The written details of Obama's jobs plan are discouraging.
They make it clear that the plan is not about serious business growth and long-term sustainable job creation.
It's all about politics.
The plan calls for more big spending in the short-term to pander to Obama's base and hype class warfare.
Sure, dumping big money into the economy will likely trigger some artificial short-term momentum that will give Obama something to talk about over the next 14 months as he seeks to maintain his own job.
But as we have seen with Obama's last stimulus bill, near zero interest rates, the FED's QE2 program, and unprecedented government spending, more money, at best, creates only a false sense of progress in the short-term.
Ultimately, it leads to more debt, a weaker dollar, fewer jobs, and a scared, paralyzed business community.
The specifics of the plan raise a slew of troubling questions.
Here's my take on many of the big ones, segregated into ten topics.
1.
How long does Obama really want the 2011 payroll tax holiday to continue? Wasn't this payroll tax holiday just a last minute addition to the eleventh hour 2010 negotiations to extend the Bush tax cuts, a costly $120 billion item (per year) that Obama demanded to help appease his base? Hasn't the payroll tax holiday been a complete failure at creating jobs? How can Obama possibly now claim that letting this short-term holiday expire on schedule is an unfair tax increase? Wouldn't extending the tax holiday into the future just make it harder to get rid of this perk in the future? Is Obama's real intention to make this payroll tax holiday permanent? Doesn't this holiday rob from Social Security and Medicare and make these programs progressively weaker by stripping away big dollars that are earmarked for these programs? Is the real objective of the extended payroll tax holiday to set Obama up so that he can campaign that he has delivered a tax break for middle- and lower- income Americans, albeit at the expense of senior entitlement programs? 2.
Has unemployment insurance now become the ultimate welfare program? Is there any limit on future extensions of the unprecedented benefit extensions that already exist? Isn't it now clear that these extensions do nothing to create jobs? Weren't more than 10 percent of the unemployment benefits paid last year classified as "improper payments," the bulk of which were paid to people who had already returned to work? Isn't it true that thousands now opt to stay out of the workforce because the marginal yield over their unemployment benefits isn't worth the effort? 3.
Is there any evidence to suggest that short-term, make-work, government construction jobs, funded with borrowed dollars, substantially contribute to subsidy-free, long-term job growth? Wasn't that the failed objective of Obama's first massive stimulus program that sprouted expensive construction signs all over the country but did nothing to help with long-term job growth? Wasn't that prior stimulus program the runaway spending spree that Biden was supposed to carefully manage? Wasn't that prior stimulus program going to fund shovel-ready jobs that Obama laughingly acknowledged didn't exist after the fact? How can we possibly believe a repeat program will be any different? How can Obama possibly advocate such a course simply because there are projects and people who want to do them? Doesn't that over-simplistic logic ignore all economic consequences and assume a limitless supply of money? Is that logic any different that a bankrupt couple claiming that they should get their house remodeled because they really want it and others can use the work? 4.
Why would any business hire a new employee to secure a peanut tax credit that, at best, covers only a fraction of the cost of the fringe benefits offered to the new employee? Isn't this just a useless gimmick designed to create an illusion, and a related campaign claim, that businesses are being offered meaningful pro-growth tax incentives? 5.
Why should a business that hires a veteran or a long-term unemployed person be given an extra tax credit? How does this increase overall job creation? Doesn't it just favor certain classes of employees over others? Won't businesses be stronger by hiring the most qualified persons? Should the federal government be earmarking favorite candidates in the hiring game? Why can't veterans play on a level playing field with others? Why should persons receive a preferential hiring status just because they remain on the unemployment rolls for a long time? 6.
Shouldn't individual states be responsible for resolving their present educational challenges, including dealings with teacher unions? Didn't the last stimulus bill prove that short-term federal subsidies, funded with borrowed dollars, promote a misguided dependence, create expectations that can't be sustained long-term, and provide an excuse for states to not take aggressive, strategic actions? Don't states ultimately end up weaker as a result? Don't these short-term subsidies ultimately hurt long-term, self-sustaining job creation? 7.
