The Jobs Speech Obama Should (But Won’t) Give
Sep 5th, 2011 | 7 responses
Today is Labor Day in a nation where not enough of us are able to find work. Later this week President Obama will give a major speech on the economy and jobs and there is naturally speculation as to what he will say.
I’ve been pondering what I would say, assuming anyone chose to listen, and have come up with what I hope the President will say about how we will get things back on track.
The first thing I would propose is a major public works program that would be on par with those of the New Deal. There is almost nobody out there who disputes the fact that our infrastructure is a mess. For example I’m willing to bet every one of us drives on roads that are in desperate need of repair.
Those roads are just the tip of the iceberg with regard to our needs and I could probably fill a dozen pages with links to examples of the mess we have out there. Bridges, roads, dams, waterways, etc are in many cases decades old and are crumbling.
In my own region we have miles of levees which protect some of the richest farmland in the world. Yet these levees are in many cases in serious danger of collapse and are quite vulnerable to earthquakes.
Should they collapse this could bring about a disaster to rival New Orleans, with millions left without drinking water and possibly thousands of acres of farmland left useless, which could cause serious food problems. This is only one example of the impact of a failing infrastructure.
The recent disaster in Japan and the earthquake and hurricane along the East coast also remind us that our nuclear power plants are aging and in need of major retrofitting.
And of course in many cases the existing roads, dams, water and power grids, etc are not anywhere close to enough for the growing population.
So my first proposal would be for a huge investment in infrastructure repair and expansion program. According to the link above we need to spend at least $ 2.2 trillion dollars over the next 5 years just to get things caught up.
I would leave the specifics of how much to spend to the experts in terms of exactly how much to budget but something along the lines of this amount would seem proper and could serve as a replacement for any new ‘stimulus package’.
In addition it would be an area of spending that is both clearly needed and also a clear function of the government.
As part of this proposal I would also recommend that a panel of real experts be established to determine where the money is spent. It should not be caught up in politics and spent where the politicians want, but rather spent where it is needed.
The infrastructure projects would provide work for a lot of people but it would obviously not provide enough work for everyone so we would also need to find ways to stimulate job expansion.
To that end I would propose extending the payroll tax cut for two more years but I would limit the cut to the *employer* side. For those who don’t know, for every dollar an employee pays in Social security and Medicare tax, the employer pays another dollar in tax.
The current cut is aimed at the employee side of the equation and while that is certainly a nice savings for the worker it really does not do much to reduce the costs to the employer. So I would push to have the cut extended but put on the employer side.
Also to assist in job development I would propose is to explore having a holiday on overseas income for businesses.
Right now businesses have as much as $ 1.5 TRILLION dollars in income being kept overseas but they are unwilling to bring it home because the government would take a big chunk of it away.
So I’d like to find a way to bring it in back but I would not want to see that money simply socked away or used to buy a new corporate jet. So I would include a proviso that any money brought back would have to be spent on expanding the business in some way, it could not be paid out to investors or used for some non productive purpose.
Hopefully the above proposals would help to bring out new jobs, but one other problem we have right now is that often the starting jobs do not pay a very high amount. When you factor in the costs of work (clothes, lunches out, travel to work, day care, etc) it is often the case that the job pays less than unemployment.
So I would propose expanding the unemployment program to allow it to pay a certain amount to people with jobs in order to help defray those job costs. Obviously this could not go on forever and we want to help provide a basic living but not one comfortable enough to last forever.
The idea would be for the new worker to have time to be on the job long enough to begin climbing the ladder again and to get raises, which would render the extra benefits uneeded.
I would also encourage an expansion in jobs training programs, perhaps in conjuction with the extended unemployment/underemployment benefits to help those who have lost jobs get the skills needed for new ones.
This program could include a combination of federal funding for programs as well as tax breaks to employers who provide the training themselves.
Now to pay for all of the above we’d likely need to start eliminating some of the income tax cuts of the last decade, at least with regard to higher income employers. I don’t think that a modest increase would prevent these earners from continuing to invest and we could couple the income tax hikes with higher deductions for investment in job production.
This would mean that if the higher income earner did put their money into job creation that they’d see less of a tax increase.
These are just a few ideas which I think could help to bring things back but I am doubtful the President will propose them because each of the proposals would prompt opposition from one extreme or the other.
The infrastructure proposal would find protests from both sides. Hard core conservatives wouldn’t like the ‘big guvmint program’ while hard core liberals would be upset at the retrofit of nuclear plants benefiting big nasty corporations/evil polluters.
The payroll tax cut would upset liberals for not going to the worker while the upper income tax hike would anger conservatives.
And so on and so on.
Of course it is always possible that the President will take a bold step and that both sides in Congress will unify behind what is best for the country. Then again it is also possible Obama will simply read this post as his proposal (but I’m not holding my breath).
Indeed the most likely event is that liberals and conservatives here on TMV will tell me how bad my proposals are when they don’t fit their own agenda (which is fine, I love TMV debate but you get my point).
7 Responses to “The Jobs Speech Obama Should (But Won’t) Give”
You can’t blame intransigence on ANY of the “liberals”. They might be upset, but you know as well as I, that they will at least negotiate a compromise.
Fat chance with the Republicans. It’s their way or Armageddon, damn the collapse of civilization, full speed to the golf course, cell phone switch in the O F F position….did the lobby man pay my greens fees today?
Boy! Fetch me my three wood….
