WASHINGTON — Could it work? That's the question being asked about President Barack Obama's new jobs plan.
Independent experts answered Friday with a qualified yes.
The American Jobs Act would create jobs and help keep a struggling economy moving forward, said a number of economists. But they cautioned that it wouldn't shift the nation's business gears into overdrive, and it offers only modest benefits, given the headwinds the economy faces from a moribund housing sector and financial turmoil in Europe.
Macroeconomic Advisers, a leading economic forecast group based in St. Louis, projected that Obama's plan "would give a significant boost to (the gross domestic product) and employment over the near term."
Macroeconomic Advisers said the Obama plan, which the White House says will cost $447 billion, would raise the GDP by 1.3 percent through 2012, resulting in 1.3 million more people employed. It says the plan would add 0.2 percent to growth in 2013.
That's in the ballpark of estimates from economists at Bank of America Merrill Lynch, who, in a research note Friday, estimated the American Jobs Act could add between 1 and 1.5 percentage points to economic growth next year. They also noted that for every percentage point of growth, the jobless rate falls by three-tenths of a percentage point.
Mark Zandi, the chief economist for forecaster Moody's Analytics, envisioned 1.9 million jobs created if the plan passes as proposed, something he considers unlikely. However, about 40 percent of the jobs — 750,000 — would come from the payroll tax holiday provisions alone.
Martin Regalia, chief economist for the U.S. Chamber of Commerce, raps Obama for not seeking more-lasting job creation. "It does help temporarily maintain or boost demand, because it puts more spendable money in people's pockets, and some of that will be spent. If all you want to do is boost the growth rates for next year, this will probably do that," he said.
But that's not necessarily the best course, he said. The chamber wanted a focus on the energy sector, where relaxation of rules could put people to work immediately, and more support for international trade, including passage of pending free-trade agreements with South Korea, Colombia and Panama.