A Rational Jobs Plan from Senate Republicans

by Douglas Holtz-Eakin

Senate Republicans have just introduced the “Real Jobs Plan.” As I’ve long argued, an effective jobs “plan” is a commitment to a sustained environment for long-term growth. The president’s failed proposals have repeatedly proven that “temporary and targeted” stimulus is insufficient. Moreover, his latest effort displays more interest in politics than growth.

Senators McCain, Paul, and Portman have proposed a plan that effectively targets job creation at a time when we desperately need it by incentivizing growth and repealing the job-killing Affordable Care Act and Dodd-Frank law. There is a lot here to like.

Still, inevitably there will be a war of numbers in which progressives trot out numbers from Keynesian business cycle models to argue that the strategy won’t work. To anticipate the debate, here are some of the highlights of the Real Jobs Plan and some estimates of the jobs impact:

1. Lower the corporate tax rate to 25 percent, resulting in an additional 581,000 jobs per year, on average

2. Reduce the tax on foreign earnings brought back to the U.S., resulting in 2.9 million jobs

3. Repeal Dodd-Frank, estimated to cost the U.S. 4.6 million jobs by 2015

4. Repeal ACA, estimated to cost the U.S. economy at least 800,000 jobs

5. Lift the offshore drilling moratoria, resulting in 1.2 million U.S. jobs

6. Prohibit the EPA from regulating greenhouse gases, estimated to cost the economy 1.4 million jobs by 2014

7. Ratify, immediately, the free trade agreements with South Korea, Colombia and Panama, resulting in 250,000 new jobs

Of course, No. 7 has finally occurred after five years of unnecessary delay. Let us hope that the first six do not meet a comparable fate.

One way to think of the strategy as a whole is to use the repatriation policy as a jump start to job growth, followed by a solid plan to cement these gains and make them permanent.

Three cheers for a rational plan.

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