The Math For Three-And-A-Half Million Jobs

Tags: 2012 Value Stocks ,CSIQ ,FSLR ,JASO ,LDK ,SOLR ,SPWRA ,STP ,TAN ,Top Performing Stocks To Buy ,TSL ,WFR ,YGE ,Solarbuzz Let’s the Shine Out of Solar Stocks - TAN, FSRL, STP, YGE, LDK, CSIQ, JASO, WFR, SOLR, SPWRA, TSL

Congress, well-fed and self-satisfied, can catch its wind now. It has put together a $789 billion stimulus package to get the economy on the road again. The most interesting and obtuse comment about the new plan came from Senator Harry Reid, who said the legislation would create 3.5 million jobs.

The 3.5 million jobs forecast has always been a mysterious subject.? The language used in the original House stimulus bill indicated that the programs in the legislation would create or save 3 to 4 million jobs. The "save" part is an important distinction.

The bill will provide for aid to states, tax cuts for the "middle class", and money for building infrastructure. No one in the Congressional leadership has argued that this will not create 3.4 million or 3.6 million jobs. The staff members in the House and Senate must be certain about the 3.5 million figure because no one has made an ! effort t o discredit it.

The other alarming information that no one was discussing as part of the self-congratulatory announcement of a victory over the recession was what will happen if the economy continues to lose jobs at the rate it did in January. A total of 3.5 million people could be out of work between the beginning of this year and the end of June. The stimulus package will probably not have even kicked in by then. So, with the job losses from January 2009 through the end of June at 600,000 a month, the entire $789 billion will be spent filling this unemployment crater. What will it cost to add another 3.5 million jobs after the job losses from the first half of the year have been reversed? Perhaps another $789 billion.

The trouble with the demented math behind the stimulus package is that it requires economists who believe that unemployment is moving toward 9% to subtract jobs from the economy faster than government programs create them. Most members of Congress and the Administration believe that the new legislation will take 18 to 24 months to have its full effect. An unimaginable downturn could cause the loss of six or seven million jobs by the end of 2010.

It is tragic that the stimulus program has been birthed, at last, but was stillborn. There are a number of other factors that could help reverse the drop in GDP, but none of these has a sure chance of success.? It would be hard to find a large industry in America which is adding jobs.? For that matter, it would be hard to find a large American company making net additions to its payroll.

There is a temptation to say that the stimulus package is simply a cruel trick, meant to give people some hope. Members of Congress will be able to take credit for its results two years from now if it works, or they can simply say the economy was too far gone to be saved ! if it fa ils. Either way, the issue is not creating 3.5 million jobs. It is creating 8 or 9 million.

Douglas A. McIntyre