U.S. Experts Show Mixed Reactions to Obama's Jobs Plan
September 15, 2011 (Xinhua News Agency - CEIS) While some economists and political scientists at Columbia University said Tuesday that Obama's new jobs plan is a step in the right direction, others were more critical.
"The bill is overall a good idea," W. Bentley MacLeod, professor of Economics and International and Public Affairs, said.
"It's the kind of thing that the economy has desperately needed for a while," David Epstein said, who specializes in political science. "Here he is proposing a not hugely overwhelming policy, but a serious set of policies that could actually do something about the problem."
However, other experts cautioned this may not be enough. "Obama's proposals are simply the same as since the start of 2009: temporary tax cuts (half the new program) and temporary spending increases. These policies are not effective," said Jeffrey Sachs, Quetelet professor of Sustainable Development, Health Policy and Management, and director of The Earth Institute.
"The U.S. economy needs more than a temporary stimulus to return to self-sustaining growth and full employment," he said. "Our growth and employment problems are structural, and need a structural response."
Pablo Pinto, professor of Political Science, was also skeptical. "The Jobs Act is a good step forward but probably insufficient ... the tax cuts will have a small impact on firms that are not ready to hire given the drop in global demand."
"Households and firms view the tax cuts as temporary," Sachs said. "Knowing that the government will have to reverse them in order to close the budget deficit, they are prone to use the tax cuts to pay down debts ("deleverage") rather than to engage in new spending or hiring."
Also, "the emphasis on deficit reduction in political discourses is magnified by divided government and the impending electoral season, placing extra constraints on the government's ability to attack the unemployment problem," Pinto said.
Sachs said the U.S. Congressional Budget Office (CBO) reports show the agency hasn't done its homework by assuming the stimulus policies work without considering the impact they may have.
"There is, alas, no reason to believe that the stimulus packages have done much of anything to stimulate the economy even in the short term, much less to bridge the gap to the revival of sustained growth," Sachs said.