President Barack Obama, after more than 2½ years of failing to get serious on jobs and unemployment and trillions of deficit and stimulus spending, hasn’t been able to lower the unemployment rate.
He recently mentioned he had a plan to get America working again and insisted it should be passed despite the plan being almost the same as what hasn’t worked in the past.
Unfortunately, as Albert Einstein once said, insanity is doing the same thing over again and expecting different results.
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The president, by his own staff's own admission, is "hoping" to save or create 2.5 million jobs with his program, which will cost $475 billion.
Now since the president is proposing to pay for the program over 10 years, let’s assume the $475 billion in direct expenses is financed for 10 years at 2.5 percent which adds roughly $120 billion to the total cost of the program.
In other words, as the calculations detailed and show below elaborate, the overall American Jobs Act (AJA) plan will cost $190,000 per job created (excluding the interest expense) and about $260,500 per union job created (including interest).
My assumptions assume all jobs are created, not just saved. Obviously saving a job will make the cost per job even higher.
Now, wouldn’t it be easier to offer a $40,000 dollar tax credit to everyone who hires someone for at least 5 years at a minimum of $30,000 salary annually plus health insurance? That would create 11.85 million jobs for 5 years or more. That wouldn’t be jobs “saved’ but jobs created.
To “enforce” this, we can start with companies that have at least $100 billion of market cap so we could actually GO after Apple, Cisco Microsoft, Exxon, Caterpillar, United Technologies, Boeing, etc. if they tried to renege.
Many small U.S businesses do business with Boeing and the other large companies and will see a drastic pickup in orders and overall business.
State, federal and local governments will have less people on food stamps and Medicaid and tax receipts will be booming.
Just think, almost 12 million new jobs will be created and the increased tax receipts and lower unemployment, food-stamp and Medicaid expenses could make this plan revenue-neutral or even lower our annual $1.5 trillion deficits.
The stock market and housing market would be booming and the unemployment rates would be 4 percent or lower.
This is the type of plan we need.
About the Author: Bill Spetrino
Bill Spetrino is a member of the Moneynews Financial Brain Trust. Click Here
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