When President Barack Obama was trying to sell his $787 billion economic stimulus plan to the American people, there was no louder cheerleader for the plan than Mark Zandi of Moody’s Economy.com. Zandi confidently produced scientific tables purporting to prove that for every $1 the Obama administration gave to states, GDP would grow by exactly $1.36. Zandi later produced an analysis claiming that Obama’s stimulus would create 2.2 million jobs.
But as millions of Americans now know all too well, Zandi was very, very wrong. President Obama’s stimulus has completely failed to create any jobs and instead has witnessed more than 4 million jobs lost in 2009. Commenting on the state of the U.S. economy, Zandi now tells USA Today: “It’s getting increasingly unusual that we’re not seeing a hiring kick set in.”
If Zandi and his allies on the left want to figure out why the economy is not creating any jobs, they need to put down their failed Keynesian formulas and talk to real business owners and executives. Executives like Dan DiMicco, CEO of steelmaker Nucor Corp, who told the Wall Street Journal: “Companies large and small are saying, ‘I am not going to do anything until these things — health care, climate legislation — go away or are resolved.’” Or Porta-King CEO Steve Schulte who tells USA Today his company is not investing because “proposals in Congress to tackle climate change and overhaul health care would raise costs.” These businessmen have every right to be worried. As we’ve detailed before, the Senate Health Bill currently being debated in the Senate would be a disaster for the U.S. economy:
- Kills Jobs: All told, the Reid Bill raises taxes by $370.2 billion over the next ten years with many of those taxes starting to be collected this year with unemployment at 10.2% and rising. Worse, the bill includes a job killing employer mandate which taxes companies for hiring people. Specifically, companies with more than 50 employees that do not offer a health plan approved by federal bureaucrats will be forced to pay a $750 per employee job tax.
- Hurts Small Businesses: The Reid Bill acknowledges it is terrible public policy for small businesses and tries to address this problem by including a “small business tax credit” to minimize the impact of the job killing employer mandates and regulation-caused increases in private health insurance premiums. But the tax credit only lasts two years and largely excludes small business owners, small businesses with high-average payrolls, and firms with 25 or more workers. Essentially, after all exclusions, the only eligible firms are those firms with 10 or fewer workers as well as those with low-income workers—the least likely to offer coverage even with a significant price reduction.
- Hurts Poor: The Reid Bill’s employer mandate is especially punitive on poor families. Firms that hire an employee from a low-income family who qualify for an insurance subsidy are charged a tax penalty of $3,000. So a company could save $3,000 by hiring, say, someone with a working spouse or a teenager with working parents, rather than a single mother with three children. Worse, companies only have to pay $750 an employee instead of $3,000 if one quarter of employees are low-income. This creates a situation where, if a company has a lot of low-income workers, they can actually save money by dropping their health plan and just dumping all their employees into the federal exchange at their own expense.
This morning the White House will host a “Forum on Jobs and Economic Growth” or what everybody else is calling a “jobs summit.” At the summit, the 130 invited executives, union leaders, academics and local government officials will discuss what the White House wants to call a “jobs plan” but what everybody else is calling a second stimulus. But the ideas being discussed for the second stimulus are the same failed ideas from the first stimulus.
It is way past time for a new direction. Yesterday, House Minority Whip Eric Cantor (R-VA) outlined a seven point common sense plan for job creation here at the Heritage Foundation. Item number 1: “Halt Any Proposed Rule or Regulation Expected to Have an Economic Cost, Result in Job Loss, or Have a Disparate Impact on Small Businesses.” As Cantor explained in his speech, that means a merciful end to Obamacare.
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