President Obama’s jobs speech tonight contained more detail than is usually offered. In this article, I will summarize the president’s proposals. My editorial comments throughout will be in parentheses and my analysis is at the end.
The speech:
Mr. Obama states that Americans do not care about politics, they care only about results that will ease their suffering. He requested that politicians “stop the political circus” and help the economy. (Many Americans do care about politics because that is what fuels much of the policy which impacts our lives. Great rifts exist, many due, in part, to lies one party tells about another, creating rigid misconceptions that are not adequately questioned by the average voter.) The president stated that the American dream, with its notion that hard work will be rewarded, is eroding. He admits that small business drives economic recovery, but believes the government can help. (Government helps best by creating a business-friendly environment in which businesses can grow.)
President Obama claims the American Jobs Act is not controversial and will be completely paid for, therefore not adding to the deficit. He further promises it will create jobs, cut payroll taxes in half, and jolt a stalled economy. (This admission of a stalled economy contradicts his earlier assurances that our economy was recovering.) He again admitted that small businesses create jobs and favors a tax cut for small businesses hiring new employees or giving raises.
Several times he stressed the urgency of the situation. Mr. Obama wants to spend money on infrastructure, repairing and building roads and bridges. He mentioned a desire to compete with China’s infrastructure. (Two things: Where is the fuel tax money that is supposed to be used for roads and highways, and why hasn’t it been used for its intended purpose? And why is he so jealous of China; doesn’t he know the low wages their workers earn? We do not want to be China.)
In addition to fixing up to 35,000 schools, rehiring teachers, extending tax cuts in the amount of $1,500.00 per family next year, and extending unemployment benefits for another year, Mr. Obama promised rehabilitation of homes and refinancing mortgages for cheaper interest rates. (The home rehab reference is unclear, but his previous mortgage program was fraught with problems, dragging applicants through months of red tape; and then helped relatively few homeowners. Why should we believe he will do a better job this next time around?)
He maintains that keeping jobs here in the USA requires out-building, out-performing, and out-educating the global competition. (Businesses go where they can pay the lowest tax rates, have reduced labor costs, and not be subject to crushing and often unnecessary regulations.)
Mr. Obama boasts that he has been advocating this plan for months. He aimed several barbs at his opponents, and in a spiel of over-the-top hyperbole, suggested that Republicans would sacrifice safety for lower government spending, even accepting levels of mercury in children’s food, etc. (I hope only the densest of American voters would believe this outlandish rhetoric.)
President Obama again accused Republicans of not wanting to raise taxes on the rich. He said Warren Buffet is upset because his tax rate is lower than that of his secretary, and has asked the federal government to change that. (This is disingenuous. Mr. Buffet certainly pays more in taxes than his secretary does. There is a difference between income tax and capital gains taxes. This was ignored. However, I agree the tax code should be reformed. Also, there is nothing preventing Mr. Buffet from paying his secretary better or from donating funds of his own to the IRS.)
President Obama claims he can lower corporate tax rates by closing tax loopholes, while conversely proposing higher taxes on big corporations. (How he managed this direct contradiction of himself was verbal ballet, and I doubt that many people caught it.)
How to pay for his plan:
Although more details are to come in this regard, President Obama’s plan as stated tonight will remove tax breaks for oil companies (which will result in higher prices for us consumers), and take them away from millionaires and billionaires. In other words, he wants to raise the taxes on businesses and wealthy people. (I hope Mr. Obama has taken some math lessons, since he previously lumped incomes of $250,000 or more in with the millionaire/billionaire category, thereby effectively targeting the very small businesses he claims he wants to rescue.)
He also suggests modest adjustments to Medicare and Medicaid. Mr. Obama said we are spending too fast on Medicare and it must be reformed. (He is correct on this issue, but usually Democrats accuse Republicans of wanting to cut these programs. We will see if they treat the president’s recommendations with the same level of outrage.)
Mr. Obama then launched into a long list of what-if’s which pulled his speech from the practical into the whimsical, and deprived it of its momentum. In our legislative history, what if we hadn’t done this or passed that? (The fact is we did or we didn’t, and it has no bearing on finding a solution for today’s problems. Dwelling on things that didn’t happen is wasted time, and surely an exercise only intended to inflame the passions of his party. There was no logic to it.)
Mr. Obama claims that he wants manufacturing returned to the USA. (Really? This conflicts with his earlier statement about closing corporate tax loopholes and raising taxes on corporations to pay for his jobs plan. Those actions will not encourage a return of manufacturing to the United States.) The president then stressed the importance of trade agreements so that American items can be sold around the world. (It is my understanding the trade agreements have been on his desk, awaiting his action.)
He mentioned new manufacturing sectors, most of them “green”, that will, he maintains, make the USA Number One again. (It was interesting to learn that he believes we are not Number One anymore. He later in his speech contradicted himself on this point.)
