Economists: American Jobs Act Will Prevent New Recession

September 28, 2011 5:51 pm ET — Kate Conway

President Barack Obama and Speaker John Boehner

As congressional Republicans grow ever more determined to invent their own rules of economics, it's good to remember now and then that there are real experts — people with advanced degrees who have spent years studying and analyzing the principles that actually govern the economy — who are offering advice based on fact rather than pushing economy-killing ideas designed to help their own electoral chances.

Bloomberg News recently surveyed nearly three dozen economists about the effect the president's proposed jobs bill would have on the economy. In defiance of Republicans currently on a tear about a second "failed" stimulus, the economists said the legislation would increase GDP, lower unemployment, and help avoid another recession.

President Barack Obama's $447 billion jobs plan would help avoid a return to recession by maintaining growth and pushing down the unemployment rate next year, according to economists surveyed by Bloomberg News.

The legislation, submitted to Congress this month, would increase gross domestic product by 0.6 percent next year and add or keep 275,000 workers on payrolls, the median estimates in the survey of 34 economists showed. The program would also lower the jobless rate by 0.2 percentage point in 2012, economists said. [...]

Some 13,000 jobs would be created in 2013, bringing the total to 288,000 over two years, according to the survey. Employers in the U.S. added 1.26 million workers in the past 12 months, Labor Department data show.

Other reputable economists have estimated the plan's employment impact to be even higher, with Moody's saying it will create 1.9 million jobs. Meanwhile, some Republican-supported ideas are what are projected to cause "a serious drag on the economy," according to at least one of the economists surveyed:

"The important thing to consider is: What happens if we don't do anything?" said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida. He said the program "very well could" forestall a recession in early 2012.

"Most of all, it prevents a serious drag on the economy next year" from current programs expiring, said Brown, who estimates the Obama plan would add 0.5 percent to GDP in 2012.

A reduction in government spending, the end of the payroll-tax holiday and an expiration of extended unemployment benefits would cut GDP by 1.7 percent in 2012, according to JPMorgan Chase & Co. chief U.S. economist Michael Feroli in New York. Instead, the Obama proposal makes up for that potential loss and may add a net 0.1 percent to the economy, he estimates.

Sadly, Republican legislators leave the president and congressional Democrats in a position where all they can do for the economy is swim upstream against the other party's inane policies; the GOP is so laser-focused on its agenda of cutting spending (and winning the 2012 election) that the its leadership will plug their ears against the voices of experts like these. Instead, they'll hem and haw about "compromise" while refusing to give an inch; they'll insist, against the wisdom of the experts, that starving the government of revenue and slashing programs like unemployment aid will spur economic growth; and they'll continue to push the federal government ever farther away from a political landscape in which bipartisan achievements can occur.

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