Why should the federal government even consider creating a new corporation, wholly-owned by the government, that would be staffed by individuals appointed by the President and that would spend tens of billions of dollars each year by making direct loans and loan guarantees to finance "economically-viable" transportation, water and energy projects? Wouldn't such a corporation ultimately lead to the same impossible problems that Freddie Mac and Fanny Mae have created? Why should the federal government be in the business of financing private businesses? Given the Solyndra debacle and scandal (which cost taxpayers a half of billion dollars) and similar failed government-funded projects, why should anyone think that government bureaucrats have the capacity to determine whether a project is "economically viable"? Wouldn't such a government-owned corporation encourage ugly crony capitalism and (as in the case of Solyndra) become a tool for using taxpayer dollars to reward campaign donors and finance wasteful projects for political purposes? By throwing big taxpayer dollars at marginal projects, wouldn't such a government-owned corporation disrupt the normal discipline of the capital markets? 8.
Why should the employment discrimination laws be extended now to make unemployed persons a new protected class under such laws? How will such a change possibly result in the creation of more jobs? Wouldn't such a change provide a disincentive for businesses to hire? Wouldn't such a change just encourage more businesses to outsource their needs, often to companies outside of the U.
S.
? Isn't the fact that a person has been out of work a long-time a relevant factor for an employer to consider in the hiring process? Wouldn't such a change in the law lead to wasteful, job-destroying litigation where unemployed persons, armed with their tenacious attorneys, will assert that they were victims of discrimination, claiming liquidated damaged and attorney fees (all authorized by Obama's plan)? What additional steps will a business need to take in the hiring process to protect against potential discrimination claims? How much energy, time and money will be spent by businesses to protect themselves (on training programs, special procedures and the like), all of which will result in less job creation? Wouldn't such a change in the law result in the EEOC, the Justice Department and other agencies hassling businesses even more because of their hiring practices? Wouldn't such a change in the law create a mindset in many unemployed persons that they are "victims"? Isn't such a mindset destructive to many by creating an entitlement expectation and subordinating the importance of personal responsibility? Wouldn't such a change in the law just spawn massive new government regulations that will slow down and hurt all businesses? Isn't this proposed law change just another example of Obama-style, job-killing legislation? 9.
Wouldn't fewer jobs be created by increasing taxes on those who make over $200,000 a year and on oil-drilling activities? Don't many successful owners of pass-through business entities (S corporations, LLCs and partnerships) make over $200,000 a year? Isn't it a given that increasing their taxes will result in fewer jobs being created? Wouldn't limiting the benefit of any charitable deduction to 28 percent just result in less charitable deductions? Wouldn't drops in charitable deductions lead to fewer jobs in charitable organizations? Wouldn't limiting the benefit of the home mortgage interest deduction to 28 percent result in permanent damage to the housing industry, make it much tougher from that industry to recover, and lead to many fewer construction jobs? Wouldn't increasing taxes on oil-drilling operations further discourage oil drilling, make us more dependent on offshore oil sources, and continue to kill oil-related jobs in the U.
S.
? Is Obama's plan just an attempt to redistribute wealth under the guise of job creation, when in fact it will lead to less long-term, sustainable job creation? 10.
What is Obama's expectation in providing that the proposed tax increases will not happen if the Super Committee of 12 can find adequate future spending cuts? Is this a ploy to force the Super Committee of 12 to find more illusory future spending cuts? Is this a ploy to force the Super Committee of 12 to incorporate the proposed tax increases into their final proposal? Is this a ploy to hold out some temporary uncertainty with respect to the tax increases to help with an immediate passage of Obama's plan? Doesn't this just confirm the stupidity of the whole Super Committee idea? Is the whole plan just a gimmick to give Obama something to campaign about when Congress shoots down the plan because good answers to the foregoing questions and many others don't exist?
