The Folly of “Jobs Plans”

The stimulus taught candidates to be very, very vague about how they’ll fix things.

John Boehner

The typical Republican candidate of 2010 spends most of his time on one of two pursuits. The first is deriding President Obama and the Democrats for promising to rescue the economy with stimulus packages and jobs plans. The second is rolling out his stimulus and jobs plans.

Rep. Roy Blunt, R-Mo., for example, now the favorite to win Missouri’s open U.S. Senate seat, has just wrapped up a “jobs tour” on a “jobs bus” with the release of a 21-page document titled “Jobs for Missouri: Roy Blunt’s Jobs Plan.” His campaign reminds reporters that the Democratic candidate, Robin Carnahan, has no jobs plan.

Yet neither candidate is doing what Democrats did in order to elect Obama and sell the 2009 economic stimulus package: getting specific with numbers. Want some idea of how many jobs might be generated if you vote for Blunt or Carnahan? Tough luck. It’s out of their hands. As Blunt puts it in his plan, “Private sector job-creators are ready to invest in the kinds of job-creating activities we need to recover fully from this economic crisis and help millions of middle class families get back to work.” Trust him, then trust them. Things will work themselves out.

There’s nothing new about candidates offering sure-fire “jobs plans.” By merely saying the phrase “jobs plan,” a candidate signals that he is serious. This year, however, voters are simultaneously more desperate and more cynical about economic policy.

First, the desperation: Unemployment was at 5.6 percent when Newt Gingrich first wrapped his hand around the speaker’s gavel in 1995. It was 4.6 percent when Democrats took over the House in 2007. If Republicans win in November, “Speaker John Boehner” might be confronting unemployment of about 10 percent when he gets the gavel in January 2011.

Now, the cynicism: Democrats sold the stimulus in 2009 in part by offering predictions of how many jobs it would create. The stimulus would create (or save!) 4.1 million jobs. The unemployment rate would stay below 8 percent. What lesson did both parties learn from those sales pitches? Never try that again. Promising a lower unemployment rate, as the White House did in 2009 in selling the stimulus, “was a dumb thing to do,” groused Rep. Barney Frank, D-Mass., on Tuesday.

Yet it’s something that incumbents have to do with proposed legislation. They don’t have to dig in and sell voters on the reliability of their predictions like Obama did. But if they introduce their plans in Congress, they have to watch as the Congressional Budget Office assesses whether their plans add up or create jobs. The economic models which Democrats used to sell their legislation, developed by the CBO and analysts like Mark Zandi of Economy.com, argued that unemployment benefits, payroll tax cuts, and expensing of investment costs would do more for the economy than other kinds of spending.

A persistent recession will take its toll on predictions like these. “Zandi’s model, that simple multiplier effect, suggested that a targeted jobs credit would be effective,” says Rea Hederman, who crunches numbers for the Heritage Foundation’s Center for Data Analysis, the conservative think tank’s answer to the CBO. “It wasn’t effective.”

Candidates don’t have to worry about any of this. Their jobs plans take the ideas that sound good—from small business owners who show up at events and from friendly think tanks—and promise to enact all of them. Will they work? If their models say they will, great. If their opponent’s models say they won’t—well, who trusts the models anymore?

So the new jobs plans consist of ideas the parties always trot out, ideas that repeal unpopular things Obama has done, and, occasionally, numbers. In his plan, Blunt suggests that stopping cap-and-trade legislation will save “more than 32,000 Missouri jobs.” Of course, that legislation is stalled in the Senate, so there’s nothing to save that hasn’t already been saved by the filibustering talents of Mitch McConnell. Blunt also joins candidates like Illinois Democrat Alexi Giannoulias in calling for extensions to the homeowner tax credit. According to the CBO, a dollar spent on this credit adds only 40 cents to the GDP. But voters still like the sound of the homeowner tax credit.

Dig into candidates’ jobs plans and you find ideas that have been discredited by previous experience or made to look better than serious economists think they are. Jeff Greene, a billionaire running for U.S. Senate in Florida, has one ad in which he repeats the word “jobs” seven times in 30 seconds. What did he plan to do to create them, other than being an “incredibly successful businessman”? Tax credits and “green jobs,” the latter being the absolute least successful concept of the last two years of Democratic governance. Commercials for Ohio U.S. Senate candidate Rob Portman, a Republican, emphasize the word “jobs” again and again and point viewers to the “Portman Plan to Create Ohio Jobs,” a 12-page document downloadable from his Web site. Among the job-creation ideas: rescuing a Bush “small business tax cut” which affects about 2 percent of small business owners.

“My own view is that tax cuts are virtually useless under current economic conditions,” says Bruce Bartlett, a conservative economist and Bush White House veteran. While he doesn’t want the Bush tax cuts to expire in 2011, he accuses Republican candidates of engaging in “90 percent dogma and 10 percent pandering to the Republican base.”

“The sorts of tax cuts Republicans tend to favor would not increase spending or investment, but simply reduce tax payments with the money mostly being saved, not spent,” says Bartlett. “In other words, they would have no more stimulative effect than the 2001 and 2008 rebates, which is to say none at all.”

Republicans’ argument against that is simple: Obama’s spending failed to turn the economy around, so reversing his policies will reverse the economy’s doldrums. It’s just not clear how it all will work. In his plan, Portman proposes “immediate action to stimulate the economy and create jobs by providing a one year suspension of the payroll tax.” CBO, Zandi, and everyone else agrees that this would be stimulative. Portman suggests paying for it with leftover stimulus money, although the expected revenue from the payroll tax in 2011 is roughly three times larger than that total. (“Return the stimulus money” has the rhetorical effect for Republicans that “repeal the Bush tax cuts” used to have for Democrats, although the money on the table for Democrats is many times more than those stimulus savings.) But it’s on this point that Portman offers his only hard jobs numbers: “Research suggests that this proposal alone will create 4.8 million jobs.” According to the campaign, that number was derived from a 2008 study that no one else reads quite so optimistically.

“That’s, well, that’s a robust amount of job creation,” says Hederman. “We’ll leave it at that.”

Politically, it’s smart for Republican candidates to avoid Obama’s mistake and stay away from bold and specific predictions about how well their jobs plans will work. But if they take power, how much slack will voters give them? How many months will members of Congress be allowed to experiment before the voters become impatient and angry? That’s another lesson to take from Obama: Three years into a recession, there’s not much patience left.

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