Friday, September 09, 2011
- This is the text as published at whitehouse.gov.
- There are enhanced graphics (more slides) and a fact sheet at the blog.
- It's too darned bad that this serious an approach couldn't have been implemented in the first stimulus bill early in 2009, when it would have made more of a difference and would have been far easier to afford. Much of the money in the first stimulus bill was simply thrown away.This appears to be a much more serious attempt at real stimulus.
- Temporary measures and tax credits are not going to be very effective at creating jobs. The measures described on the business side will tend to create more business investment (expensing) and generate a flow of funds to help a business like Mr. Packaging Guy's afford to buy new equipment. Also a lot of business owners will buy new cars. So it is not all bad. But any temporary tax cut won't produce much more employment, because....
- The White House doesn't "get" the problem for business owners involved in unemployment taxes. One reason why small business owners (and indeed all business owners) are reluctant to hire is unemployment taxes and experience ratings. Remember, unemployment taxes apply to almost ALL your payroll. I will expand on this point further, but between the kind of wretched failure involved in the health reform bill and the fear of firing involved in the unemployment tax club, many businesses will not respond to temporary funding measures - they have to make things work over the long term. Here is a document produced by DOL that lists the basic provisions for the states. On the extreme right hand column, you will see three rates. The top is the minimum. The second from the top is the maximum. The bottom is the rate that a new business will pay (usually an average rate). Because hiring a worker that the business may not be able to keep can potentially have huge costs over a couple of years (2% of 80% of payroll for three years?), many businesses cannot hire anyone. They can hire temps, but they can't hire permanent workers.
- Essentially, the payroll tax cuts involved are so large that they represent an abandonment of the SS program. If this bill passes as scheduled, the tax increase scheduled for 2013 (fixed) would be so huge that it would tip the economy into recession then or increase an existing recession.
Update: Fact Check on the "paid for" claim:
THE FACTS: Obama did not spell out exactly how he would pay for the measures contained in his nearly $450 billion American Jobs Act but said he would send his proposed specifics in a week to the new congressional supercommittee charged with finding budget savings. White House aides suggested that new deficit spending in the near term to try to promote job creation would be paid for in the future - the "out years," in legislative jargon - but they did not specify what would be cut or what revenues they would use.Greek 2-year yields are over 57%. Greece is shocked - just SHOCKED over rumors of default. I would say that this is a level of fantasy equivalent to the "paid for" claim. Still, whatever the US does right now is overshadowed by European problems.
Not that European problems are good for the US. They aren't. But they sure are good for US bondholders. So it really doesn't matter that the US is about to up the debt limit to about 15.2 trillion so that Treasury can sell bonds, because frankly, US repayment worries are in the future, and Euro worries are, like man, RIGHT NOW. Right now, our banks are a parking lot for a lot of global money and our Treasuries are liquid as can be.
In addition he might have said, "Our air and water are the cleanest in the world. I believe we only need to continue with what we have, not decreee ever more regulations in an attempt to become more pristine."
He might also have mentioned, "New scientific work has cast even more doubt on CO2 as a major cause of climate change. Our policies henceforth will be to adapt to climate change, whatever direction it takes, and forget about the impossible task of mitigating climate change through restrictive energy policies."
Finally, he coud have said, "Our housing markets are burdened with too many foreclosures and a lack of confidence. I ask Congress to encourage the purchase and conversion of foreclosed houses into rental units by giving investors a period of ten years of zero capital gains taxes and enhanced depreciation on such houses. This will help clear this inventory much faster than doing nothing."
Instead it was a laundry list of giving more money to unions (teachers, construction workers, government bureaucrats) and demands that Congress pass it RIGHT NOW. We're screwed!
Had dinner with a large investor (Democrat) who met with the president last week.
"He just doesn't get it".
2016. See ya'll then.
Obviously, if you are in Treasuries it's a concern that must be watched closely.
"Spend $450 billion dollars now, it will create jobs, and I’ll tell you how I’m going to pay for it a week from Monday. If you disagree, you want to expose kids to mercury."
A interesting point from another blog
" Unfortunately, our societies simply don't have the political structures to make the right choices, or at least those that would serve the people best. Our political structures serve those who hold the power, and they will choose to hold on to that power. The structures allow them to use the people's wealth against the people's best interests. It's perverse, it's insidious, and it's our reality. Voting someone else into power doesn't change these structures one bit."
HOWEVER, Being the Incumbent, the President has a tremendous advantage, so as much as I hate to say it, given the poor job he has done, the odds are only 49/51 against.
I've applied the basic physics model to manufacturing jobs.
No gallows humor this time, just 100% gallows.
You wouldn't expect conservatives to vote for him. He has provoked the liberals, the teachers' unions....
He lost the independents a while ago. Incumbency is a big advantage, but I'm not sure he can capitalize on it, having spent his political capital. He's going to find it hard to get a credibility loan under the circs.
One USDA employee passes the office of a fellow employee. Hearing the sound of crying, he rushes in to find his colleague at his desk, sobbing bitterly. "What's wrong, Bill? Has something happened to your family?" he stammmers. "Is there anything I can do?"
Bill struggles for composure and chokes out "My farmer died."