Obama versus Romney on Jobs

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.

The AJA was filibustered by Senate Republicans, and the Republican-controlled House of Representatives likewise prevented the bill from coming to a vote. Mitt Romney, now the Republican presidential candidate, attacked the plan as “mere stimulus” that would “throw a cup of gasoline on the embers” of the recovery. Ultimately, Obama, bolstered by polls endorsing his plan, won partial passage of two AJA policies: a one-third cut in employees’ payroll taxes (he had proposed one-half), and an extension of unemployment benefits by about 60% of what he had recommended.