it will take a strong economic expansion to get job growth going again."
And Anne Kim, the economic program director for The Third Way, a moderate Democratic think tank, said the White House really isn't trying to secure a near-term boost in jobs.
"There is only so much anyone can do about the unemployment rate, and it's largely out of the government's control," said Kim.
"What they're aiming for is to lay out a long-term economic strategy and an agenda that re-engages middle-class Americans and persuades them that their best prospects for a better future lie with President Obama and Democrats," she added.
In a conference call with reporters before the speech, senior White House aides conceded that the jobs package has a familiar feel.
But National Economic Council Deputy Director Jason Furman said many of the problems — from job creation to government spending — "are all exactly the same as last year. A lot of the responses are building on what was done over the last year."
The newest emphasis in the package is its focus on small businesses, which are the largest generators of new jobs.
Many entrepreneurs and locally operated businesses have complained bitterly that they can't gain access to credit, despite the billions taxpayers poured into big banks to stabilize them last year.
By using TARP repayments from big banks to help small businesses, the White House hopes to show that Main Street is benefiting from the administration's efforts as well as Wall Street.
"Through sheer grit and determination, these companies have weathered the recession and are ready to grow. But when you talk to small business owners in places like Allentown, Pa., or Elyria, Ohio, you find out that even though banks on Wall Street are lending again, they are mostly lending to bigger companies. But financing remains difficult for small business owners across the country," Obama said.
As for the tax break for new hires, Morici questions whether it will have much impact without broader evidence that the economy is in full recovery. "Without customers, these guys aren't going to be hiring anyway," he said.
Robert Shapiro, a former Clinton administration economic adviser, said in a recent posting on the website of his firm, Sonecon, that the White House should focus on cutting the payroll taxes of employers who increase their work force.
Such a tax would be singularly focused on new jobs and could help avoid the nettlesome problem of defining which new hires would qualify for a tax break under the Obama proposal.
"Its projected power to boost follows directly from its success in creating jobs, since the new workers would spend virtually everything they earn," Shapiro argued.
Expansion of the stimulus spending program on infrastructure and green jobs could have more impact, but economists say it's unclear how quickly that money could be approved by Congress and pushed out into the market.
The vast majority of the big infrastructure projects approved under last year's stimulus programs are just now getting started. The White House has indicated that the bidding process could be accelerated for a second round this year because there wasn't enough money for all the worthy projects.
If that's the case, a quick turnaround could do some good by expanding the ongoing hiring of workers for the roads and bridge construction projects that economists say have indeed helped to bend the job loss rate.
But the benefit from the green jobs program — nicknamed by some as "cash for caulkers" because of its emphasis on home retrofitting — may not be as effective.
To be sure, the green job initiative has led to job creation. The wind industry recently told the New York Times that stimulus cash was vital to helping it endure the economic downturn.
And there is plenty of anecdotal evidence of business expansions prompted by the money being pumped into weatherizing houses and other projects. Evergreen Recycling, a Las Vegas firm, hired 60 people with the help of stimulus funds.
But Faucher said "green jobs are a small piece of the puzzle. We can't count on that to spur significant job growth."
He said a more efficient and effective way the White House and Congress could influence the unemployment rate would be to ship billions in aide to state and local governments, which are on the verge of laying off hundreds of thousands of workers.
In a recent interview with POLITICO, National Economic Council Chairman Larry Summers was lukewarm to that proposal, noting that some states didn't use stimulus dollars last year to save jobs but put it in "rainy day" accounts.
"This is the rainy day, so hopefully they will start using them," said Faucher.
One Obama proposal that the economists all agreed would be prudent is the expansion of unemployment benefits.
"Jobless people can be counted on to spend everything extra they receive," said Shapiro. "It also has the virtue of doing some good for millions of people."
(c) Capitol News Company, LLC 2010
Ads by GoogleWhat's This?Small Business Loans
Business Loans from $50k to $30mil. Great rates at Travis Credit Union
www.traviscu.org
Small Business Loans
Get Up to $50K. Bad Credit OK. No Hidden Fees. Apply Online Today!
www.CorporateCreditSuccess.com
Finance a Small Business
Helpful information on financing a small business effectively.
www.wbsonline.com
More from Reuters Ford posts first full-year net profit since 2005
DETROIT (Reuters) - Ford Motor Co reported 2009 earnings of $2.7 billion on Thursday, its first full-year profit since 2005, and said it expects a 2010 profit amid market share gains and a slow U.S. auto sales recovery.
Durable goods orders climb while jobless claims dip
Toyota extends massive safety recall to Europe | Video
AT&T earnings up 26 percent, driven by wireless
P&G, Colgate top expectations as consumers spend more
Nokia, Motorola boast rising smartphone sales
» More Top NewsWall St lobs volley at Obama
Executives say the president is waging "a populist battle against the banks" and question whether proposals will ever become law. Full Article | Full Coverage
Financial regulatory reform falls apart
Banks double down on risk
Live Coverage: World Economic Forum
Davos 2010Analysis:
Is the iPad a Kindle-killer?
The tech world is buzzing with the launch of Apple's sleek new iPad. Does this spell the end for Kindle? Full Article
Slideshow: Meet the iPad
AT&T retains Apple glitz with iPad deal
Leftover Apple...
Technology© Copyright 2010 Thomson Reuters Editorial Editions: Africa Arabic Argentina Brazil Canada China France Germany India Italy Japan Latin America Mexico Russia Spain United Kingdom United StatesReuters
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About Thomson Reuters
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Acquisitions Monthly
Buyouts.com
Buyouts Europe:
Buyouts Conferences:
Venture Capital Journal
EVCJ
International Financing Review
International Securitisation Report
Project Finance International
PEhub.com
PE Week
Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.
NYSE and AMEX quotes delayed by at least 20 minutes. Nasdaq delayed by at least 15 minutes. For a complete list of exchanges and delays, please click here.
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