Two cheers for the president and his America's Jobs Act. Cheer Number One: In presenting it to a joint session of Congress, he sounded as passionate and determined as he's ever sounded.
Second cheer: He laid out the problem correctly and effectively. He explained why jobs and growth must be the nation's first priority now -- not the federal deficit. The economy is in crisis. People are hurting. So government must act, and act quickly. It's irresponsible at a time like this to suggest that government should simply close down.
But a jeer because the jobs plan he presented isn't nearly large enough or bold enough to make a major dent in unemployment, or to restart the economy.
$450 billion sounds like a lot -- and is more than I expected -- but some of this merely extends current spending (unemployment benefits) and tax cuts (in Social Security taxes), so it doesn't add to aggregate demand.
The net new boost to the economy is closer to $300 billion. That doesn't approach even half the gap between what the economy is now producing and what it could produce at or near full employment.
And much that $300 billion is in the form of temporary tax cuts to individuals and companies. Some of these make sense -- enlarging the Social Security tax cut, extending it to employers, and giving small businesses a tax holiday for new hires.
But temporary tax cuts haven't proven to be particularly effective in stimulating new spending in times of economic stress. People tend to use them to pay off debts or increase savings. Companies use them to reduce costs, but they won't make additional hires unless they expect additional sales -- which won't occur unless consumers increase their spending.
That leaves some $140 billion for infrastructure -- improving outworn school buildings, roads, bridges, ports, and so on. And $35 billion to help cash-starved states avoid more layoffs teachers. Both good and important but still small relative to the overall need.
Why did the president include so many tax cuts, and why didn't he make his proposal sufficiently large to make a real impact on jobs and growth? Because he crafted it in order to appeal to Republicans. To get it enacted, he needs their votes.
I'm having a dizzying sense of déjà vu. The first $800 billion stimulus (spread over two years) wasn't nearly large enough given the drop in aggregate demand. And half of it was in the form of tax cuts. The reason it wasn't bigger and contained so many tax cuts was to get Republican votes. But its apparent ineffectiveness -- it saved around 3 million jobs, but that didn't save it from appearing to fail -- made it harder for the White House to do anything more to stimulate the economy, and ward off what's likely to be a double dip.
That's been the heart of Obama's dilemma. Big and bold enough to make a difference, and Republicans are certain to reject it. Small and focused on tax cuts, and maybe Republicans will bite. But even if they sign on, what's the point of the exercise if it won't have a measurable effect on jobs and growth?
And why would they sign on this time, anyway?
Republican Senate leader Mitch McConnell scoffs "This isn't a job plan. It's a reelection plan." That's precisely the problem. McConnell and company have stated publicly that their number-one objective is to unseat Obama and regain the presidency in 2012. They don't want to give the President anything he could possibly claim as a victory. And they're not terribly worried if the economy stays awful through Election Day because that's the best way to fulfill their number-one objective.
The president would have done better with a plan that was big enough to make a real difference. And then, when Republicans rejected it, campaign on it.
So two cheers -- for both the president's style and his words. And one jeer: He failed on substance and strategy.
Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.
Follow Robert Reich on Twitter: www.twitter.com/RBReich
He didn't go nearly far enough for anyone to notice. His rhetoric is no longer a winner.
So don't hold your breath for anything soon - first it was the Gang of Twelve having some plan by Thansgiving, now it is Christmas. Will the present be wrapped in glittery ribbon or will it be a lump of coal?
The one and only way for the economy to improve is to attack the financial woes that keep consumers and businesses afraid to venture out. The record debt and deficit spending are a stormy wind that keeps everyone hunkered down.
Obama's "plan" is nothing but the same tired tricks of the last three years. More spending, more borrowing and more debt. Even a family cannot avoid bankruptcy by borrowing and spending more. We must reduce spending and pay down debt.
As for unity, let's try unity behind the GOP's plan instead of calling the same old call that didn't work.
A quarterback in a game calling for the same failed play over and over would be called by the coach and probably be replaced by the 2nd string..
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You mean like the republicans asking for more tax cuts?
How has that play worked for America?
More tax cuts is not the issue. Extending existing tax credits is the issue which Obama accepted earlier. Raising taxes in a recession is a no-no and has proven to be anti productive.
Obstructionist? That simply means someone doesn't agree with a bad plan. Somehow disagreeing has now become an obstructionist. So if Reid will not let house bills go to the floor in the senate where elected senators can read a bill and debate it, isn't that real obstructionism? One guy controls what a hundred senators can do?
Level the playing field and Americans can beat anybody!
How about comparing the U.S. to Germany? the Republicans dont even mention the succesful countries of Europe because they sweep the floor with the U.S.
GOP = Banana Republic U.S.
We are hurting ourselves, we are our own worst enemy.
We need to level the playing field rather than race to the bottom of the global barrel.
True. It's only 1/3 of what we've wasted in Iraq!
"Republican Senate leader Mitch McConnell scoffs "This isn't a job plan. It's a reelection plan." That's precisely the problem. McConnell and company have stated publicly that their number-one objective is to unseat Obama and regain the presidency in 2012. They don't want to give the President anything he could possibly claim as a victory. And they're not terribly worried if the economy stays awful through Election Day because that's the best way to fulfill their number-one objective.
"The president would have done better with a plan that was big enough to make a real difference. And then, when Republicans rejected it, campaign on it."
Also true -- and I've been saying exactly this since LAST YEAR.
So tell us why he didn't just do that?
Point is spending by government doesn't help in most cases especially when it's borrowed money. That's like a business borrowing 5 million to buy refrigerators to sell to Eskimos.
Government spending can help when Eisenhower started the interstate highway system. That investment helped the economy not only in construction, but because the interstate system revolutionized our networking and increased profits to businesses relying on transportation.
The space program was government spending that led to private companies developing new technology that not only helped the space program, but products and technology for commercial uses.
The infrastructure maintenance program Obama proposes is not the same. We already have roads and bridges that are being used. While maintenance is needed, the system still works.
It's like painting your house. You can live in it without painting, so there is no benefit except to make it look better. If you are short of money, like the US is, we wait until we have the money to paint.
A lot of the 450 billion would go toward non-direct-jobs payments like tax breaks, which many say are not very effective in producing jobs. I believe only 175 is targeted for direct jobs spending like infrastructure work. The latter amount is very unlikely to get by Congress. So my inquiry was about whether a smaller amount might be granted, and how that could be spent more modestly and stretched out longer. So 20r billion is out of the picture. We must consider a smaller amount--say, 50 billion. Based on your figures (if I got it right) 5 million jobs @ $10/he @ 20 hrs/wk could extend for 4 years. So, to agree with you further, why doesn't O push for that (or something close)? I'll reply to Heron77, with whom I disagree some and agree some.
On what grounds? Really? If you loan someone 10,000 to buy a car and that car was now worth only 6,000 should the federal government have the right to make you lower the prinicpal amount to be repaid to 6,000 thus making you take the loss? Really? Wow!
Oh yeah, and that wasteful spending the President alluded to -- that can be found alone in the defense and Pentagon budgets.