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09/11/2011

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TANSTAAFL

It is hard to improve upon Posner's critique of the new Obama fig leaf masquerading as an economic stimulus proposal.

contradiction much?

Wait...is it just me or do these two arguments totally contradict each other:


"Extending unemployment benefits...will actually reduce the hiring of the unemployed by reducing...intensity of job search by unemployed persons"

and

"there is no labor shortage. Employers have all the employees they want to have"

It seems untenable to assert that it would be good to let unemployment benefits expire because it would cause people to more frantically search for jobs and then, in the next paragraph, claim that there are simply no jobs to be had even if we try to create incentives for companies to create more with tax breaks.

Mitchell Khong

It is worth mentioning that the Obama administration already tried to implement tax credits for the hiring of new or unemployed workers. It is a bad idea for reasons that Posner listed, and it was rejected by Congress even when it was still controlled by Obama's allies. The fact that it is being proposed yet again suggests that either the Obama administration has been slow to learn or that the proposal is merely a political ploy.

Dick King

No contradiction.

The number of unemployed is governed by labor demand.

The extent to which the hires are from the pool of long-term unemployed rather than recently unemployed or currently working depends in part on the search effort by the currently moderate-term unemployed.

-dk

contradiction much?

Sure, I will concede that side of the double bind--however that also means that you must concede that Posner's claim that unemployment benefits decrease intensity of job searching is then totally baseless in this context because no matter how hard the unemployed look for jobs, to quote Posner, "[e]mployers have all the employees they want to have."

Given that there are not enough jobs period, the insinuation that we should allow millions to drop of unemployment to set a fire under their pants is not only economically bankrupt but also reflects a total lack of empathy for the circumstances of the jobless.

Not only would extending unemployment benefits save millions of families from dire poverty, and thus be the ethical thing to do, it would put cash in the hands of people who will actually spend it (thus stimulating demands and growth).

an observer

since there is little change the Republicans would ever do anything for the good of the country, or might in any way lead to Obama's re-election, Obama obviously framed his package for maximum political effect.

the plan has one great attribute---it brings into focus our FICA taxes were are both horribly regressive and anti-growth. A tax on a job, obviously, out to be eliminated.

The albatross around Obama's neck are all of his supporters who are so impractical they just don't get it. Observer has been reading Call Me Tom, the new Eagleton biography. Boy did Tom understand the shortcomings of today's liberals.

Obama should use this speech as a springboard to propose all kinds of changes and programs, starting with ending the income tax and replacing it with a VAT. Liberals will wring there hands about a VAT not being progressive, but the current tax code is regressive, especially as applied and we need lots more more, especially for basic research

see page 25 at this link

http://www.aaas.org/spp/rd/rdreport2012/12pch02.pdf

Jack

"The problem with government-financed construction projects as a method of stimulating employment and the good things that come with higher employment is delay, which we saw with the original (February 2009) $787 billion stimulus program, a significant portion of which was earmarked for construction and related projects."

........ this has been the traditional (mebbe) wisdom in short recessionary dips that would fit the term "cyclical" but with the construction sector being close to decimated with NO chance of coming close to recent levels in our life time.... we should begin the construction stimulus, and continue it for the coming decade.

Posner is right about "red tape" as the first stim-projects had to both begin in a short time and be finished in 18 mos. Highway and other projects can be greatly delayed by bad winters, and need one mention having half the nation under water in the "good building months".

But there's more, it takes time for those idled by housing starts having dropped from 2.5 million to 350,000 to move from light residential crafts to heavier, infrastructure related projects. Even if the guy is trained, happens to have some of the right hand tools etc... there is still the delay as a company obtains a contract, moves into place and hires/trains the necessary help.

This is a DEEP mess, and will not respond to a quick "shot in the arm". The $90 - $135 if state aid is counted isn't much and should be continued until most of the estimated $2 trillion of long delayed repairs and upgrades are accomplished.

As for worrying about "helping when the economy is recovering" what is to worry? That these piddly amounts, or a roaring rebound is going to cause (haha!) labor shortages? Ha! enough to give those of median and lower incomes a chance to see some tiny bit of "trickle down?" We've enough labor on the side that coupled with predictable productivity gains if labor became (at all) in short supply to grow at 5% for the coming decade. Please wake me if inflation triggered by labor shortages rears its (ugly to some) head.

NEH

An unemployment problem in America? Imagine that! Once again, it is the common problem within American Government. To little, too late. This program should have been placed on the table twelve to twenty four months ago, if not earlier, not last week. It's going to take at least this long to get the program rolled out to Main Street (the Red Tape issue). The main problem as I see it, is that Washington, the Media, Finance, Commerce and Industry has suffered from a mistaken mindset, "It's only a Recession (the current economic blinders problem-Depressions are a thing of the past) and things will be back to normal in about twelve months. Oops, maybe we were wrong, this is going to be an extended Recession. Let's call it the Great Recession." Hey! Maybe this is a what a Depression looks like in a modern Global "Free Trade" Economy. Right ...! And once again we're back to "To little too late".

At least it's a step in the right direction. Someone's recognized the fact that the indvidual consumer can't and won't pull the Economy out of this Depression and that's it's going to require the massive support and action by not only the Government, but also Business and Industry.

Matt

"Tax credits for hiring the unemployed are likely to have no net effect on unemployment at all, because there is no labor shortage. Employers have all the employees they want to have, which is why there is such a rate of un- and underemployment and discouraged workers; employers lured by the tax credit to hire an unemployed worker are likely to lay off one of their existing employees to make room for the new employee. And finally, financial assistance in refinancing home mortgages has been tried, and is a proven failure because of restrictions in mortgage instruments on refinancing and the poor credit of the homeowners who need refinancing the most."

