Submitted by Econophile.
This article originally appeared in the Daily Capitalist.
The President just finished his jobs speech and I can report with high confidence that it won’t move the needle. In my article last week, “Unemployment Will Remain High Because Obama Will Do All The Wrong Things” I said that Obama would:
I suspect that President Obama in his speech this week will come up with the same remedies that his Administration has been proposing before, but repackaged to make it sound like bold new remedies. More tax breaks for employers, more “focused” spending on infrastructure, job training programs, and green jobs.
And that is exactly what he is proposing in his American Jobs bill that he announced tonight. He proposes to extend the payroll tax cut (50%) for another year, give more tax incentives to businesses hiring workers or raising workers’ wages, and spend massively on infrastructure. He didn’t exactly say “how much” spending, but reports are saying $447 billion. An outline of the bill can be found here. It is a piece of liberal trash and I urge you to read it, but not on a full stomach.
He made it sound exciting as if they were really doing something but not really. It all sounds very familiar. He proposes a lot of tax incentives or spending for specific classes of workers: companies hiring veterans, hiring workers jobless for more than 6 months, summer jobs next year for disadvantages kids, hiring more teachers, continue tax breaks for “average working famlies”, some kind of incentive or penalty for corporations hiring workers in America, not abroad, and a mortgage refi incentives.
The President certainly made all the new spending sound exciting. We’re going to have first class airports (a snub at the Chinese), great bridges and roads, first class schools. We’re going to be a powerhouse based on all this useless spending. Look, I know there are lots of potholes on the roads, but are trucks having a problem getting goods to us?
How to pay for it? He noted the new budget deal cuts $10 trillion in the next ten years, plus another $1 trillion next year in cuts determined by the Congressional “Super Committee.” He said we need to pass it right away but not let it add to the deficit. He proposed “cuts” in Medicare, Medicaid (“reform our health care system to strengthen Medicare”) but he didn’t offer anything beyond that except that “we’ve got to work together.” He also proposed tax hikes for the wealthy and corporations. First of all he said even Warren Buffet agrees he should pay more taxes. Then he said we need to reduce corporate taxes and then he said we need to get rid of corporate tax loopholes. I don’t know how you can lower taxes by raising taxes.
This is the Japanese approach to economic recovery. They spent trillions and have a first class wasteful infrastructure and a stagnant economy. The idea that you can spend more and cut the budget is a fantasy. My guess is that they will have some CBO or OMB study saying it’s feasible, but the “cuts” will all be back-ended – if they are real at all.
He made a big pitch for the role of government in the economy and how, starting with Lincoln, the partnership of government and business made America great. “Where would we be without our colleges?” he asked. Ask Harvard or Stanford, maybe they know. To the Tea Partiers in the audience he asked, “Do we dismantle government and say you are on your own? That’s not what America is. Yes we are a country of rugged individualism but we are also all connected as a people.”
This is one of the things I really dislike about the guy. He trivializes the opposition. It’s one of those “well, everyone knows …” kind of put downs, well … on you if you read this blog. It’s like “economist’s say …” as an answer to you wack jobs who don’t buy Keynesian economics.
This speech is another liberal fantasy by President Obama. He is clueless and apparently desperate because he cannot come up with anything that works. I wonder what he would say to the question, “why hasn’t the $830 billion Recovery Act spending worked to create jobs as you said it would?” You are witnessing first hand the further destruction of our economy because this new spending will add debt upon debt to no economic gain. And to be clear, it is the failure of Keynesian economics on a grand scale.