President Obama's "American Jobs Act" is essentially Stimulus 2.0. He's asking for roughly $450 Billion to be used for infrastructure projects (plus the Infrastructure 'Bank'), tax cuts, extensions of unemployment benefits, and local government aid. The emphasis hasn't changed much - like the American Recovery and Reinvestment Act before it (Stimulus 1.0), over half of the proposal is dedicated to tax cuts.
Obama wants to extend the payroll tax cut that was set to expire this year, and make it bigger - dropping it down to 3.1% from 4.2% now (it's normally 6.2%). He also wants to cut the payroll taxes businesses pay in half, so it matches the new individual rate (3.1%). Throw in a couple Billion dollars for tax incentives to get businesses to hire the long-term unemployed and invest in new factories and supplies, you get to about $240 Billion - well over HALF of the total bill.
Then there's the limited new spending - which consists of the Infrastructure Bank ($10 Billion to start, self sufficient after a while), Immediate Surface Transportation - i.e., roads, rail, bridges, airports, public infrastructure, etc. ($50 Billion), Modernizing Schools and Colleges and fixing up foreclosure properties ($45 Billion), Extending unemployment benefits ($49 Billion), Subsidized Job training and re-training ($20 Billion), Teachers, First Responder Jobs, and Local Government Aid ($20 Billion), and Housing Assistance ($16 Billion).
I believe that Stimulus 1.0 was not nearly large enough to make any substantive impact on economic growth. I felt that it emphasized tax cuts instead of putting money where it's needed most - in building things in order to get people back to work. Had it been $1 Trillion in infrastructure spending, I think the economic impact would have been far greater. Instead, we got 1/3 of that on infrastructure spending, local government aid, and unemployment benefits, and then 1/2 a trillion in tax cuts.
Tax cuts are good, but infrastructure spending is better. It puts people back to work, and it's work and construction that we need to do anyway. I feel that President Obama is missing an opportunity to think big. Stimulus 1.0 didn't work very well because it wasn't very stimulative. It tried to do too many things for too many people. Stimulus 2.0 is probably going to work the same way, only with less of a visual impact since it's smaller. Though, the infrastructure bank will be nice - if it works.
Overall, President Obama's speech and whole plan seem to be more about re-election prospects than about real job creation. The Republicans weren't wrong about Stimulus 1.0 not working - it didn't. However, the reason it didn't is because most of it went to tax cuts, which are not very stimulative. Stimulus 2.0 won't work either, because it's mostly tax cuts.
Apparently, at least 50% of any stimulus plan needs to be tax cuts in order to garner any Republican support. May I suggest for Stimulus 3.0 (we'll need it because 1.0 and 2.0 won't work) that it be $3 Trillion dollars. $1.5 Trillion to pay for a 50% reduction in ALL taxes (corporate, individual, capital gains, etc.) for 3 years, and $1.5 Trillion in infrastructure spending. This way, the Republicans will be happy about the largest tax cut in our Nation's history, and Democrats will be happy about the massive investment in transportation, schools, the power grid, etc. Everyone's happy.
And, there will be jobs!
Though I believe infrastructure spending is good, necessary and will offer a faster and more immediate to short term boost, I think the President should have been more specific on what specific projects he wants to get done. We don't necessarily need to repave roads, we need to repair/replace bridges, build more efficient cleaner light rail & high speed rail lines, we need to invest heavily in cleaner energy etc.
ReplyDeleteI think the President should have focused and allocated more money to education grants and scholarships to make college more affordable, even if temporarily, over the next 4 - 5 years to encourage and help more people get the degree's they will need to get the jobs that these new jobs will require and start getting people back to work in quality, good paying secure jobs.
I think your right he threw the Republicans a bone with the tax cuts in order to better the chances of passage or if nothing else to be able to say, "See I told you it's the Republicans who won't help you, I gave them what they want most." The only issue I have with further Corp. tax cuts especially for larger business is that the reason the first round didn't work is because company's began hording cash for their execs rather than investing it in their business's and hiring new people, I have no reason to believe they simply won't do the same. I appreciate his incentive to hire those who are already unemployed and Vets but this puts pressure on people who are working and stiffles their ability to find better jobs or have upward career movement as companies will hire for the tax credit and it puts those who might be looking to make a move at a significant disadvantage, ex. Candidate A Hire Me I'll cost you money to do so vs. Candidate B Hire Me I've been unemployed for a year I'll give you $4k to do so (I believe that was the #). This credit is still available to companies who downsize so it doesn't matter if the company lets go of current more expensive employees and rehires folks with lower salaries they still get the credit.
I think what he should have done instead is offered that incentive to companies who increase the size their workforces, should have placed restrictions on what kind of employees they could get the credit for ex. you cannot get the credit for hiring someone for a position that was made empty due to lay off or termination. Makes corporations accountable.
In the end without all the details I think this is an ok start I think it is a lot more of the same with no real innovation which I think is what this country needs now bold, innovative, strong even daring leadership.