Create 12 million jobs or a new recession?

A major reason people may be voting for Mitt Romney for President is his claim that he will create 12 million jobs in the next 4 years.   Pressed on where he came up with this number he said in a campaign television ad:

I will create 12 million jobs when President Obama couldn't. First, my energy independence policy means more than 3 million new jobs, many of them in manufacturing. My tax reform plan to lower rates for the middle class and for small business creates 7 million more. And expanding trade, cracking down on China and improving job training takes us to over 12 million new jobs.

However, the Washington Post fact checker awarded Romney Four Pinocchios for this statement!

http://www.washingtonpost.com/blogs/fact-checker/post/mitt-romneys-new-math-for-jobs-plan-doesnt-add-up/2012/10/15/fd1d1e1c-170f-11e2-a55c-39408fbe6a4b_blog.html 

The claim that 7 million jobs would be created from Romney’s tax plan is a 10-year number, derived from a study written by John W. Diamond, a professor at Rice University.

The 3-million-jobs claim for Romney’s energy policies appears largely based on a Citigroup Global Markets study that did not even evaluate Romney’s policies. Instead, the report predicted 2.7 million to 3.6 million jobs would be created over the next 8 years, largely because of trends and policies already adopted — including tougher fuel efficiency standards that Romney has criticized and suggested he would reverse.

The 2-million-jobs claim from cracking down on China is also very suspicious. This figure comes from a 2011 International Trade Commission report, which estimated that there could be a gain of 2.1 million jobs if China stopped infringing on U.S. intellectual property rights. It is unclear when China might implement the improvement in IPR protection envisioned in the analysis.

The candidate’s personal accounting for this figure in this campaign ad is based on different figures and long-range timelines stretching as long as a decade — which in two cases are based on studies that did not even evaluate Romney’s economic plan. The numbers may still add up to 12 million, but they aren’t the same thing — not by a long shot.

Interestingly, it noted that:

The 12 million figure is not a bad bet by Romney. Moody’s Analytics, in an August forecast, predicts 12 million jobs will be created by 2016, no matter who is president. And Macroeconomic Advisors in April also predicted a gain of 12.3 million jobs.

http://thehill.com/blogs/on-the-money/economy/247081-experts-say-economy-should-grow-despite-who-wins-white-house-in-november

"Most forecasts for employment growth are very close to 12 million over the next four years regardless of who wins the presidency," Mark Zandi, chief economist with Moody's Analytics.  

The Labor Department has projected that employers will create 20.5 million jobs from 2010 to 2020 with the healthcare sector expected to grow the most rapidly, while construction jobs could struggle to recover positions lost during the recession. 

So it is predicted that we will see 12 million new jobs if Obama remains our President for the next 4 years!

However, Romney says we need to do tax reform. What effect will that have?

Bruce Bartlett, who held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul, says of Romney's claim that tax reform will create jobs:

http://economix.blogs.nytimes.com/2012/10/16/romneys-tax-plan-and-economic-growth/

if Mr. Romney’s plan is enacted as proposed the growth effect will be small to nonexistent.  The idea that tax reform will jump-start an economy suffering from the after-effects of a cyclical downturn is nonsense. 

More likely the tax reform will result in big tax cuts for the rich.  Read:  http://genesview.blogspot.com/2012/10/are-we-being-scammed.html


Furthermore Romney says we need to do massive spending cuts to reduce the national debt.  Read:  http://genesview.blogspot.com/2012/10/does-romney-have-plan-to-reduce.html

What effect will that have?

http://www.thenation.com/blog/169373/romney-ryan-economic-plans-would-increase-unemployment-deepen-recession#

it would cost the US economy millions of jobs. Ryan’s 2011 budget plan proposes what the Center for Budget and Policy Priorities calls “the most severe and wrenching budget cuts in US history—two-thirds of which would come from programs for people of low or moderate incomes” (Medicaid, Pell Grants, food stamps and low-income housing). According to the Economic Policy Institute, “The shock to aggregate demand from near-term spending cuts would result in roughly 1.3 million jobs lost in 2013 and 2.8 million jobs lost in 2014, or 4.1 million jobs through 2014.