IMO this is exactly how this proposal should be made: as an actual infrastructure improvement program, with actual examples of all the bridges, levees, roads, etc. on the brink of failure. There are enough examples spread across the entire country, including some recent events such as the I-35 bridge collapse in Minnesota. Personalize it by crafting a list of these projects across the entire country. There will be enough of these projects to appeal to folks across the country (as long as they’re real and not fabricated, like bridges to nowhere).
Calling it a “jobs program” conjures visions of spending-for-spending’s sake, total anathema to the Tea Party/GOP, and then it will be fought heartily.
Of course, anything Obama says will be fought heartily …
I had a problem with this when Obama did it in the first place. the solvency of SS & Medicare is in question, cutting the revenues for these programs without corresponding cuts in benefits* for those was wrong-headed. Making the government more insolvent can’t be good for the economy.
* Actually I think they should not have cut the tax at all. I’m just trying to say that we’ve got to teach Americans the realities of cause-and-effect. You want a tax cut? Then, right then and there, a cut in an expenditure or a benefit must be made at the same time. We keep doing one without the other and that’s why we’re in a mess.
Sure, that’s fine. But it’s high time we restructured corporate income taxes entirely. A much bigger topic than a mere comment, but I’d really like to see them eliminated, replaced perhaps with a fee structure to cover basic costs of doing business, but not taxing any income until it moves from business to individuals (in terms of salaries, dividends, etc.).
Ugh, this one I hate.
First, the level of business ethics on the low-wage side is horribly poor. Such businesses will take advantage of this by paying dirt wages for the requisite 6 months and then getting rid of those workers. It’s happened with other programs, it would happen with this one as well.
Second, jobs are a market, just like any other market, and this would be like a subsidy or a price control or any other action a government would take to manipulate prices on the market. Such actions are not only unsustainable but they skew markets so much it interferes with the very functions of capitalism. This recession is directly related to government interference in the markets, namely with Frannie & Freddie inflating the housing market until it crashed. Having such interference in the wage market would be bad as well (conservatives constantly say the minimum wage act and other laws already interferes in that market enough).
Just cancel the Bush-era tax cuts. The numbers show they didn’t do squat. If they were so wonderful, the economy wouldn’t be a slug…
Great post Patrick. I like the way you think. It might actually work if we could A.) manage to avoid any unnecessary wars, B.) teach corporate America the lesson taught in, “How the Grinch Stole Christmas”, and C.) teach citizens the value of conserving.
Infrastructure seems to be the one area most people agree we should work on. It would both provide jobs and infuse money into the economy. The first roadblock I see is the lack of shovel-ready jobs. This isn’t the 30′s where an architect can whip up a plan, a contractor will hire a bunch of guys and we can start next week. Today there are environmental impact statements, licensing, permits, zoning, etc. Maintenance of existing structures would mostly avoid those problems.
The second problem would be paying for it. The GOP is not likely to approve a plan that is not balanced by cuts in other areas, and the Democrats are not likely to agree to cuts. The GOP is not likely to approve the tax increases you suggest.
The switch in the payroll tax is interesting, essentially changing a direct monetary stimulus into a jobs stimulus. I agree the Democrats are not likely to embrace this one, as they traditionally take the employee side. Again there is the problem of paying for it.
The jobs training program sounds good in theory but in practice many jobs require training or apprenticeships that take years, and the jobs that don’t already have enough applicants.
I am not educated enough about the Overseas income holiday to have an informed opinion.
Overall though this is a reasonable plan that asks both parties to give up a sacred cow or two, and as you say that is exactly why it can’t happen.
Good noble thoughts, Patrick. As mentioned, above, some impractical or too political. These guys, the administration and congress, seem to be arguing over the way to bail out a sinking rowboat. And, Obama will PROPOSE your infastructure and $ repatriation, but they will be in the usual form of platitudes. Plus, he will seem to be alternately nagging/blaming congress and begging them to “do their job” while looking down from Mt. Olympus.
BTW: I wish he had said screw you, I’m making this speech from the oval office.
Patrick,
Interesting but a few thoughts.
1. Most infrastructure belongs to state and local governments, not the Federal government. The only way for the Feds to fund that infrastructure would be to give the money to the states (maybe with strings).
2. Your math is pretty far off. The infrastructure spending you propose would cost $440 billion per year (using the $2.2 trillion number. The payroll tax change is another $100 to $150 billion per year. The repatriation change doesn’t really cost anything but I doubt it would have much impact. Most businesses are cash flush at the moment so repatriation is not a big deal. I have no idea what the UI change you describe would cost but let’s put it at another $100 billion per year
To cover $650 to $700 billion per year is a lot more than you could support with the tax changes you describe. Indeed, ending the entirety of the Bush tax changes would produce less than $350 billion, maybe half. Ending only those changes at the top end produces $50 billion or so.
Thus, I’d conclude it’s a pretty fiscally irresponsible proposal and I’m not at all sure, to the point other posters have raised that it would produce jobs in any form of reasonably efficient manner.
Sorry for the slow reply but it’s been a busy work day.
Thanks for all the feedback. I certainly agree the proposals could be tweaked, perhaps extending the infrastructure plan from 5 years to 10 to spread out the costs would help.
Also I am open to the idea of gradually eliminating more of the 2000′s tax cuts, the issue there is that despite the focus on the rich, the cuts helped a lot of low income families.
For example it reduced the base rate from 15% to 10%. So someone in a lower income bracket would see that tax increase by 50%, which is a bad thing for someone on a limited income.
But since I’m not President (a fact I am sure many are pleased about) I think we’ll end up focusing on what Obama proposes.