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4B Daily News – Thursday, September 8, 2011 Obama's best jobs plan might be status quo WASHINGTON (AP) — First, do no harm. Econ- omists say the most impor- tant part of the jobs plan President Barack Obama will unveil Thursday night is the renewal of two mea- sures already in place — a cut in Social Security taxes and emergency aid for the unemployed. His new proposals, like spending more for trans- portation projects and cut- ting taxes for companies that hire the unemployed, probably wouldn't add many jobs, they say. Not soon, anyway. ''These are not bold, new, big programs,'' says Nariman Behravesh, chief economist with IHS Global Insight. ''You put every- thing together, it's going to be pretty small.'' The job market needs big help. In August, the economy generated zero job growth. And the unemploy- ment rate is 9.1 percent, a level more typical for a recession than for a recov- ery in its third year. For Obama, who also faces sinking approval rat- ings as he goes before a joint session of Congress and on national TV, the options are limited. Con- gress must approve any new measures, and congression- al Republicans oppose new spending. ''Anything that would be of a big enough size to real- ly help the labor market is going to have trouble get- ting through Congress,'' and businesses have to have enough workers to keep up. The problem is that keeping the tax cut doesn't create jobs where they did- n't exist before. ''It's in the 'Do no harm' camp,'' says econo- mist Heidi Shierholz of the Economic Policy Institute. ''We have that support now, so it's not going to gain us anything. It's just a matter of: If we let it go, we lose.'' says Michael Hanson, senior economist at Bank of America Merrill Lynch. ''And anything that can get through Congress will be too small to be much help.'' Federal Reserve Chair- man Ben Bernanke, Inter- national Monetary Fund chief Christine Lagarde and other economists have urged Congress to do more to help job growth and the economy over the next year or two — and worry about cutting spending later. Economist Barry Bosworth of the Brookings Institution, for example, says the government needs to spend $700 billion to $800 billion a year to gener- ate healthy job growth. Obama's plan was still being shaped Wednesday. Here are the ideas the White House is considering: — Extending, for one year, a cut in the payroll tax that supports Social Securi- ty. The cut, part of a deal struck last December by Obama and Republicans, reduces the tax to 4.2 per- cent from 6.2 percent on the first $106,800 a person makes. That amounts to $1,000 a year for someone earning $50,000. Keeping the tax cut would cost the government $110 billion to $115 billion. The research firm Macro- economic Advisers esti- mates it would support 400,000 jobs in 2012. The theory: More money in peo- ple's pockets increases demand for goods and ser- vices across the economy, Critics of this approach also point out that the extra money in people's pay- checks this year has mostly been eaten up by higher gasoline prices. ''Continuing the payroll tax cut is tempting,'' says John Makin, economist at the American Enterprise Institute. ''But I have to ask, if I look at the results, is it worth an increase in the deficit and debt?'' ——— — Keeping emergency unemployment benefits for another year. Unemploy- ment checks put money in the hands of people who are likely to spend it immedi- ately, helping businesses and making them more like- ly to hire. Macroeconomic Advis- ers estimates that another year of emergency unem- ployment benefits would support 200,000 jobs in 2012. Critics say unemploy- ment benefits discourage some people from aggres- sively seeking work. Researchers at the Federal Reserve Bank of San Fran- cisco have concluded that unemployment benefits keep the unemployment rate about 0.4 percentage point higher than it would be otherwise. The unemployed used to get 26 weeks of benefits. During the recession, Con- gress extended it to as much as 99 weeks — almost two years — in states with high unemployment. Obama may back a national version of a Geor- gia program that encour- ages businesses to provide on-the-job training for peo- ple receiving unemploy- ment benefits. About a third of the time, the workers wind up getting hired full- time. ——— —Offering tax incen- tives to businesses to hire the unemployed. Under consideration is an expand- ed version of a law passed last year that encouraged companies to hire the unemployed. The law exempted employers from paying their share of the Social Security tax when they created jobs for those unemployed for at least two months. But economists say the law didn't boost hiring much. Rajeev Dhawan, director of Georgia State Universi- ty's economic forecasting center, says the tax break might encourage employers to hire workers they didn't need, which would be inef- ficient. Or, he says, it could give them a tax break for something they were going to do anyway. ——— — Spending more on public works. Obama's pro- posals will probably include spending on roads and other infrastructure programs and add to the deficit. And he's expected to call for as much as $50 billion for school construction and renova- tion. But public works pro- grams can take years to get started and create jobs. ''Infrastructure spending cannot jump-start near-term hiring unless ramped up at a pace and a scale that, out- side of wartime, would be unprecedented,'' Macroeco- nomic Advisers concluded in a report. Some businesses would welcome it anyway. Dyke Messenger, CEO of a construction equipment firm called PowerCurbers in Salisbury, N.C., says new infrastructure spending could help his business — and embolden him to hire more people. He employs 85 now. He says his customers — construction companies — won't order more of his machines ''until they can see a steady supply of work ahead of them.'' ''I'm not going to hire somebody unless I'm absolutely sure I've got work for them, period,'' Messenger says. Help Our Friends & Place Your business Info in the Daily News for only $25 "Paws & Claws" Adopt A Pet Page runs the last Saturday of every month. To be a Pet Sponsor call Suzy at the Red Bluff Daily (530) 527-2151 ext. 103 Let's all help the Tehama County & Corning Animal Shelters find homes for these pets. Tehama County Department of Animal Services, Red Bluff This pet sponsored by THE AQUARIUM & PETS 345 So. 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