Macroeconomic Advisers: Republican “jobs” plan creates no jobs
Macroeconomic Advisers has a new analysis of the Republican alternative to the American Jobs Act.
Bottom line job impact through 2013:
- Obama’s American Jobs Act: +1.3 million
- Republican’s Jobs through Growth Act: zero (or worse).
Read below via Macroadvisers: Man Up: AJ(obs)A vs. J(obs)TGA (emphasis added):
Last week the Republican leadership unveiled the Jobs through Growth Act (JTGA) as a counterpoint to the President’s proposed American Jobs Act (AJA). JTGA includes a Balanced Budget Amendment (BBA), reform of the income tax code, repeal of “Obamacare,” Dodd-Frank, and other regulations, fast-track authority for the president to negotiate new trade agreements, and the easing of restrictions on the exploration for new domestic sources of energy.
Without more detail on the Republican plan, we cannot offer a firm estimate of its economic impact in either the short or long run. However, if what we do know of JTGA were enacted now, we would not materially change our forecasts for either economic growth or employment through 2013.
If actually enforced in fiscal year (FY) 2012, a BBA would quickly destroy millions of jobs while creating enormous economic and social upheaval.
However, we believe no responsible policymaker would push the implementation of a BBA when the projected federal deficit is $1 trillion and the Fed is unable to offset much fiscal drag.
A BBA would amplify cyclical swings in the economy. Furthermore, it likely would be abandoned or circumvented with the first recession after ratification, creating confusion and uncertainty over fiscal policy.
The proposed income tax reform is revenue neutral for both households and corporations and so, upon first consideration, implies little near-term impact on either aggregate demand or employment.
However, if the burden of taxes shifts down the income distribution, or if the curtailment of interest deductions and depreciation allowances raise the cost of capital, there could be near-term drag on consumption or investment.
The long-run impact of income tax reform cannot be properly assessed without additional details on the proposal.
The near-term stimulus to employment or investment from repatriating earnings sooner than previously expected is negligible.
The beneficial effects of fast-track trade authority cannot be quantified without knowing what agreements are fast-tracked. Moreover, there is bipartisan support for negotiating trade agreements beneficial to the U.S. economy.
The impact of regulatory and energy proposals in JTGA is difficult to assess, but we are skeptical of claims for large near-term employment effects. Moreover, there is bipartisan support for reducing or delaying the burden of those regulations with adverse near-term impacts on growth and employment.
Previously we reported our estimates that implementation of AJA would boost GDP growth by 1.3 percentage points over 2012 and raise employment 1.3 million by the end of next year.