They make it clear that the plan is not about serious business growth and long-term sustainable job creation.
It's all about politics.
The plan calls for more big spending in the short-term to pander to Obama's base and hype class warfare.
Sure, dumping big money into the economy will likely trigger some artificial short-term momentum that will give Obama something to talk about over the next 14 months as he seeks to maintain his own job.
But as we have seen with Obama's last stimulus bill, near zero interest rates, the FED's QE2 program, and unprecedented government spending, more money, at best, creates only a false sense of progress in the short-term.
Ultimately, it leads to more debt, a weaker dollar, fewer jobs, and a scared, paralyzed business community.
The specifics of the plan raise a slew of troubling questions.
Here's my take on many of the big ones, segregated into ten topics.
1.
How long does Obama really want the 2011 payroll tax holiday to continue? Wasn't this payroll tax holiday just a last minute addition to the eleventh hour 2010 negotiations to extend the Bush tax cuts, a costly $120 billion item (per year) that Obama demanded to help appease his base? Hasn't the payroll tax holiday been a complete failure at creating jobs? How can Obama possibly now claim that letting this short-term holiday expire on schedule is an unfair tax increase? Wouldn't extending the tax holiday into the future just make it harder to get rid of this perk in the future? Is Obama's real intention to make this payroll tax holiday permanent? Doesn't this holiday rob from Social Security and Medicare and make these programs progressively weaker by stripping away big dollars that are earmarked for these programs? Is the real objective of the extended payroll tax holiday to set Obama up so that he can campaign that he has delivered a tax break for middle- and lower- income Americans, albeit at the expense of senior entitlement programs? 2.
Has unemployment insurance now become the ultimate welfare program? Is there any limit on future extensions of the unprecedented benefit extensions that already exist? Isn't it now clear that these extensions do nothing to create jobs? Weren't more than 10 percent of the unemployment benefits paid last year classified as "improper payments," the bulk of which were paid to people who had already returned to work? Isn't it true that thousands now opt to stay out of the workforce because the marginal yield over their unemployment benefits isn't worth the effort? 3.
Is there any evidence to suggest that short-term, make-work, government construction jobs, funded with borrowed dollars, substantially contribute to subsidy-free, long-term job growth? Wasn't that the failed objective of Obama's first massive stimulus program that sprouted expensive construction signs all over the country but did nothing to help with long-term job growth? Wasn't that prior stimulus program the runaway spending spree that Biden was supposed to carefully manage? Wasn't that prior stimulus program going to fund shovel-ready jobs that Obama laughingly acknowledged didn't exist after the fact? How can we possibly believe a repeat program will be any different? How can Obama possibly advocate such a course simply because there are projects and people who want to do them? Doesn't that over-simplistic logic ignore all economic consequences and assume a limitless supply of money? Is that logic any different that a bankrupt couple claiming that they should get their house remodeled because they really want it and others can use the work? 4.
Why would any business hire a new employee to secure a peanut tax credit that, at best, covers only a fraction of the cost of the fringe benefits offered to the new employee? Isn't this just a useless gimmick designed to create an illusion, and a related campaign claim, that businesses are being offered meaningful pro-growth tax incentives? 5.
Why should a business that hires a veteran or a long-term unemployed person be given an extra tax credit? How does this increase overall job creation? Doesn't it just favor certain classes of employees over others? Won't businesses be stronger by hiring the most qualified persons? Should the federal government be earmarking favorite candidates in the hiring game? Why can't veterans play on a level playing field with others? Why should persons receive a preferential hiring status just because they remain on the unemployment rolls for a long time? 6.
Shouldn't individual states be responsible for resolving their present educational challenges, including dealings with teacher unions? Didn't the last stimulus bill prove that short-term federal subsidies, funded with borrowed dollars, promote a misguided dependence, create expectations that can't be sustained long-term, and provide an excuse for states to not take aggressive, strategic actions? Don't states ultimately end up weaker as a result? Don't these short-term subsidies ultimately hurt long-term, self-sustaining job creation? 7.
