I watched the second half of the President's jobs speech on Thursday and read the full transcript.
First, one utterly non-substance related comment.
Good lord, Congress sure got a leg workout during the speech! It seemed like they were standing up to clap (at least, the Democrats were doing it, since a lot of people didn't stand up all the time) every time Obama paused to take a breath. I wouldn't be surprised if some of the elderly Congressmen had to be helped out of there afterwards.
Now, onto the speech itself.
I was quite disappointed, both with how the speech was delivered and with the content. To be fair, I didn't go into it with high expectations, but after all the hype this speech got for the last month, I fully expected more oomph. I heard/read a lot of rhetoric and political platitudes (talk about a lot of sound bites for his campaign, good grief!), not to mention lots of attacks on straw men. That last part, the straw man argument, has been standard for Obama's speeches since he was Candidate Obama, so it didn't surprise me in the slightest. And the whole "pass this now" mantra got really old really quick. In terms of style, that component of the speech just rubbed me the wrong way, coming across as desperate. Whatever I think of his policies, that just smacked of bad speech writing.
Anyhoo, the White House released a fact sheet in conjunction with the speech, since the President didn't actually lay out any of the specifics of the plan in his speech. That part irked me the most--why have such a special speech when none of the specifics are actually laid out in the speech and are released separately? Back on point, I've examined the fact sheet and will attempt to try and grade each proposal objectively. I'm grading each component separately, as the whole package will not make it through Congress as a single bill.
Tax cuts for small businesses
-Cut the payroll tax in half for the first $5 million in revenue companies have through 2012.
In general, I like tax cuts. However, due to the temporary nature of this one, not to mention the poor financial state of the entitlements, this doesn't make sense. All I see happening with this, best case scenario, is moving hiring forward a bit, kinda like what Cash for Clunkers did with auto sales. After the tax reduction is phased out in 2013, it is then a 100% payroll tax for companies hiring after that. I can't think of many businesses that don't plan more than one year out. In addition, Social Security/Medicare/Medicaid are all on shaky financial footing. Halving the revenue of those programs will speed up their decline.
Grade: C+
-Eliminate payroll tax for adding new workers or increasing wages up to $50 million above previous year levels, through 2012.
Again, temporary nature of this--all I see it doing in the best case scenario is shifting hiring. Where does that put companies in 2013? It will effectively be a massive tax hike on companies at that point.
Grade: C+
-Extend 100% investment expensing through 2012.
Shifting investment spending. In addition, I haven't seen any figures that show that the current 100% investment expensing has been of any benefit.
Grade: C
-Help small businesses access capital.
Even the fact sheet is pretty sketchy on the details. One thing it does mention is speeding up government payments to small vendors. That I like. Without concrete details, I can't grade it on more than general concept.
Grade: B/B+
Putting workers back on the job
-Returning Heroes and Wounded Warriors tax credits of up to $5,600 and $9,600, respectively, for hiring vets and disabled vets who've been looking for work for more than six months.
Let me preface my analysis by saying I am very pro-troops. That being said, I disagree with this proposal. For one, it creates a new task force for this purpose, and I don't like the additional growth of government. Two, most companies I know of give preference to vets already, so the tax credits are unnecessary in my opinion. Most government contractors and the government itself give you a pretty big preference if you're a vet or disabled. Three, the temporary nature of these tax credits. Shifting hiring, yada yada yada. When the tax credits expire, will companies still want to hire vets over everyone else?
Grade: C+
-Preventing the layoffs of firefighters, cops, teachers, and hiring thousands more with $35 billion.
This is a bandaid, nothing more. Will cities and states be able to afford all those employees when the latest round of federal money runs out? Most likely not, if the last few years are any indication. In addition, what about all the other public employees who have been laid off, who aren't union members?
Grade: F
-Modernizing over 35,000 schools and spending $30 billion on school infrastructure, which will employ thousands of construction workers.
Sure, I agree with the concept. I just don't think it should be the federal government's job to do that. In addition, as with any construction project, this will take a loooong time. Many such projects are measured in years from when the idea is first proposed to when ground is first broken. As such, this will have a long term impact, but little impact on hiring in the short term (12 months or so)
Grade: D+
-Make an immediate $50 billion investment in roads, railroads, and airports.
