New jobs report shows that months of moderate job losses have been followed up by a month of large job losses. All this is from before the current financial crisis began to have its impact felt. Long story short, the next month is likely to be even worse than September was. And that, in turn, raises the risk of a dangerous cycle wherein the fact that other people are losing their jobs causes additional job losses. Nobody can get a car loan, so car companies lay workers off, so the newly jobless can’t afford new furniture so the folks who deliver furniture lose their jobs, too.
Normally over the past few decades we would count on the Federal Reserve to snap the cycle by lowering interest rates. But we’ve gone about as low as we can go already. We need fiscal policy to step in. Fortunately, CAP’s Brian Levine has a new paper out today on the McCain jobs plan:
Sen. John McCain’s economic agenda is founded on huge tax cuts for corporations. In January, McCain unveiled his “economic stimulus” plan, which consists of a cut in the corporate tax rate, a permanent research and development tax credit, and a provision allowing full expensing of business equipment. All of these proposals are important parts of his “Jobs for America” plan, which he unveiled in July. Our analysis of these plans, based on data from Moody’s Economy.com and the Tax Policy Center, concludes that:
- The three proposals in Sen. McCain’s economic stimulus plan would create only about 450,000 jobs in 2009, at a cost of $280 billion.
- In contrast, a well-designed economic stimulus plan, costing the same amount, would create 2 million jobs—more than four times as many jobs for the same amount of resources.
- The United States needs to generate 1.5 million jobs a year just to keep up with the new workers entering the labor force.
For a look at what a “well-designed economic stimulus plan” would look like, see here.