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The Cost Of Obama’s Stimulus Plan: $312,500 Per Job (Vote) Created Or Saved (And Guess Who Is Paying It)

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Zero Hedge
Sept 13, 2011

For those eager to put some math to the rhetoric coming from the White House over the president’s jobs creation plan, and that should be everyone, here is a quick and dirty estimate based on the numbers being thrown around of a 2% GDP increase in year 1 and 1.9 million jobs created or saved… most saved, as in those you can’t really quantify. Said otherwise, roughly a $300 billion increase in GDP yields 1.9 million jobs. So far so good.  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% 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 AJA plan will cost $250,000 per job created (excluding the interest expense) and $312,500 per union job, er job created (including interest). And that’s how much it costs for Obama to purchase one vote… created or saved. Keynesian efficiency strikes like a Swiss watch yet again.

As for the just as troubling question of who ends up footing the bill of this “fully paid” for stimulus act, here are the details.

Earlier today, the OMB director Jack Lew gave some so far largely missing information when he laid out how the president plans on paying for the Stimulus Act (http://www.c-spanvideo.org/program/WhiteHouseDailyBriefing1719). Specifically, Obama and his advisors believe they are “over achieving” by raising more ($467 bn) over 10yrs to pay for the jobs package now.

So on an annual basis, tax increases will be as follows: (86% limit of itemized deductions, 4% hedge fund managers, 8.6% oil & gas, 0.6% Corp Jets)

Per Year (Beg Jan 2013)
1) Itemized Deductions (ie $250k or higher income                       $40.0 bn
2) Hedge Fund managers                                                            $  1.8 bn
3) Oil & Gas Industry                                                                  $  4.0 bn
4) Corp Jet Depreciation                                                              $ 300 mm


(1) Limit on Itemized Deductions for those making above $200k & Families above $250 k ==> will raise $400 bn over 10yrs ($40 bn/yr) (because you know anyone making over $200k is very wealthy)

  • A d v e r t i s e m e n t

(2) Taxing Carried Interest as Ordinary Income ==> will raise $18 bn over 10yrs ($1.8 bn / yr)

(3) Removing Oil & Gas Industry tax breaks ==> $40 bn over 10yrs ($4 bn / yr)

(4) Removing the favorable depreciation for Corp Jets (currently 5 yr depreciation) so it is the same as Commercial Jets (7yr depreciation)  ==> $3 bn over 10yrs ($300 mm per yr)

So, Keynesian effiency aside where the IRR on any new job creation is so negative our excel #Refsout, our far more important question is… how does anyone think this proposal has any hope of passage in a Republican controlled House?

This article was posted: Tuesday, September 13, 2011 at 3:11 am

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