President Obama Thursday night urged Congress to pass a plan that some analysts say will put 1.9 million Americans to work in the next year. But two days earlier, GOP presidential candidate Mitt Romney announced a plan that he says will create nearly 10 times as many jobs.
Romney, who detailed his jobs agenda in a 161-page book, said in a Las Vegas speech unveiling the plan that if elected, he would push his plan to create 11.5 million jobs in his first term, dropping unemployment to less than 6 percent and boosting GDP growth to 4 percent annually.
But while most economists agree that Romney’s plan does include some job-creating initiatives, whether his proposals will add up to 11.5 million jobs is a bit hazy.
“It is unclear what that 11.5 million number came from,” said John Irons, research and policy director for the Economic Policy Institute, a nonprofit think tank.
Irons said 11.5 million jobs, or about 240,000 per month, is a “fairly modest target” because most economists would expect about 300,000 to 350,000 jobs to be created per month when the economy is coming out of a recession.
“If that’s his target, I don’t think it’s ambitious enough,” Irons said. “It is a little bit notable, but that’s not that many over four years. That’s the kind of job creation you would expect to see as a status quo.”
Romney’s proposed GDP growth is about half a percent higher than the 3.6 percent growth that the non-partisan Congressional Budget Office projects under current law for the same four-year time frame.
But on unemployment, Romney suggests his plan will outpace current CBO predictions by 2 percent.
“It’s a practical plan to get America back to work. It’s also immediate,” Romney said of his plan. “This isn’t something that’s going to take years to put into place.”
The former GOP front-runner’s plan includes five executive orders he would sign on his first day in office and five bills he would immediately send to Congress.
One bill would lower the corporate tax rate from 35 percent, the second highest rate in the world, to 25 percent. William McBride, an economist at the Tax Foundation, said the lower rate would reduce unemployment by about 0.5 percent, adding about 1 million jobs in a year.
“The corporate tax rate is generally considered to be one of the most harmful of taxes in terms of economic growth, so cutting it, there is a lot of bipartisan agreement about this,” McBride said.
But while dropping the rate to 10 percent would stop U.S. businesses from relocating overseas, it would not lead to a large number of companies relocating to U.S. soil because the average rate of America’s trade partners is around 25 percent as well, he said.
“This ultimately isn’t so radical. It’s just moving us toward the average,” McBride said.
Romney would also immediately send Congress free-trade agreements with Panama, South Korea and Colombia. The U.S. Chamber of Commerce estimates that opening trade with these three countries could create 380,000 jobs and the International Trade Administration expects the agreement with South Korea alone to boost annual exports by $11 billion.
As a part of what Romney calls his “Middle Class Tax Savings Plan,” the former Massachusetts governor said he would eliminate taxes on capital gains and dividends for people who earn less than $200,000.
Joe Rosenberg, a research associate with the non-partisan Tax Policy Center, said cutting investment income taxes only for people making less than $200,000 is “a bit of an odd way to do it” because such a small number of people at or below that income level bring in much money from capital gains or dividends.
“It is sort of a political have your cake and eat it, too,” Rosenberg said. “You’re not going to propose something extreme such as eliminating all capital gains and dividends, but you will throw it out there as a signal that you’re sympathetic to that point of view.”
Romney also plans to eliminate the estate tax, or “death tax,” because, he said, it could have “catastrophic” effects on small family-owned businesses.
The CBO estimates that permanently repealing the estate tax would increase the deficit by about $500 billion in a decade. But a 2003 study by William Beach, an economist with the conservative Heritage Foundation, estimated that repealing the tax would create between 170,000 and 250,000 jobs.
There are many similarities between Romney’s plan and other Republican plans that have been put forth, such as House Majority Leader Eric Cantor’s job-creation agenda and his fellow GOP candidate Jon Huntsman’s proposal.
All three call for repealing “Obamacare” and rolling back Obama-era regulations. Huntsman also proposed dropping the corporate tax rate to 25 percent and cutting taxes on capital gains and dividends.
“This plan is broadly consistent with Republican’s expressed positions,” said Andreas Stathopoulos, assistant professor of finance and business economics at the University of Southern California’s Marshall School of Business. “It is not surprising that Romney’s plan is what it is.”
ABC News’ Emily Friedman contributed to this report.