Obama versus Romney on Jobs

With US unemployment still above 8%, jobs have become a major focus in the presidential campaign. But, while President Barack Obama’s proposals are convincing, none of Mitt Romney’s would do much in the near term – and some could prove counterproductive.

BERKELEY – The United States has just completed its third year of economic recovery, but the unemployment rate remains above 8%, and there are worrisome signs of a slowdown. So it is no surprise that jobs have become a major focus in the presidential campaign – or that the candidates have very different ideas about how to boost employment.

Last autumn, President Barack Obama proposed the American Jobs Act, a $450 billion package of fiscal measures aimed at job creation. The AJA amounted to about 3% of GDP and was designed to take effect in 2012, providing a timely employment boost and insurance for the US recovery against global headwinds. Most of its measures had enjoyed bipartisan support in the past; tax cuts comprised about 56% of the total cost; and the package was paid for in Obama’s long-term deficit reduction plan.

Several independent economists concluded that Obama’s plan would provide a significant lift to the job market in 2012-2013. Indeed, two of the nation’s most respected forecasters predicted that the AJA would add 1.3-1.9 million jobs in 2012 and more than two million jobs by the end of 2013. The non-partisan Congressional Budget Office (CBO) also found that most of the AJA’s policies ranked high in budgetary effectiveness, measured by the number of jobs created in 2012-2013 per dollar of budgetary cost.

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