This is even more of a long term impact than the school modernization effort. Take the planned I-526 expansion in the Charleston, SC area. The $500 million, seven mile expansion has been in the approval process at least since 2006. Not shovel ready at all!
Grade: F
-Establish a National Infrastructure Bank with $10 billion in capital.
I don't mind the general concept of this idea. While it has flaws, it puts the onus on the private sector, rather than the government, which I am completely a supporter of. However, I don't like the effective subsidy process of giving loan guarantees.
Grade: B
-Invest $15 billion in rehabilitating foreclosed properties.
Shifting construction activity. In addition, what happens if $50,000 has been spent rehabilitating a house and it still won't sell? This concept is all fine and dandy, but I see serious pitfalls in how it would be carried out, and what impact it would have.
Grade: C-
-Expand high speed wireless access in a "deficit reducing" way.
Umm, I'll believe this one when I see it. Zero details offered on this plan. In addition, I don't think it should be the government's responsibility to do this.
Grade: D
Unemployment Insurance extension and new unemployment programs
-Extending 99 week unemployment date one more year.
Where's it going to end? In addition, there are plenty of studies, including some by that fearless Keynesian economist, Paul Krugman, that extending unemployment insurance adds to structural unemployment.
Grade: F
-Work sharing programs--folks would be allowed to work fewer hours rather than being laid off, and would be able to draw UI benefits while doing so.
So you'd still be able to work part time and draw UI at the same time? That doesn't make sense to me.
Grade: F
-Bridge to Work/reemployment programs--companies could hire unemployed folks as temporary or volunteer workers and they'd be able to continue to draw UI while they do so.
I see that being ripe with the potential for abuse on both sides. Taking UI out of the picture, I like the idea of companies bringing on unemployed folks as temp workers or volunteers.
Grade: D+
-Tax credits for hiring long term unemployed workers/investing in low income youth and adults.
These programs would give a $4,000 tax credit for hiring folks unemployed for more than 12 months or would subsidize the wages of low income youth and adults. I find both quite troubling from both a financial sense and from a policy standpoint. Little offered in the way of concrete details, so I don't have much to go on.
Grade: D-
Help folks refinance their mortgages to today's low rates
-Remove barriers preventing folks from refinancing their homes. I disagree vehemently with this proposal. The housing industry is finally starting to have serious requirements regarding mortgages again, and this would relax them back to how they were during the bubble...which is kinda what got us where we are now.
Grade: F
This plan is fully paid for
-The $447 billion plan is fully paid for.
Uh, none of it is paid for. The President hasn't offered a single way to pay for any of the proposals, instead passing the buck off to the Super Committee and Congress to come up with a way to pay for it.
Grade: F-
OVERALL GRADE FOR THE SPEECH: D
He proposed some good ideas, which I've given him credit for here. But also some terrible ideas, in my opinion, and more ideas straight from the patently failureicious playbook of Stimulus I. In addition, I view much of this as too late--why didn't he propose this when he had a "laser focus on jobs" in 2009 and 2010, or as part of last year's "Recovery Summer?"
So your belief system boils down to "Screw you, got mine." Awesome!!
ReplyDelete@Anonymous:
ReplyDeleteNot at all. For one, I'm not sure where in this post you're getting that idea from. My belief system is (to paraphrase) that you do the best you can with what you have where you are. In other words, pull yourself up by your bootstraps.
I think you might be referring to my general disapproval of the additional spending and targeted tax credits? To preface my position, I am generally against any sort of stimulus, on grounds that "stimulus" actions on the government's part historically have a terrible record. As far as tax cuts/lower tax rates go, I'm all for them...as long as they aren't a temporary, one or two year gimmick.
That comes down to my belief that the government has grown far too big and is entitling itself to more and more of my money each year. In addition, if it is a temporary tax cut now, it will be a tax increase later. That's my biggest problem with temporary tax cuts.
In terms of the overall jobs plan, I'd say 80% of it is based on temporary gimmicks. Temporary spending on union workers (teachers/cops/etc) was a key plank of the 2009 stimulus bill, which let states get by without laying off too many workers, but once that money ran out, they had to start making layoffs. This just prolongs that a bit further.
None of these ideas (with the exception of maybe the infrastructure bank) address the core, long term issues that face the American economy. Hence the overall D grade.
Perhaps you'd care to elaborate your comment?