"Businesses repeatedly see that, so they respond to it in a temporary way," said Martin Regalia, chief economist for the U.S. Chamber of Commerce, which raps Obama for not seeking more-lasting job creation. "It does help temporarily maintain or boost demand because it puts more spendable money in people's pockets, and some of that will be spent. If all you want to do is boost the growth rates for next year, this will probably do that."
But that's not necessarily the best course, he said. The chamber wanted a focus on the energy sector, where relaxation of rules could put people to work immediately, and more support for international trade, including passage of pending free-trade agreements_ especially the long-delayed deal with South Korea.
"Trade agreements were kind of mentioned almost casually, but there was no plank. We think that's something that would be very, very important," Regalia said, noting that Obama wants to double exports yet yields opportunities to others. "To get in there first is important, and in fact we're ceding the playing field to competitors who have already established trade agreements with (South) Korea."
Another reason why support for Obama's plan is hedged among experts: There's little to fix the housing sector, a huge drag on the economy. Obama talked broadly about encouraging government-controlled mortgage lenders Fannie Mae and Freddie Mac to refinance home loans to lower interest rates, but he gave few details.
There are 800,000 lender-owned properties nationwide, and another 800,000 in some stage of the foreclosure process. A staggering 3.5 million mortgages are now delinquent — not yet in the foreclosure process, but they could wind up there. Moreover, an estimated 30 percent of homes with a mortgage are now worth less than the mortgage — a phenomenon described as being underwater.
That's why support for the American Jobs Act is qualified.
"These are useful changes, but the most important driving force for our current economy is that people will not increase their spending until their balance sheets are repaired and their houses are no longer underwater," said Dean Croushore, chairman of the economics department at the University of Richmond. "These are things the government is not able to fix, so we should expect slow economic growth for several years to come."
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