President Barack Obama has come out with his job creation package that basically targets small business, infrastructure spending and energy efficiency. But will it work? Experts think not. They reckon it’s a case of doing too little.
In his blog, economist Robert Reich says the package doesn’t measure up. Not when unemployment is at 10% and one in four homeowners is paying more than what their house worth. “No president in modern times walks a tightrope as exquisitely as this one. His balance is a thing of beauty. But when it comes to this economy right now — an economy fundamentally out of balance – we need a federal government that moves boldly and swiftly to counter-balance the huge recessionary forces still at large.
“States and cities, for example, are estimated to be $350 billion hole this year and next. They can’t run deficits so they’re wildly cutting spending, cutting jobs, cutting contracts, and raising taxes and fees. That’s a huge anti-stimulus package roughly as big as the remaining direct spending in the old federal stimulus package. Which means, Obama’s ‘new’ stimulus, announced today, is about all we have, and it’s not nearly enough.”
Reich says what’s needed is a package that bails out states and cities. After all, if they could do it for banks which started the crisis, why not do it for local authorities who fell victim to it?
But there is further evidence that it won’t put on nearly enough jobs to stop unemployment climbing. As Northern Trust analyst Asha Bangalore says, the economy would have to put on 86,600 jobs to keep the unemployment figures at their present level. And that’s not going to happen.
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