Obama Gives (another) Jobs Speech
On Thursday night, President Obama addressed a joint session of Congress to outline a new plan, dubbed the “American Jobs Act.” The actual legislation won’t be introduced until early next week, but the highlights of his proposal include:
- An estimated $450 billion price tag;
- The White House has not spelled out how it would pay for the proposal; rather it will be sent to the new congressional super-committee. The cost could simply be spread out over the next ten years. As a result, the increased spending and decreased revenue could simply be added to the national debt
- A cut of the Social Security Payroll tax for many workers and employees;
- The tax for individuals had previously been cut from 6.2 percent to 4.2 percent, and is scheduled to be raised without further action. Obama’s plan cuts the tax to 3.1 percent
- The tax for employers would be cut to 3.1 percent on the first $5 million in payroll
- A tax holiday for companies that add workers or increase wages;
- Payroll increases of up to $50 million would pay no Social Security tax
- A $4,000 tax credit for businesses that hire workers who have been out of work for more than six months;
- A one-year extension of unemployment benefits;
- Aid to state and local governments; and
- Infrastructure spending
Economists asked to analyze the plan were cautiously optimistic. The plan faces significant challenges getting through Congress, but an economist for Moody’s said that the plan could add 1.9 million jobs and reduce the unemployment rate by a percentage point from its current 9.1 percent. The payroll tax cut would add the bulk of that figure: as many as 750,000. Macroeconomic Advisers, LLC, predicted that the plan could increase GDP by 1.3 percent by the end of 2012, and could add as many as 1.3 million jobs.
On Thursday, a guest editorial in the Wall Street Journal highlighted Obama’s consistently poor handling of the economy:
The failed stimulus bill cost an astounding $280,000 per job—over five times median pay—by the administration's inflated estimates of jobs ‘created or saved,’ and much more using more realistic estimates.
Cash for clunkers cost $3 billion, just to shift car sales forward a few months.
The Public-Private Investment Partnership, despite cheap federal loans, generated 3% of the $1 trillion claimed, and toxic assets still hobble some financial institutions.
The foreclosure relief program permanently modified only a small percentage of the four million mortgages the president promised.
And even Mr. Obama now admits that the shovels weren't ready in all those "shovel-ready" stimulus projects.
The paper also printed a dubious “top ten” records set under the current administration:
The column summed it all up: “Perpetually overpromising and under-delivering is not remotely good enough, not even for government work. No corporate CEO could survive such a clear history of failure.”
The Milwaukee Journal Sentinel, in an editorial the following morning, was similarly unimpressed. The paper criticized several elements of the plan:
“We like some of Obama's proposals. But here's our main concern: The president vastly overestimates the ability of the federal government to influence the behavior of businesses and the economy.”
Extending unemployment: “But none of these ideas creates new jobs.”
Some of Obama's proposals may help at the margins. […] But we didn't hear anything in the president's speech that, even if enacted, would make a major dent in the nation's stubbornly high unemployment rate.