This morning's announcement that the unemployment rate rose from 7.2% in December to 7.6% in January, increases the pressure to get some sort of economic stimulus plan into effect. There is much work to be done to reconcile the House and Senate versions of the bill, and big questions about whether and how much the final bill will actually create new jobs to offset the ones being cut.
Last month, those jobs were being eliminated at a ferocious pace. The 598,000 jobs employers shed in January exceed by 14% the 524,000 that economists had expected. Those economists had underestimated the job cut damage in the previous two months as well. Since the recession started in December 2007, 3.6 million jobs have evaporated, 50% of them in the past three months.
President Obama claims that his stimulus bill can save or create 3 million jobs. But to get something passed, Washington will need to reconcile the Senate's $920 billion plan -- which includes more money for unemployment benefits - with the House's $819 billion package. I regret that it will take another one of those "heaven help us" sales pitches to get this done.
To me, it would be much better to see a fact-based explanation that connects the stimulus spending to the three million new jobs. I have no doubt that something will be passed, but it will probably include $275 billion in tax cuts, which will be saved and not spent, and therefore will just pile more debt on our grandchildren without contributing to those new jobs.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book is You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing.
Nuclear power is on the comeback trail
Apple backs AT&T in continuing spat with Verizon
Closing Bell: The recession is still over, still... do you feel it?
Reader Comments (Page 1 of 1)
2-06-2009 @ 1:00PM
Nick Pasquine said...
Many more jobs lost and all Congress can come up with is pork and welfare. Some change! Go to Congress.org and contact your Reps. to put a stop to this waste that has only the support of those looking for something for nothing. We need brains thrown at these problems, not pork and welfare.
2-06-2009 @ 5:17PM
Marilyn said...
"You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is about the end of any nation.
You cannot multiply wealth by dividing it."
The late Dr. Adrian Rogers, 1931 – 2005