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Keith Hennessey Asks: What Does It Mean to Focus on Jobs?

And I am off to check his math...


What does it mean to focus on jobs?: The conventional Beltway logic is that the President used his State of the Union Address to “pivot to focus on job creation.” We have been told for a week or two that job creation is policy priority #1.... Wednesday night the President “pivoted to focus on jobs.”

That is why jobs must be our number one focus in 2010, and that is why I am calling for a new jobs bill tonight.

I have a simple question: What does it mean to focus on jobs?

I would presume that it means the President would propose new policy changes that are designed to significantly increase employment, and fairly quickly....

My back-of-the-envelope calculation... suggests that the President’s new Small Business Jobs and Wages credit will increase full-time employment in 2010 by 165,000 – 297,000 years.  By 2011, it will increase full-time employment by 264,000 – 594,000 years.... For comparison, remember that the U.S. economy has lost 2.7 million jobs since a year ago, and 7.2 million jobs since the beginning of the recession in December 2007.  297,000 is 4.1% of 7.2 million, so you’re talking about a policy change that at best would restore fewer than 1 out of 25 jobs lost since the recession began.

Now for the bigger problem:  the White House fact sheet is correct– CBO says this is the job creation policy with the greatest job creation bang per deficit buck.  Other policies are less efficient.  So while the total 2010 jobs impact of the President’s full proposal will be larger than just the impact of this new credit proposal, it’s still going to take only a tiny bite out of our employment problem, and the other components will have an even smaller effect than this core element.

I am not comfortable extending my back-of-the-envelope calculation to the President’s full proposal, but someone in Congress should ask CBO to apply their methodology to the President’s full package.  Members of Congress should understand not just the policies they are voting on, but the projected quantitative impacts of those policies on employment, GDP growth, and budget deficits. The numbers matter...