Amazon to New York: Drop Dead*

Amazon pulled the plug on its commitment to build its HQ2 in the Long Island City neighborhood of New York City. Although city residents broadly supported the project, there was a very vocal local opposition with Alexandra Ocasio Cortez one of the leaders. It takes a lot of gall to say No to 25000 clean high paying jobs, but NYC did just that. Too bad.

By jerking Amazon around the city sent a message that it simply doesn’t care about jobs. Trust me the economic after shocks are going to be nontrivial.

* With apologies to the New York Daily News for its famous 1975 headline “Ford to New York: Drop Dead”

In the Wall Street Journal, "Wider Tariffs Threaten to Take a Big Economic Toll," June 3, 2018 (Online)

But the cost in jobs widens as tariffs spread. If tit-for-tat retaliation escalated, raising global tariff and nontariff barriers to levels last seen in the early 1990s, before the creation of the North American Free Trade Agreement and the World Trade Organization, the economists on average saw 845,000 net U.S. jobs lost, with estimates ranging from 10,000 to 3,000,000. David Shulman, senior economist at the UCLA Anderson School of Management, in the survey said it could lead to recession.

For the WSJ URL (paywall) see: https://www.wsj.com/articles/wider-tariffs-threaten-to-take-a-big-economic-toll-1528047583 

Obama the Job Killer

In delaying the Keystone XL pipeline to 2013, President Obama proved once and for all that he does not care about jobs, except perhaps his own. In kowtowing to the environmental lobby the $8 billion infrastucture project that would transport oil from the Canadian oilsands to the Gulf coast, President Obama is holding about 23,000direct jobs hostage to his political whim. Furthermore, upon completion we would have significantly improved our energy security. We would substitute Canadian oil for middle-eastern oil, a great trade-off, but not in the eyes of our President.

Let us hope that we will soon have a more enlightened leadership in the White House.

Obama Jobs Program: Good, but Less than Meets the Eye

President Obama unveiled his $447 billion jobs program last Thursday. Most of the elements make sense and it will be far better than the $800 billion stimulus package put together by the then House Speaker, Nancy Pelosi in 2009. Several economists done cartwheels over the program, most notably Mark Zandi of Moody's, arguing that the program has the potential to increase economic growth by a full two percentage points next year. Trust me, Mark is either dreaming or totally in the tank for the Obama Administration.

In its essential elements the program envisions a 3.1% cut in payroll taxes for workers, up from the current 2%($175 bil.) a 3.1% cut in payroll taxes for businesses for incremental payrolls up to $50 million(($65 bil.)an extension of emergency unemployment benefits( $49 bil.) teacher and public employee retention($35 bil.), modernizing transportation infrastructure ($50 bil.) fixing schools($35 bil) and a few other things. First, most forecasters already modeled in the existing 2% payroll tax cut and the extention of emergency unemployment benefits. Second, not all of this will pass. Third, no forecaster has made any allowance for the contractionary effects of increasing taxes and/or cutting other spending to pay for the $447 billion program. Remember the President said the program will be paid for. If it is paid for concurrently, there is no Keynesian stimulus. Nevertheless, as I have been arguing for over a year, at least the Administration is trying to do something about the scourge of mass unemployment facing our country. Net net, it will help but not a whole lot.

Why? There was no mention energy development in the speech a private sector way of creating jobs. There was no mention of fast-tracking environmental approvals for the transportation project which means it will take forever for them to get started and of course all of this will be subject to costs and the rulemaking asociated with the prevailing wage requirements of the Davis-Bacon Act.

Buried in the speech there was a ray of hope on entitlement reform. The President admitted with respect to Medicare,"with an aging population and rising healthcare costs, we are spending too fast to sustain the program." He later added, "We have to reform Medicare to strengthen it." A very big admission and it opens the way for an entitlement deal later in the year.

An Open Letter to President Obama on Jobs

Dear Mr. President:

I hope you are enjoying your working vacation in Martha's Vinyard. You sure could use a break from Washington and the emerging bear market on Wall Street. You told us that you will address the nation on the need to create jobs after Labor Day. I hope you come up with some good ideas in the clean ocean air. We surely can use them because we have a real employment emergency that is draining both the economy and the spirit of our nation.

Given the emergency, I assume that you are open to a few new and some old ideas about job creation. All the ideas you mentioned on your midwest tour such as ratifying the free trade agreements, passing the new patent law, extending the social security tax cut and extending unemployment benefits are mostly helpful, but they really won't do a whole lot in the short run.

So here are a few ideas that might move the dial.

1. We need an all out domestic energy program. That means more offshore drilling, establishing clear rules and best practices for hydraulic fracturing drilling technolgy that has the real potential to limit our dependence on foreign oil and approving the privately financed Keystone XL Pipeline that will bring Canadian oil to our gulf coast. Note that all of the above does not involve tax dollars. On the public side keep up and step up the research into energy alternatives, but have no illusions about all of the "green" jobs it will create.

2. Spend big on infrastucture. The $50 billion infrastructure bank is small potatoes and may take awhile to launch. Spend $200 billion, but fast track or eliminate the environmental approval process and waive the prevailing wage requirements of the Davis-Bacon Act. With very low interest rates and high unemployment, now is the time to borrow and spend for worthy projects.

3. Give employers a 5% tax credit for increasing their wage bill subject to FICA employment taxes. I think this would work far better than your current payroll tax cut.

4. Have Treasury sit down with the business lobbies and cut a deal on corporate tax reform to present to the Congress. I fear the normal process might take forever.

5. Fund the above with a combination of a one-time lower tax rate for repatriating foreign sourced corporate earnings that are idling overseas, a higher gasoline tax and a down payment on entitlement reform. By the way, if you can get it, going big on a grand bargain for reducing our structural deficit is good idea, but you have to convince yourself and your friends in Congress that the real heavy lifting has to be on the spending side.

None of this will be easy, but when you are President all the easy stuff gets decided before it gets to you. Enjoy your vacation and come back with a real program.

Sincerely,

David Shulman

Letter to NY Times(Online Edition), Mar 12

To the Editor:
Re Bob Herbert’s column and “The Emotion of Reform,” by David Brooks (column, March 9):
It was great to see Mr. Herbert and Mr. Brooks agreeing with each other. President Obama’s maniacal obsession with health care shows complete disregard for the jobs crisis facing our country. Moreover, as Mr. Brooks points out, the focus on health care has created so much uncertainty in the small-business community that new hiring has all but ceased. Wake up and connect the dots.
David Shulman

http://www.nytimes.com/2010/03/13/opinion/lweb13herbert.html?scp=1&sq=%22David%20Shulman%22&st=cse