published Saturday, September 10th, 2011

Obama's latest 'stimulus' bill unlikely to help

With the U.S. economy sluggish at best and unemployment at 9.1 percent, President Barack Obama has proposed a nearly $450 billion package of borrowing, spending and tax breaks that he says will create jobs.

In other words, he wants something that looks a good bit like 2009’s $862 billion federal “stimulus” that has so far added massively to the national debt but not created the jobs that the administration projected.

That may or may not give you confidence in the president’s latest proposal. At any rate, here are a few of the specifics:

• The payroll tax on workers’ income of up to $106,800 would drop from 4.2 percent this year to 3.1 percent next year. That would cost the Treasury about $175 billion, and since payroll taxes raise money for Social Security, this cut could hasten the day when Social Security runs out of money.

• Payroll taxes would be cut in half for businesses whose payrolls are $5 million or less. Businesses would get a full payroll tax “holiday” for wages paid to new hires or for increased payrolls. This would cost the government $65 billion.

• The president wants money for school, road and other infrastructure projects. He wants to create an “infrastructure bank” to partner with private businesses to fund infrastructure projects and a program to improve vacant properties and help stabilize neighborhoods that have lots of those properties. The combined cost of those programs would be $105 billion.

• The president wants Congress to again extend jobless benefits for millions of Americans who are out of work. He also wants money for state training programs for workers who have been unemployed long term. That would cost approximately $49 billion.

• The bill would provide $35 billion to protect a range of government workers from layoffs.

• Businesses would get tax credits of up to $4,000 for hiring workers who have been out of work more than six months. That would cost roughly $8 billion.

So what do you think? Would this new package create lots of jobs or just make our national debt and economic situation worse? Does the fact that the proposal contains many provisions similar to those of the 2009 stimulus give you confidence — or concern?

The administration predicted the last stimulus would keep unemployment under 8 percent — which it plainly did not do. Interestingly, the administration is not putting forth a specific jobs projection with this proposal, offering instead vague assurances that the bill would give a “jolt” to the economy.

That’s undoubtedly true, but it is less clear that the “jolt” would be in a positive direction.

As for the president’s claim that this stimulus bill would be completely “paid for,” fact checkers at The Associated Press raised serious doubts.

Referring to a congressional “super committee” that is tasked with reducing federal deficits, the AP wrote that this latest stimulus “will only be paid for if a committee [that Obama] can’t control does his bidding, if Congress puts that into law and if leaders in the future — the ones who will feel the fiscal pinch of his proposals — don’t roll it back.”

The AP called it “sleight-of-hand accounting,” adding, “Essentially, the jobs plan is an IOU from a president and lawmakers who may not even be in office down the road when the bills come due. Today’s Congress cannot bind a later one for future spending. A future Congress could simply reverse it.”

We don’t know whether Republicans will go along with the president’s insistence that they “pass this jobs bill right away.” But we see little chance it will do much good if they do.

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EaTn said...

The righties in DC keep saying the govt needs to get out of the way and let small business create jobs. If I remember correctly only demand creates jobs, and with a major portion of consumers either unemployed or underemployed the demand is not there. Jobs creation by the govt has kept us on lifeline the past couple years but has expired. The right wingers rich tax cuts approach in reviving the economy has no merit and is not an option.

September 10, 2011 at 6:33 a.m.
rolando said...

It is easy to generate a demand, EaTn. One only needs to come up with something the public wants or needs, and voila. Madison Avenue does it all the time...usually with advertising.

The problem lies all those trillions businesses are holding back in fear of what the government is going to do. They are no longer creating demands and producing they go into the handling, or services, mode. Buying overseas, shipping, handling, distributing, and wholesaling. Those are exactly the types of jobs we have today, with a few exceptions.

As for small business, they have very limited discretionary funds. Investing in new hires is not a good idea in this government-controlled economy -- one never knows what the inexperienced-in-business fools are going to come up with, and foist on us, next.

September 10, 2011 at 7:18 a.m.
hambone said...

I hate to repeat myself on here , but here goes.

Rolando, do you want me to beleive that small business (and large) is not filling all those new orders they have (demand) or signing all those new contracts (demand) that are coming in every day bacause they are worried about all those taxes they will have to pay on their huge new profits. Or maybe they are not hiring because of the added cost of Obamacare?

The lack of demand has nothing to do with unemployment?

September 10, 2011 at 9:29 a.m.
LibDem said...

hambone, it is a known fact that conservative business people will live on food stamps before making a profit that would incur tax. If I don't know whether the tax on my profit will be 25% or 50%, I'll just refuse to make a profit. That'll show 'em.

September 10, 2011 at 1:36 p.m.
Selah said...

EaTN...right on!!! It just continues to show the ignorance and lack of leadership in the Republican Party. The Republican party is "hell bent" on destroying Pres. Obama at my expense and the expense of the majority of Americans. Let's make them pay in 2012!!! This is the only way WE CAN SPEAK AND make the Republican Party listen because they thrive off of status, money , and attention!!!

September 10, 2011 at 3:05 p.m.
conservative said...

Demoncrats and the rest of the left decry "tax cuts for the rich" and "subsidies for corporations". So Obamboozler calls for payroll tax cuts for high salaried CEO's and tax credits (corporate wellfare), for small business which are also the "rich"! Demoncrats stood up and applauded this proposal at the speech. You think some lieberals out there might get angry when someone points this out to them?

September 10, 2011 at 5:36 p.m.
EaTn said...

conservative-- I do not agree with Obama reducing the payroll entitlement tax as a means of giving the middle class a break. It should have been through a larger standard deduction or some other means. The proposal can turn into a permanent trend that will water down the entitlement funds and give the right wingers a more solid excuse in the future to kill the programs. Maybe you can talk your conservative legislators into opposing it since it gives the middle class a bigger percent break than the wealthy.

September 10, 2011 at 6:20 p.m.
conservative said...

EaTN,the proposal is 3.1 percent up to the maximum of $106,800. This is a flat tax, which is fair for rich, poor and the middle class.

September 10, 2011 at 7:19 p.m.
EaTn said...

conservative... it's only flat to the maximum--anything above that is zero.

September 10, 2011 at 8:23 p.m.
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