Opinion: Obama's Job Plan Won't Deliver Jobs

Friday, September 16, 2011 - 01:59 PM

Without Obama in front of the camera, monopolizing the way his jobs bill is being spun, the devils in the details have been popping up like weeds.

As Obama has crisscrossed the country this week, one of the bigger details that has emerged is that the White House wants to pay for part of the package by limiting income tax deductions on individuals earning over $200,000 a year, and families bringing in over $250,000 a year. I wonder why he left that little, four hundred billion dollars over ten years, detail out of his speech?

The president is clearly playing a very political game in his insistence that Congress pass the bill now, with a short amount of time for debate and analysis. House Majority Leader John Boehner is absolutely right in saying that the bill should be scored by the Congressional Budget Office before Congress gets to work on it.

Having the CBO projections in hand should be a prerequisite for any major piece of legislation, and Boehner is absolutely right in saying that the "record of the economic proposals enacted during the last Congress necessitates careful examination of the president’s latest plan.”

While I like much of the broad strokes of the package as outlined in Obama's speech, in that it includes long term budget trimming in exchange for some short term - fairly targeted - stimulus, some of the ideas he came up with aren't really particularly stimulative.

For example, giving an extra benefit to employers who hire workers who have been out of work for six months or more is astonishingly discriminatory, and practically cries out for abuse.

What's to stop an employer in a low skill field from laying off a few workers, and picking up a bunch of workers who've been unemployed for 6 or more months, just to pad their bottom line?

Ideas like that, and cutting the employer's side of payroll taxes, go after the entirely wrong problem. The problem is demand - businesses can meet their demand with the workforce they have.

They're not going to hire millions of people just because they have some money sitting in their bank accounts. If this was the case, with record amounts of capital sitting on balance sheets, they would have already started doing so.

Businesses don't need more capital, in fact capital is very cheap right now. The problem is not that labor isn't cheap. The problem is that businesses don't need any more workers to keep up.

During the president's speech, he said there shouldn't be games, politics or delays. But what he is doing by trying to ram this through is precisely a political game.

His speech left out major, controversial, points in the legislation, and if he tries to ram this through, especially if the CBO scores come back very different than the rosy picture the White House paints, this opportunity he has to rise above the fray could really backfire on him.

Solomon Kleinsmith is a former nonprofit worker, serial social entrepreneur and strident centrist independent blogger from Omaha, Nebraska. His website, Rise of the Center, is the fastest growing blog targeting centrist independents and moderates.


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Comments [2]

Marcello from Brooklyn

I agree with Mr. Kleinsmith about the possibility of cheap tricks being played by employers to exploit aspects of the legislation (the 6 wks. unemployment hiring clause) and also about the fact that, as him and Mr. Teicher say, the problem is in the lack of aggregate demand. The issue is that, in addition to everything else he has inherited from the past, Obama is also the first president who is staring in the face at the new long-term structural change that has occurred in the economy in the last decade: the outsourcing of most of the manufacturing sector and the permanent disappearance of those jobs. During the last ten years the effects on people consumption rate have been hidden by the fact that the process was still taking place and that many of them were able to use their houses as ATM machines. Now that is over. Also, while it's true that interests rate are really low at the moment, the Govt. should not necessarily resort to borrowing all the capital needed for a grand Roosevelt style public works program. Corporations profits are considerable but they are sitting on capital. Moreover wealth inequality is at historical highs also thanks to the rise in profitability that some of these very same firms have reaped by outsourcing jobs. To ask firms and affluent individuals to pay more taxes would avoid having to borrow all that is needed for public work on infrastructure (a fiscally responsible move) and, in addition, would spur some of this firms to move their capital from money markets to actual investments in the domestic market (which is what should actually be incentivized).

Sep. 18 2011 10:47 PM
Sheldon Teicher from Forest Hills, NY

I have a somewhat different view of the situation than Mr. Kleinsmith has. I hear very often that banks are not lending even though prospective borrowers have excellent basics. It is fairly obvious that banks are jittery since almost daily new revelations emerge as to how rickety the entire financial industry really is.Mr. Kleinsmith is right when he says that most businesses can get by with the staff that they now have and that is the crux of the problem. LACK OF DEMAND. Until and unless demand is stoked no change in hiring will occur. And since private industry doesn't seem ready to stoke that demand that leaves only one source for that remedy-may I use the term- "stimulus"- and that is from the federal government! By the way right now long term interest rates are at historic lows so that the Treasury can borrow at near ZERO rates.That is a situation that cries out for use if this country was in a mature political condition. It is not at that point because we have one political party- the repubs- who see it as their G-D given right to delay and frustrate any advance in the economic status of the country. It would also help if the media, including WNYC, understood macro-economics if they are going to talk about the subject. They don't and they swallow the misinformation that the repubs churn out. Contractionary fiscal policy is NOT EVER expansionary in a deleveraging trap that we currently find ourselves in. As heretical as this may sound WE NEED TO SPEND MONEY NOW to get out of this dearth of employment!!!

Sep. 16 2011 05:28 PM

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