Obama Jobs Plan Sinks Wall Street
Despite the applause President Barack Obama received from Congress nearly every time he said, "Pass this bill," on Thursday night, Wall Street's response wasn't as enthusiastic.
Reuters said the stock market's drop of 2.7 percent may be linked to investors' doubts over the president's proposal.
Keynote points of the American Jobs Act proposal include:
- Taxes raised for those who can afford it and cut for those who cannot.
- More construction projects.
- More jobs for teachers.
- Financial incentives for companies that hire people who have been unemployed for 6+ months as well as veterans.
The price tag: $447 billion.
"People are digesting the president's plan and the possibility of it actually being passed," said Brian Jacobsen, a chief portfolio strategist at Wells Fargo Funds Management, to the Wall Street Journal. "The big question is whether the plan laid out last night will be a bipartisan solution or whether we'll see more political gridlock."
While the American Jobs Act is supposed to create more job opportunities and tax breaks, John Carney, senior editor at CNBC, has begun wondering if it will actually put us into another recession:
"If people believe that the spending will result in higher taxes, they’ll save more in anticipation of the taxes. They may save more than the government spends, which is why the jobs plan could lead to economic contraction."
In world news, the Wall Street Journal has noted the other factor that is playing a role in the market's downturn today:
Germany's top European Central Bank representative, Jurgen Stark, announced he is resigning "for personal reasons"-- a surprise to the executive board since he had three more years left.
In response, the Euro is now the lowest it's been since February, according to Forbes, as Europe continues to struggle with its own tailspin debt crisis.
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