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Obama jobs plan vs. GOP proposal: No comparison, really

Students of the sciences can generally tell the difference between action and motion. The first produces results; the second is often designed to avoid results.

For a laboratory experiment in how to spot the distinction, let’s examine the competing jobs plans offered by President Obama and congressional Republicans.

Obama’s version, dubbed the American Jobs Act, was introduced in September to widespread predictions that GOP opposition would doom it on Capitol Hill. Whether that was supposed to be a self-fulfilling prophecy or just the plain-vanilla type of prophecy, it has been borne out.

In the most recent blow, Senate Republicans (with the connivance of three Democrats) last week killed a provision that would have provided $35 billion to states and municipalities to hire or retain schoolteachers, police officers and firefighters. The sticking point evidently was the requirement that the spending be funded by a half-percent tax on incomes over $1 million a year.

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The signs are that other pieces of the jobs act won’t fare any better. Those include an infrastructure bank to help fund $50 billion in transportation and other projects (to be voted on next week), temporary extension of payroll tax cuts and unemployment benefits, and other tax-related incentives for small business hiring.

Taken together, this effort isn’t perfect; for one thing, the administration’s proposals to address the housing slump have been consistently late and inadequate — notwithstanding Monday’s announced enhancements to the government’s home-refinancing program. But there seems to be little question that it would accomplish the crucial near-term goal of raising aggregate economic demand — that is, putting cash in the pockets of the middle class and the working class, which would spend the money promptly, while setting up infrastructure investments that would continue to boost the economy for decades.

Just keeping teachers and first responders on the job would have an immediate effect on unemployment. That’s because the single biggest drag on U.S. employment comes from layoffs by local governments, which have hemorrhaged 210,000 jobs since September 2010, more than half of them in education.

Of course, people can disagree in good faith over the right way to address a genuine crisis, and congressional Republicans stepped up to the plate earlier this month with an alternative package they call the Jobs Through Growth Act. The moniker seems designed at least partially to exploit the news media’s tendency to look for balance and objectivity in all things, as though to place the Democrats’ jobs act and the Republicans’ jobs act on equivalent pedestals.

But did the Republicans propose a jobs act in the sense of a package of near-term demand-creating initiatives, as opposed to shibboleths and ideological dog whistles? Some economists think not. Joel Prakken, a former economist at the New York Federal Reserve Bank who is chairman of St. Louis-based consulting firm Macroeconomic Advisers, said that if the entire package were enacted immediately, “we wouldn’t change our estimates of economic growth.”

That’s assuming Congress skipped one big element of the GOP plan, which is enactment of a balanced budget amendment. If that got passed during this period of economic strain, he said, “it would be catastrophic.”

Prakken’s firm estimates that the near-term stimulative provisions of the Obama program — infrastructure spending, the temporary payroll tax cuts and extended unemployment coverage — would create 1.3 million jobs in the first year and raise gross domestic product growth by 1.25 percentage points.

It’s only fair to observe that buried deep within the GOP program are a few initiatives that would make sense over time, such as improving the president’s authority to negotiate fair international trade agreements and examining more closely the economic effect of regulations. But one has to dig pretty deep to find them.

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Some of the plan’s elements, indeed, seem to have been conceived largely to produce telling acronyms, such as the Freedom from Restrictive Excess Executive Demands and Onerous Mandates Act — yes, “FREEDOM.” This measure aims to eviscerate environmental and occupational safety regulations, suggesting that it’s all about your FREEDOM to succumb to polluted air and water and to get disemboweled at work.

Others address issues and programs that don’t even exist, which is as good a definition of partisan paranoia as you might find. One is a provision to eliminate “junk lawsuits” over medical malpractice, “tort reform” being a GOP hobbyhorse of long standing. This is not even a legitimate issue in healthcare costs, let alone in job development: Credible estimates place the cost of malpractice litigation, including the defensive medicine that the fear of lawsuits supposedly generates, at no more than 3% of our $1.7-trillion national healthcare bill — or no more than about $50 billion.

By contrast, the administrative overhead and profits of the private health insurance industry, according to the chief actuary of Medicare/Medicaid, will amount to $152.1 billion this year — not including the administrative burden insurers push down onto doctors and hospitals. But you won’t find a measure to control insurance company costs in the Republican jobs plan. Quite the contrary — the plan calls for a repeal of healthcare reform, which is the only government initiative in existence aimed at controlling the costs imposed by commercial insurers.

The GOP plan is shot through with measures aimed at protecting corporate profits, including a cut in the corporate tax rate, attacks on the power of unionized workers, the repeal of financial regulations and incentives for U.S. corporations to repatriate overseas earnings. In job-creating terms, these are entirely beside the point. Corporate profits today already have bounced back almost to their pre-recession highs — but businesses aren’t spending those profits on hiring.

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“Business profitability is not what’s holding back the economy,” said Gus Faucher, director of macroeconomics at Moody’s Analytics. As he points out, survey after survey of business owners has established that their primary concern is not regulation or taxation, but the lack of near-term consumer demand.

What’s desperately needed today on jobs policy is clear thinking. Instead, the Republicans have produced gimmicks such as Rick Perry’s do-it-yourself optional flat tax and Herman Cain’s 9-9-9 tax plan, the latter of which gets murkier the deeper one dives into it, like a polluted lake. Now there’s the Jobs Through Growth Act, which is all smoke. The best thing one might say about it is that where there’s smoke there’s fire.

But it may be more pertinent to quote President John F. Kennedy’s famous observation, that where there’s smoke there’s usually only a smoke-making machine.

Michael Hiltzik’s column appears Sundays and Wednesdays. His latest book is “The New Deal: A Modern History.” Reach him at mhiltzik@latimes.com, read past columns at latimes.com/hiltzik, check out facebook.com/hiltzik and follow @latimeshiltzik on Twitter.

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