My company laid off 15% or so of the workforce on Friday. Welcome to 2009.
I wonder where we will be at the end of the year when 10-12 million people are unemployed. What if my guess is off and we are talking about 20 million unemployed Americans? I can imagine how it felt to be told your position has been eliminated. I’ve been in the same shoes in the past. Retail construction is not a growing enterprise at the moment. Either my employer will reinvent itself in rapid fashion (which it is attempting) or the company will continue to suffer.
In uncertain times, I feel certain of several things. This depression will last from several years to more than a decade. The country will be reshaped at the end of the economic realities currently being wrestled with. “Stimulus” will not solve anything in the long run. From my own pocketbook to the way the federal government handles money, a fundamental shift must take place in the way we think about money, credit and savings. I don’t see how we can ever go back to “easy credit for everyone.” I’m not particularly interested in what Obama has to say about the matter because he is no more an economist than I am. I’m sure he has some economists advising him but it isn’t clear to me why I should listen to them either. Where did we get this idea that government is supposed to create jobs? Most people seem to accept as a given that the federal government should make up jobs to shore up a failing economy. Now we’re arguing over who has a better plan to create jobs out of thin air.
CEA Director Romer’s view is that the House analysis is absolutely incorrect. The CEA estimates that the Republican plan would create only 1.7 million jobs, compared to 4.2 million for the Democratic plan.
Question: The House claims that based on the research of CEA Chair Christy Romer, their plan would create 6.2 million jobs. Isn’t that a more effective way of jumpstarting the economy?
Answer: The Republican House analysis is flat wrong in its claim that the House Republican stimulus is more effective. No matter what your analytical assumptions, as long as they are consistent the plan the President supports would result in substantially greater job creation than the House Republican plan.
Independent groups that have analyzed the President’s plan — from Macroeconomic Advisors to former McCain advisor Mark Zandi — have confirmed that the President’s plan will create between 3 – 4 million jobs–twice the number of the House plan. The President supports takes a broad, comprehensive approach. It includes substantial tax cuts – many of which mirror the provisions in the House Republican plan. But it also includes new spending programs that many economists across the spectrum believe will help create jobs and give our economy a kickstart right now.
Question: But doesn’t Dr. Romer’s research show that the economic impact of tax cuts is higher than even the Administration is assuming?
Answer: Dr. Romer’s research suggests that all types of fiscal stimulus, both spending and tax cuts, might well have a larger impact than is typically assumed and is assumed in the CEA’s analysis. It would be great if that were so. It would mean more job creation and more economic activity — which is exactly what we need right now. The Administration has based its analyses on more modest assumptions that are in line with those several independent forecasters – Republican and Democrat alike.
We should have an open discussion about these analytical issues.
We cannot afford to play political games with apples-to-oranges comparisons. Such political games distract our attention from the magnitude of the substantive task at hand.
What are all these jobs that will be created? How long will they last? What sort of long-term impact will they have on the nation’s economy moving forward? Who is going to pay the salaries of the people who take these jobs? There really are no authoritative answers to these questions.
The White House view that government spending is a potent way to get out of a recession is, in essence, a bet on a theory. The theory might be right, but it is certainly one about which many economists have doubts.
Economists may argue and debate all they want. None of them are likely to be laid off in 2009. That pleasure is reserved for the rest of us. For a few dozen of my former co-workers I wish you only the best and hope you find new opportunities soon.