A bankrupt jobs bill

Jesse Jackson Jr.’s proposed jobs bill would have a devastating ripple
effect on the U.S. economy if it were to pass. The Chicago congressmen
is proposing that our Federal government pay $40,000 a year for all
unemployed Americans.

Please bear in mind that there are 15 million unemployed Americans
nationwide. The cost of the government employing them would be a
staggering $600 billion. Try and wrap you common sense around this comic
offering.

What about the Americans who make less than $40,000 per year; the equivalent of $19.25 an hour? Sixty-five percent of American workers make less than $40,000 per year. Do they not have an incentive to quit their jobs and become unemployed to increase their income? There are approximately 211 million workers in the U.S., and 137 million make less than $40,000. For the ease of arithmetic, let us assume 100 million workers quit their jobs for these new government jobs. The cost to the taxpayer would be an additional $4 trillion. The total cost of Jackson’s program to the government would be a whopping$6.2 trillion, or 44 percent of GDP. Is the federal government bankrupt yet? Almost half the GDP would go to highly paid government jobs for the unemployed.

Uncle Sam would not be spared from this carnage. Without these businesses making profits and employing their highly paid employees, there would be few, if any, taxpaying entities remaining to shoulder the crushing tax burden resulting from the government hiring the unemployed at $40,000 per year.

Of course, the Federal Reserve Bank would come to the rescue of the economy, as it always does when it senses a potential financial disaster. Its time-honored solution to most financial problems is to print money. It this case, it would print a lot of money. If it wanted to save the economy, it would print enough money so that $40,000 in real terms would be less than today’s minimum wage of $7.25 an hour, or about $14,500 per year. This would require the Fed to triple the money supply. Therefore every dollar that you hold today would be worth $0.33 if Jackson’s jobs plan were to be “saved” by the Fed.

Fortunately, not even the Liberal Democrats in Congress are stupid enough to take Jackson’s job proposal seriously. Elementary arithmetic and common sense leads to the inescapable conclusion that $40,000 jobs for the unemployed would be an unmitigated economic disaster. But we all know that when media cameras are present, congressmen tend to open their mouths before they think.

Unfortunately, members of Congress will not apply the logic of Jackson’s ridiculous jobs proposal to serious proposals of extending unemployment benefits and raising the minimum wage. If they did, they would understand that extending unemployment benefits and having a high minimum wage also has a negative impact on the economy. The politically incorrect flip side of this argument is that reduced unemployment benefits and lower minimum wages would have a positive impact on the economy.