Why should the federal government even consider creating a new corporation, wholly-owned by the government, that would be staffed by individuals appointed by the President and that would spend tens of billions of dollars each year by making direct loans and loan guarantees to finance "economically-viable" transportation, water and energy projects? Wouldn't such a corporation ultimately lead to the same impossible problems that Freddie Mac and Fanny Mae have created? Why should the federal government be in the business of financing private businesses? Given the Solyndra debacle and scandal (which cost taxpayers a half of billion dollars) and similar failed government-funded projects, why should anyone think that government bureaucrats have the capacity to determine whether a project is "economically viable"? Wouldn't such a government-owned corporation encourage ugly crony capitalism and (as in the case of Solyndra) become a tool for using taxpayer dollars to reward campaign donors and finance wasteful projects for political purposes? By throwing big taxpayer dollars at marginal projects, wouldn't such a government-owned corporation disrupt the normal discipline of the capital markets? 8.
Why should the employment discrimination laws be extended now to make unemployed persons a new protected class under such laws? How will such a change possibly result in the creation of more jobs? Wouldn't such a change provide a disincentive for businesses to hire? Wouldn't such a change just encourage more businesses to outsource their needs, often to companies outside of the U.
S.
? Isn't the fact that a person has been out of work a long-time a relevant factor for an employer to consider in the hiring process? Wouldn't such a change in the law lead to wasteful, job-destroying litigation where unemployed persons, armed with their tenacious attorneys, will assert that they were victims of discrimination, claiming liquidated damaged and attorney fees (all authorized by Obama's plan)? What additional steps will a business need to take in the hiring process to protect against potential discrimination claims? How much energy, time and money will be spent by businesses to protect themselves (on training programs, special procedures and the like), all of which will result in less job creation? Wouldn't such a change in the law result in the EEOC, the Justice Department and other agencies hassling businesses even more because of their hiring practices? Wouldn't such a change in the law create a mindset in many unemployed persons that they are "victims"? Isn't such a mindset destructive to many by creating an entitlement expectation and subordinating the importance of personal responsibility? Wouldn't such a change in the law just spawn massive new government regulations that will slow down and hurt all businesses? Isn't this proposed law change just another example of Obama-style, job-killing legislation? 9.
Wouldn't fewer jobs be created by increasing taxes on those who make over $200,000 a year and on oil-drilling activities? Don't many successful owners of pass-through business entities (S corporations, LLCs and partnerships) make over $200,000 a year? Isn't it a given that increasing their taxes will result in fewer jobs being created? Wouldn't limiting the benefit of any charitable deduction to 28 percent just result in less charitable deductions? Wouldn't drops in charitable deductions lead to fewer jobs in charitable organizations? Wouldn't limiting the benefit of the home mortgage interest deduction to 28 percent result in permanent damage to the housing industry, make it much tougher from that industry to recover, and lead to many fewer construction jobs? Wouldn't increasing taxes on oil-drilling operations further discourage oil drilling, make us more dependent on offshore oil sources, and continue to kill oil-related jobs in the U.
S.
? Is Obama's plan just an attempt to redistribute wealth under the guise of job creation, when in fact it will lead to less long-term, sustainable job creation? 10.
What is Obama's expectation in providing that the proposed tax increases will not happen if the Super Committee of 12 can find adequate future spending cuts? Is this a ploy to force the Super Committee of 12 to find more illusory future spending cuts? Is this a ploy to force the Super Committee of 12 to incorporate the proposed tax increases into their final proposal? Is this a ploy to hold out some temporary uncertainty with respect to the tax increases to help with an immediate passage of Obama's plan? Doesn't this just confirm the stupidity of the whole Super Committee idea? Is the whole plan just a gimmick to give Obama something to campaign about when Congress shoots down the plan because good answers to the foregoing questions and many others don't exist?