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President Obama made his highly-anticipated pivot to job creation last night. The “American Jobs Act” is the name of the plan, and the one recurring theme the president repeated over and over again is that “[Congress] should pass it right away.” The president’s tone was forceful, and much like the promise he made in the midst of the debt ceiling battle, he promised to take his case directly to the people. Yet if this speech was intended to be a transcendent effort aimed at galvanizing a nation, it didn’t work.
“Tonight we meet at an urgent time for our country,” Mr. Obama began. “We continue to face an economic crisis that has left millions of our neighbors jobless, and a political crisis that has made things worse.” From the president who claimed to have created or saved four million jobs, and whose administration has been touting an economic recovery for the better part of two years, this was a rather startling, if realistic, admission.
Yet in a roundabout way, he once again shifted blame away from himself and his administration, noting that Americans who “grew up with faith in an America where hard work and responsibility paid off…for decades now…have watched that compact erode. They have seen the deck too often stacked against them.” And once again, he asked whether or not “we can stop the political circus and actually do something to help the economy; whether we can restore some of the fairness and security that has defined this nation since our beginning.”
Some of the details of the the American Jobs Act released to the press include increasing and extending a payroll tax cut for workers from 4.2 percent to 3.1 percent, costing $175 billion. The president also promised business owners a 50 percent cut in payroll taxes “if they hire new workers or raise workers’ wages.” The latter of these two ideas is new. The former is an extension of something Congress has already done.
The president then retreated to familiar ground. Noting that we have “badly decaying roads and bridges,” “highways are clogged with traffic” and that our “skies are the most congested in the world,” Mr. Obama proposed more spending on infrastructure, including “at least 35,000 schools.” Paying for these improvements will be done by setting up “an independent fund to attract private dollars and issue loans based on two criteria: how badly a construction project is needed and how much good it would do for the economy.” Price tag? $25 billion.
This proposal is remarkably similar to the 2009 stimulus package which also targeted “shovel-ready jobs.” One is left to imagine why this time around such an idea would be more successful. Adding to the familiar, the president also proposed $35 billion in spending to prevent the layoffs of more than 280,000 teachers, and the hiring of additional ones. If that gives one a sense of deja vu, it’s because the president asked for $50 billion to avert such layoffs in June of 2010.
The president also issued up a contradiction. While offering businesses a “$4,000 tax credit if they hire anyone who has spent more than six months looking for a job,” the plan “also extends unemployment insurance for another year.” This would allow Americans to collect federal unemployment benefits for as long as three years. A number of studies show that workers who collect benefits for longer periods of time stay unemployed longer. Thus, incentivizing businesses, as opposed to workers themselves, is not likely to be effective. Yet the president insisted that “Democrats and Republicans in this Chamber have supported unemployment insurance plenty of times in the past. At this time of prolonged hardship, you should pass it again–right away.”
Mr. Obama then moved on to explain how he would pay for the bill, noting that the same Congress which cut government spending by $1 trillion in July, and must come up with an additional $1.5 trillion by Christmas, should “increase that amount so that it covers the full cost of the American Jobs Act.” Again, it remains up to Americans to remember two things: one, this president wanted a “clean” debt ceiling bill with no spending cuts at all, and, two, that the so-called spending “cuts” are nothing more than a reduction in projected increases in federal spending. Mr. Obama then promised to release a plan to “stabilize” long-term debt on Monday.
Not reduce the debt. Stabilize it.
After that, another old theme with a different twist was re-visited. After acknowledging that an aging population and rising health-care costs make Medicare and Medicaid unsustainable in their present form, which he knows concerns his party, he noted that Republicans don’t want to raise taxes “on those who are most fortunate and can best afford it.” Ironically, he then proposed tax reform “where everyone gets a fair shake, and everybody pays their fair share.” That may come as a surprise to the 47 percent of Americans who pay no income taxes at all. He then proposed either-or choices between “tax loopholes for oil companies,” or “money to give small business owners a tax credit,” “tax breaks for millionaires and billionaires,” or “put(ting) teachers back to work,” even as he contended, “This isn’t political grandstanding. This isn’t class warfare.”
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