Last night, President Obama unveiled his much-anticipated program, the $447 billion American Jobs Act, to jumpstart the faltering American economy. Here's my reaction.
I grade the proposal a solid B+. The President didn't fly me to the moon, but he laid out a balanced and pragmatic program of tax cuts and federal spending that, if passed by Congress, will give the American economy a boost -- albeit possibly not as big a boost as it needs.
The Pluses
The President's proposal is carefully calibrated to the art of the possible. The American Jobs Act is balanced between tax cuts to satisfy Republicans ($245 billion) and spending programs for Democrats ($202 billion). Crowd-pleasing measures are emphasized throughout the package.
On the tax cut side, businesses and many consumers will no doubt welcome $240 billion in payroll tax reductions. Additional tax incentives proposed in the American Jobs Act include the extension into 2012 of immediate, 100 percent deductions for investment in plant and equipment, and tax credits for hiring returning veterans and the long-term unemployed.
Both the 100 percent expensing extension and the new hiring tax credits encourage private sector investment and job creation, activities that the U.S. economy needs urgently at this time.
The emphasis of the American Jobs Act on the creation of construction jobs is especially welcome, and this portion of the plan should benefit, at least in part, the energy-efficient and sustainable building sectors. Construction job spending under President Obama's proposal includes:
• The modernization of 35,000 schools ($25 billion) and community and tribal colleges ($5 billion). Funds can be used for energy-efficiency and greening, as well as repairs.
• $50 billion for the modernization of highways, transit, rail and aviation, including multi-modal facilities. Green approaches are increasingly being used for roadwork, and energy-efficiency and green construction represent a key aspect of mass transit and airport design and construction.
• $15 billion for rehabilitating vacant and foreclosed homes, businesses and community facilities. Weatherization initiatives and green certification will no doubt be utilized in this context.
• Home mortgage refinancing at 4 percent through Fannie Mae and Freddie Mac, a proposal that would enhance consumer incomes by reducing mortgage payments, indirectly benefitting home improvement and other spending.
The construction emphasis in the President's program is a good strategy. As I noted in my September 7 blog post, construction spending creates jobs across numerous disciplines, including architecture, engineering, interior design, energy audit, and the manufacture and sales of building products and supplies. Related fields also benefit, including finance, insurance, appraisal and (to track efficiency improvements) software development and sales.
Additional spending initiatives under the American Jobs Act are geared to reducing unemployment or blunting its impact. Unemployment insurance is extended and made more flexible ($49 billion); these sums are typically spent rapidly, generating a multiplier effect that boosts the economy.
Next page: Reservations about the American Jobs Act
"His "new ideas" for the
"His "new ideas" for the economy are actually retreads from the Progressive Era: more government spending; more government jobs; more government spending on unionized jobs; no accountability to taxpayers."
It's worse than that. It's a
It's worse than that. It's a rehash of his failed agenda. Too Big To Fail II, Stimulus II, Shovel Ready II, Cash For Clunkers II.
Where is access to capital in
Where is access to capital in the "no jobs" bill? Small business's are the creator of jobs, how can they expand when they don't have access to capital? Why are banks borrowing money to play the commodities market? How hard is it to require a percentage of loans are made to small business's if they borrow from the FED?
"In a June 30 article in the Wall Street Journal titled “Smaller Businesses Seeking Loans Still Come Up Empty,” Emily Maltby reported that business owners rank access to capital as the most important issue facing them today; and only 17% of smaller businesses said they were able to land needed bank financing."
Translation of Obama
Translation of Obama proposal: "I'll gladly take a hamburger today and pay you back next Tuesday and over the next 10 years when I identify where the money will come from" Money for pet projects such as continued funding for unemployment, teachers are more of the same. Employer payroll tax reduction will drive jobs, not the employee side. Quoting P Krugman? Wow we could ever have enough govt spending to satisfy him
Government doesn't, hasn't
Government doesn't, hasn't and can't create jobs. Never has, never will. All government can do is make work and use tax revenue to pay for it. Keynesian economics has proven itself a fallacy and to propose a doubling down on a failed concept is idiocy.
Only private industry can create jobs and this is where the government has actually done something. The government has inhibited job growth through its heavy handed regulatory overreach. Companies are pulling in on hiring anyone or expanding because of the uncertainty created by the regulatory morass coupled with this never ending economic doldrums, first created by government and then extended by the massive debt and regulatory uncertainty.
Obama and his administration have proven themselves incapable of solving our economic problems. We are going to have to slog through the next 16 months until an new administration that actually has the best interests of this country assumes control and begins to undo the vast amount of harm inflicted on our great nation.
Darn, your writing looks alot
Darn, your writing looks alot like a couple of common Fox News stock sound bites strung together.
Read the literature on what happened during the 1937-38 recession, a fair analogy to todays sit uation, and it shows that expansion came within 2-3 months of when spending and expansionary money supply was re-started. How odd is that??? And how did you arrive at the opposite conclusion?
Are you holding the chart wrong?
Obama's record of
Obama's record of accomplishments as detailed in the WSJ.
"Perpetually overpromising and underdelivering is not remotely good enough, not even for government work. No corporate CEO could survive such a clear history of failure. The economic records set on Mr. Obama's watch really are historic. These include the first downgrade of sovereign U.S. debt in American history, and, relative to GDP, the highest federal spending in U.S. history save the peak years of World War II, plus the highest federal debt since just after World War II.
The employment picture doesn't look any better. The fraction of the population working is the lowest since 1983. Long-term unemployment is by far the highest since the Great Depression. Job growth during the first two years of recovery after a severe recession is the slowest in postwar history.
Moreover, the home-ownership rate is the lowest since 1965 and foreclosures are at a post-Depression high. And perhaps most ominously, the share of Americans paying income taxes is the lowest in the modern era, while dependency on government is the highest in U.S. history.
That's quite a record, although not what Mr. Obama and his supporters had in mind when they pronounced this presidency historic."