I think that this is pretty accurate. It brings up the question as to why the president seems to think that government is always the answer to an issue. It seems to always be a question of what the government will try to fix with tax increases, incentives, etc. rather than IF the government should do anything at all.

NEH

Matt, "Why does the President think that government is always the answer to an issue?" Because he's the Head of the Government and answers to the people of the United States. When there is a problem, he is required to respond. That's why he was elected. Do you think that the Corporate Executives and Boards of Directors are going to respond to a Macroeconomic issue or problem? They are only concerned about their on little baliwicks and feathering their own little nests. Much like the Bank of America who is going to be laying off thirty thousand individuals in the next few months...

An employment problem in America, evidently not Corporate America's problem. Whose problem is it?

Jimbino

It seems that reducing labor costs would stimulate those employers who have excess capital and are ready to expand. And a hiring bonus for employers to hire the long-term unemployed break the vicious cycle where person unemployed for two years only becomes more unemployable without being able to rectify the situation.

TANSTAAFL

A VAT on blog commentary advocating governmental economic stimulus as the solution would be a great source of tax revenue, but for the fact that such commentary adds no value.

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Do you think that the Corporate Executives and Boards of Directors are going to respond to a Macroeconomic issue or problem? They are only concerned about their on little baliwicks and feathering their own little nests. Much like the Bank of America who is going to be laying off thirty thousand individuals in the next few months...

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Jack

NEH Exactly.. but economists know that government typically can not (will not) respond fast, or aggressively enough.

They're counting their beans and (haha!) "cuts" and "savings" over ten years but doing their macro in year or two dabs?

Matt; I don't expect miracles from the new hire bonuses either, but our very small businesses said to be the incubator of jobs often run on thin margins, so the bonus might tip the scale in favor of a hire. We have to be optimistic that the match will prove productive and continue....... a biggie in that person's life. A job is a lot better than no job. (Something as NEH touches on doesn't quite sink in for those in the DC area where joblessness is low)

And....... what really is the government risking? Is the bonus $2500? Perhaps less than ten week's unemployment costs? And other low income subsidies? If the job last three months its a win-win, eh?

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I think this is a shame otherwise it is a brave decision.

an observer

Geithner told CNBC this A.M. that he was a fiscal hawk. We now know that Obama is the same, by which I mean he is a tax and spend Democrat of the Old School, in contrast to the borrow and spend Republicans who dug the whole we are trying to escape.

Listening to Geithner his pitch was simple. The benefits are worth the costs.

Jack

Observer -- a few are now discussing our being a LOW tax nation. The fixes are, politically, confusing for the public (like lowering stated rates but closing loopholes) and DIFFICULT to fix as each loophole has the group that got it put in in the first place.

Gspn was asked about "tax expenditures" and interestingly testified that they should be Zero in theory. "A poor way........" Indeed! and HONEST capitalism would have FEW gifts from Congress, perhaps some for new tech, or to urge us to make a needed transition (as LOWERING our dependence on burning fossil fuels, but they should be a small percentage of the overall tax revenue policy.

Ha! as for "tax and spend" Geithner and others are bright enough to know it's not "we" who are bankrupt but that our government is not faced with the many sins of the past of the SPEND, SPEND and BORROW bigtime "conservatives".

Someone, perhaps all of us, got away with spending and running up the C-card now it has to stop or at least be slowed. "Trouble is" it's only those at the upper end of these graphs who have anything left with which to pay bills.

http://lanekenworthy.net/2008/03/09/the-best-inequality-graph/

And! some of 'em profited greatly! War profiteers? Banksters and other WS thieves? CEO's who won't answer the alarm unless "compensated" at over 400 times what they pay those doing the work, job exporters like Romney. Wouldn't hurt a thing to roll back Bushy's "unaffordables" and then some.

yangxinle

The writing is good, it is very helpful to me

an observer

Facts:

take a look at this graph what conservatism has done to USA and about post 9/11 drop in jobs

http://www.washingtonpost.com/blogs/ezra-klein/post/the-jobs-crisis-began-in-2001/2011/08/25/gIQAMK3eSK_blog.html

Jina Van

450 billion?!?, I cannot even imagine this sum, but hope that the politicians spend money on the right purpose!

NEH

The "weirdness" continues in the Republican dominated House of Representatives... They just passed Legislation attempting to gut the National Labor Review Board. And we're still talking about the virtues and vices of "Tax and Spend Democrats" or "Cut Taxes and Spend Republicans". John Q. Public can expect much worse from this House in the days and Months to come. Is the working man and woman finally doomed in modern America?

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Obama Admin is working hard to provide employment to citizen. So i will take it positively. Because they are trying. And that is what they can do.

TANSTAAFL

Jefferson (including his editors) said it best.

"He has refused his assent to laws, the most wholesome and necessary for the public good. . . .

He has erected a multitude of new offices, and sent hither swarms of officers to harass our people, and eat out their substance. . . .

He has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his assent to their acts of pretended legislation: . . .

For cutting off our trade with all parts of the world;

For imposing taxes on us without our consent; . . .

For taking away our charters, abolishing our most valuable laws, and altering fundamentally the forms of our governments; . . ."

Do Obama and his defenders not recognize, 235 years hence, that he is repeating the errors of George III?

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