Source: National Review Online
The president has delivered a speech on jobs in front of a joint session of Congress. National Review Online convened a panel to respond.
There is no magic bullet that will fix this economy, a clear economic fact that no one has told the president. The current gap between gross domestic product and potential GDP is about $1.3 trillion. Not even a naïve Keynesian would expect the president’s plan to have enough of a multiplier effect to bring us back to normal.
Consumers have been spending cautiously, partly due to past over-borrowing and partly from a need to offset future tax hikes. It sounded good when the president said, “Everything in this bill will be paid for — everything,” but the sad truth is that the president wants to use unspecified future spending cuts and off-budget loan guarantees. With low credibility on financing, the new plan will fail to boost consumer spending.
There are certainly some things to like in the plan, most notably reducing corporate tax preferences in order to lower tax rates. And the president was right to strike an optimistic tone — despite the current economic malaise, the country is still the land of opportunity. He was wrong, however, to imply that a great new jobs bill is what’s needed to fulfill that opportunity.
Bill Conerly is a senior fellow at the National Center for Policy Analysis.