Romney’s ideas would do little or nothing to fix the immediate crisis, and could in the short term make things worse.” Said Mark Hopkins, senior adviser at Moody’s Analytics: “On net, all of these policies would do more harm in the short term. If we implemented all of his policies, it would push us deeper into recession and make the recovery slower.”

One example, recall that the Affordable Care Act (Obamacare) is expanding medical coverage to 30 million Americans and the Medicaid expansion will cover 17 million more. That means lots more jobs for doctors and nurses. But Romney says he will back out Obamacare and cut Medicaid funding by 30%! That means lots fewer jobs needed for doctors and nurses.


In fact, Romney's plans may push us back into a recession!

http://www.bloomberg.com/news/2012-06-04/nobel-winner-stiglitz-sees-more-recession-odds-in-romney.html

Nobel Prize-winning economist Joseph Stiglitz said the election of Mitt Romney as president in November would “significantly” raise the odds of a recession because it would herald a shift to a much tighter budget.

History shows that the adoption of fiscal austerity when an economy is weak can have disastrous consequences, as happened in the U.S. in 1929 on the eve of the Great Depression, Stiglitz told Bloomberg editors and reporters in New York yesterday. Republican candidate Romney risks making that same sort of mistake by backing a plan to slash the budget deficit, he said.

 http://www.newyorker.com/online/blogs/johncassidy/2012/08/romneys-recovery-plan-could-bring-on-another-recession.html

In today’s Wall Street Journal, the Columbia economist Glenn Hubbard, who is one of Mitt Romney’s top economic advisers, has an op-ed piece entitled “The Romney Plan for Economic Recovery.”

Romney is promising austerity. Hubbard reiterates that he would aim to reduce federal spending from roughly twenty-four per cent of G.D.P. in fiscal 2012 to twenty per cent by 2016. Romney hasn’t spelled out how he would reach this target, but simple arithmetic suggests he would need to impose about five hundred billion dollars in annual spending cuts, which is equivalent to more than three per cent of G.D.P.

Spending cuts on this scale would be a big shock to an economy that is already sputtering badly. As we’ve seen in other developed countries over the past few years, the imposition of austerity policies can easily turn modest recoveries into renewed recessions. It has happened in the United Kingdom, Spain, and Italy. Romney is asking the American voters to believe things would be different here. The obvious question to ask is: Why? Like the U.K. and Spain, the United States economy is still suffering the after-effects of a big housing bust. Rather than going out and spending, households and businesses are husbanding their resources and rebuilding their savings. In economies such as these, there is a heavy reliance on the government to maintain demand. If fiscal policy is tightened prematurely, a recession is a very likely result. Japan in the nineteen-nineties provides another pertinent example.

http://www.americanprogressaction.org/issues/labor/report/2012/10/16/41608/romney-has-no-real-jobs-plan/

The truth is, Gov. Romney is ignoring facts and history while employing seriously flawed economic logic. The evidence shows that the kind of tax plan Gov. Romney proposes to implement is a job killer. What’s more, successful tax plans of the past followed a different path than the one Gov. Romney now outlines. A number of economists dug into the numbers to demonstrate that the Romney economic plan would, if anything, push our economy back into recession and cost Americans jobs.

Figure 1 shows, no matter how you cut it, Romney’s plan is worse than the status quo. His plan will either create a paltry number of jobs, far slower than the current pace, or will actually eliminate jobs and push the United States back into recession.

http://www.forbes.com/sites/rickungar/2012/04/25/british-economic-austerity-bombs-as-england-double-dips-into-recession/

the moment English Prime Minister David Cameron instituted his government austerity program in the belief that taking huge sums of money out of the British economy would get England back on more solid financial footing, American conservative leaders have been fawning all over their Conservative Party counterparts—if not the actual nation that the British Conservatives lead.

Today, the report card is in and the results are clear—the GOP has been backing the wrong horse…again.

The British Office for National Statistics confirms that the country’s GDP fell 0.2 percent in the first quarter of this year after contracting by 0.3 percent during the last quarter of 2011. These two, consecutive contractions make it official- England has doubled-dipped itself into another recession.

So instead of creating 12 million new jobs, Romney's plans will result in millions more out of a job and may result in another recession!