A study conducted by a former director of the Congressional Budget Office (CBO) has determined that a price control provision of Barack Obama's jobs bill would actually destroy 238,000 jobs.
Obama's bill contains a provision requiring drug manufacturers to pay rebates to the government on prescription drugs for Medicaid/Medicare dual-eligible participants and other low income seniors. Douglas Holtz-Eakin, President of American Action Forum and a former Director of the CBO, says that these price controls "would put people out of work, increase costs for seniors and privately-insured patients, and slow research and development for new drugs." The net effect would be a loss of 238,000 jobs in pharmaceutical and related employment industries according to the newly released report co-authored by Holtz-Eakin.
Obama consistently claims that his bill would create 1.9 million jobs. That's a number generated by Mark Zandi, chief economist at Moody's, and a cheerleader for the Administration. Zandi generated the estimate before even knowing that the White House planned to "pay for" the legislation with a $1.5 trillion permanent tax increase. After getting the rest-of-the-story, Zandi amended his analysis. In a letter to Congress, Zandi stood by his rosy jobs prediction, but noted that the tax increases would create a "drag on the economy" within a year of implementation, and by 2015 the economy would be in "the same place" as now.
The same place, Mr. Zandi? Not exactly – don't forget half a trillion more spending of money we don't have and $1.5 trillion more in permanent taxes.
Bloomberg doubted Zandi and the President's projections, too. They surveyed 34 other economists. Not one was as optimistic as Zandi. In fact the average job creation estimate by the group was a paltry 288,000. Five said the legislation would produce zero new jobs. Since Obama's wants to spend $447 billion to get there, if the average estimate were to come true that works out to $1.6 million per job.
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