The president used the word “urgent” several times, ordered Congress to “pass this bill” numerous times, and mentioned God more than once. (This surprised me.)
My analysis:
The president’s plan has some valid points. Tax credits for companies who hire veterans is an excellent idea. However, a $4,000.00 tax credit for hiring someone who has been unemployed for 6 months or longer will likely not result in many new hires as a company either has a position to be filled or it doesn’t. Extending the tax cuts for families next year makes sense. However, increasing taxes on corporations will not bring them back to our shores. Mr. Obama is incorrect about the share paid by wealthy Americans. The majority of tax revenue flowing into Washington comes from the wealthy. A little less than half of Americans pay no income tax at all. It would be interesting to know how much a person should be allowed to keep of his or her own income. Taking 100% of the income of the richest people in this country still would not pay off our debt. Higher taxes is not the answer.
The fair share argument prompts a question about politicians, their money, and the money they are paid by the taxpayer. Why should any politician be doing better financially than his or her average constituent? The first spending cuts should be to politicians’ generous salaries and benefits. “Sharing the pain” and “spreading the wealth” should begin with the very politicians who spout these notions. Most politicians are wealthy. They should set an example by spreading their own wealth, not taking ours. An unflattering example of this refusal to “share the pain” happened during the recent debt ceiling debates when Democrats threatened Social Security payments, but not one of them offered to give up their own pay to help people dependent on Social Security for their very survival.
Social Security does need reform, but it must be a graduated process that will not endanger current recipients or shock the system. The Social Security system needs reforms that will grant control of retirement funds to the wage earners themselves, in private accounts, safely away from the greedy hands of politicians who raid the funds for their own projects and purposes.
Ultimately, the president’s plan involves more spending and more taxes. He, along with many other politicians, are unable to grasp the very basic fact that you cannot spend more than you take in without creating debt.
Mr. Obama was scornful of conservative plans to cut spending and reduce the size of government, hinting that such ideas are simplistic and beneath him. The fact is, it really is that simple. Government is not the solution; it is the problem. What government needs to do is a lot of undoing of its failed policies that created this mess. Get out of the business of micromanaging business and let the free market economy heal itself.
The proclaimed sympathy for struggling Americans rings false in light of the bailouts given to major corporations, rewarding their bad behavior, and leaving citizens holding the bag. The idea that government can stimulate the economy falls flat in light of the wasted stimulus dollars spent on ridiculous and unnecessary things, while many Americans could have used that money to save their homes from foreclosure, buy their groceries, start new businesses, or pay off debts. If politicians really wanted to stimulate the economy, they would have put those funds directly into the hands of Americans who needed the money. WE would have stimulated the economy. We are tired of politicians’ words saying one thing and their actions saying something else.
A side note: As expected, Mr. Obama did not address the Justice Department raid of Gibson Guitars (while turning a blind eye to other guitar manufacturers who lean left), nor did he address the egregious Fast and Furious debacle. Of course, he wouldn’t confront these matters in a jobs speech, but we are entitled to some explanations.
Conclusion:
It was my impression that tonight’s speech was a campaign speech, in spite of Mr. Obama’s protestations to the contrary. It contained the ideas of more spending and higher taxes for the rich, along with the erroneous assertion that government creates jobs. It does not. A government job merely takes money from one tax-paying citizen and pays it to another.
Republicans should scrutinize his plan, move forward with the reasonable parts, and quickly shun the rest. Either way, Mr. Obama will use this against his opponents on the campaign trail next year.
He is correct that the tax code should be reformed. As it now stands, it is a behemoth, unnecessarily complicated system that favors some and punishes others. It is not balanced, reasonable, nor efficient. If politicians were serious about tax reformation, they would institute the Fair Tax. The current tax code punishes success, rewards failure, and encourages corruption and dishonesty. The Fair Tax would eliminate income taxes and corporate taxes, including hidden taxes embedded in the cost of everything we buy. It would be paid at point of purchase and therefore everyone would pay. Low income people would receive a monthly check for necessities. The Fair Tax is a tax on what we spend, not on what we earn. As a result, the rich would automatically pay more because they spend more. The poor would pay less. Opponents of the Fair Tax lie about it and claim it would be applied in addition to all the other federal taxes we already pay. This is untrue. It would replace other taxes. But many politicians lie about the Fair Tax because the current tax code gives them power, and they do not want to give it up. The Fair Tax would put power into the hands of the consumer, the American worker. Right now, there is much income that goes untaxed because it goes unreported. The Fair Tax would correct that problem because it is not an income tax.
Bottom line: The jobs speech was another tax and spend proposal. It was another “let’s eat the rich” message. (Outrageous considering most politicians ARE rich.) But it contained some worthwhile nuggets and was fairly well-performed; I will give him credit for that.