Posted by: SWL | September 9, 2011

Jobs Speech: Usual Blame-Shifting, Pro-Union, Anti-Big Business Plan

I spent most of President Obama’s jobs speech arguing back at the television. The man was arrogantly blaming Republicans for defeated legislation which the President actually helped block. The sectors he targets for jobs are largely unionized professions. The tax breaks he announced would benefit only some businesses. And the rest was just a retread of the failed policies of the 2009 Stimulus. In between he even injected a few deceptive statements.

(It is getting more difficult to write with a civil tone when the policies of this administration are hurting people and ruining the country. This year I’ve moved from mildly irritated to annoyed to extremely frustrated, and this speech pushed me over to angry.)

The President started the speech saying this is an “urgent time in our country”. But unemployment has been at a crisis point for two years. Mr. Obama made speeches citing the need for a federal jobs intervention in April 2009, September 2009 and September 2010 without proposing any legislation. Arianna Huffington, editor of “The Huffington Post” and Obama supporter, said that the President has no credibility on jobs because he has been saying “we’re moving on to jobs” since his inauguration (MSNBC’s “Morning Joe”, 8/16/11). It seems like this sudden urgency was manufactured to allow the President to dramatically come to the rescue after 2 years. Announcing that he had a plan but waiting two weeks to unveil it, and his theatrical tone of voice last evening just added to the dramatic effect.

In his speech, President Obama asked Congress to approve trade agreements. That legislation has been held up because he and other Democrats do not think the agreements are pro-union enough. Yet the speech made it sound like he has just been waiting for Congress to act.

The types of jobs Mr. Obama most often mentioned to receive federal funding under his American Jobs Act are construction workers, teachers and first responders. Only those already possessing the necessary skills and knowledge will be able to get these jobs, leaving the majority of the unemployed out of luck. And those professions are heavily unionized. (My son-in-law is a paramedic and was required to join the local union when he got his job.) This is another economic boost for unions, which are among Mr. Obama’s biggest supporters. (The head of the AFL-CIO, Richard Trumka, was seated near Michelle Obama during the speech and according to White House records is a frequent visitor there.) Late in the speech, when the President was speaking about reviewing federal regulations, he forcefully said he would not allow health, safety and financial protections to be changed and endanger people. He went on to name some examples – protecting children from mercury, keeping disclosure regulations on credit card companies – and then added protecting collective bargaining “rights”. What does a union perk have to do with protecting children‘s, families’ and workers’ health, safety and finances? (See previous post for a discussion of temporary jobs and funding only certain types of jobs.)

Before the speech, Press Secretary Jay Carney said the jobs would be targeted to certain areas. Will states with the highest unemployment , including Nevada and Michigan, receive the most funding? Will Reno be able to rehire laid-off firefighters so the fire station that was closed can reopen? Or will the money go to states that are heavily unionized or critical to the 2012 election? (Michigan stands to benefit under either scenario.)

The President continued his war on large corporations. He proposes that small businesses get tax credits if they hire veterans, $4000 in credits for hiring anyone unemployed over six months, and credits for raising wages (a rather vague reference). He said the administration is changing rules so small businesses that have government contracts will get paid sooner. Does that mean large companies will get paid more slowly than they deserve? Why don’t the tax breaks apply to any company that hires? With 14 million unemployed, it would be a good idea to offer incentives to anyone who creates a job. Small businesses by their very size, just do not need to hire many new workers even if the economy improves. Because of the tight budgets in most small businesses, a $4000 tax credit is probably not enough to prompt hiring. The wages paid would equal the tax credit in 14 weeks at the federal minimum wage. Can the small business owner afford to continue to employ the tax-credit-hire after that time?

Fixing roads, bridges, schools, etc. is the same plan as the Stimulus Bill. That bill cost taxpayers $787 billion and did not produce the lower unemployment figures the President promised at the time. The American Jobs Act has a smaller price tag and part of that would be tax credits instead of wages. So why would this help our now higher unemployment rate? (See the previous post for reasons why government moves too slowly to provide any meaningful economic stimulus.)

There were at least three twisted truths in the speech. First, President Obama claims Warren Buffett “pays a lower tax rate than his secretary.” No research is needed to know that is not true. The basic tax rate goes up with income. Bottom line, after numerous deductions, Mr. Buffett might pay a lesser percentage of his income in taxes. He probably has legitimate, legal deductions and credits he claims – and we need to have a national discussion about whether these are fair. But it is not true to say Mr. Buffett’s rate is lower than someone with less income.

Second, the President repeatedly said this proposal will be paid for. He explained that by saying he would ask the Congressional Super Committee to find the $447 billion in cuts. Sorry, Mr. Obama, but that only means that you are willing to accept spending cuts to pay for it. There are no planned cuts, no guarantee that the proposal will not raise the federal debt.

Third, near the end of his speech Mr. Obama cited great pre-WWII American achievements that we should emulate now: building highways, airports, research universities, community colleges, and public high schools. But Americans built or established all these things initially through state or local governments.

One of the things I most dislike about Mr. Obama is his tendency to twist or redefine words and concepts. He frequently (including last night) says that the rich need to pay “their fair share”. But “fair” means treated the same or equally. Given their higher base tax rate, the rich are already paying more than is “fair”. And is it “fair” that 47% of those who file a tax form each April do not pay any tax? I do not advocate making the lower class pay taxes, but I would appreciate it if Mr. Obama would be clearly truthful when he speaks. (Also see my post on President Obama’s statement on raising the debt ceiling.)

In some ways the part of the American Jobs Act that worries me most is continuing payroll tax cuts. Has anyone thought about how much that will hurt Social Security down the road? If both employees and employers pay less into the system, there will be less available to pay retirees in the future. Someone earning $50,000 a year would get about $30 per week added to their paycheck under the President’s plan to cut the payroll tax in half. For most people this is not worth the possibility of Social Security being even weaker when they retire. And that $30 will not have a measurable effect on the economy. (This also discriminates against large businesses – the “tax holiday” for employers only applies to businesses with under $5 million in annual payroll. There’s nothing “fair” about that.)

At the end of the speech, President Obama said he would take the message of this speech to every corner of the country. Please, Mr. President, do not waste any more of our tax dollars on trips!



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