Obama's Job Plan Picks Up Steam

by: The Good News Economist

President Barack Obama pressed forward with his job-creation proposals on Tuesday. Specifics included a hiring tax credit to businesses and other stimulus components. Further, those stimulus programs that he believes have worked best thus far, he would like to extend or amplify.

Thus far the existing stimulus efforts have taken an abysmal rate of 700,000 jobs lost a month earlier in the year and reduced that to a loss rate of almost zero. Obama asserts that in the months to come additional proposals can begin accelerate that improving net rate.

President Obama, at the Brookings Institution inWashington on Tuesday.
President Obama, at the Brookings Institution in DC on Tuesday.
Source: Associated Press

Specifically Obama would like to put an additional $50 billion toward infrastructure spending, ramp up Treasury Department lending to small businesses, extend tax credits for business investment, and offer state/local governments additional funding to help meet strained budgetary obligations.

A new infrastructure boost would further enhance programs that fund roads, bridges, airports, and water system improvements. The implication (as we've stated here many times) is that federal stimulus spending could stretch well into (and beyond) 2010. The White House continues to underscored that much of the $700B of the initial catalyst has not yet been spent and that by enhancing the most effective programs, jobs growth will accelerate in 2010.

Obama's focus on jobs is politically timed well. At a loss rate of 700,000 jobs per month (that were a projected loss for April 2009 and beyond), the economy would have lost over 5M jobs since the time that the initial $700B stimulus measure was passed. Instead the net losses were trimmed to just over 2M in the same time period. (See Job Loss Chart for monthly details)

In addition to Obama's initiatives, lawmakers are also working to continue relief to those effected by those losses. Democrats on the hill are looking to extend unemployment insurance, temporary food-stamp payment increases and subsidies for health-care purchases by the unemployed.

Following Obama's job summit last week, the President has now invited congressional delegates to the White House on Wednesday to discuss the specifics of what he'd like to see produced by those legislative leaders.

Obama is likely to assert to his guests that lower-than-expected losses from the TARP should give room to spend more on job creation programs. Republicans of course are demanding that all $200 billion in TARP savings be immediately devoted to reducing the deficit.

With the shift to net jobs growth in coming months, the political climate to accelerate jobs growth will no doubt become more accommodating.

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