Try as I may to back the President (after all, I voted for him), I just can’t believe that after this amount of time in office, he still has no clue as to how to stimulate the economy and create long-term jobs. Last night’s “jobs plan” was a watered down rehash of his early fiscal stimulus plan which would do nothing to create new permanent jobs.
His $447 billion “jobs plan” was nothing more than a “feel good re-election campaign kickoff fund” to be paid by the tax payers on borrowed money. To anyone who doubts this, just follow his travel over the next few months as he “promotes” his plan. It is a thinly veiled campaign tour paid by credit at the taxpayer’s expense. He will use the tour to criticize Republicans incessantly.
Maybe it’s not his fault. Maybe it’s due to the academics and lackeys that surround him, but last evening’s speech to the joint session of Congress was a total disaster. Even First Lady Michelle Obama looked noticeably distraught during the presentation (although we have yet to see any reporting on this).
Borrow and spend, repeat.
His expressionless cabinet looked like they were watching a fool. They didn’t see leadership, knowledge, or commitment. They saw desperation as the President barked out new spins of old ideas. He quoted other Presidents and acted angry, but said nothing notable himself. He began by saying all of this would be paid for, but ended with no details on how. Borrow and spend, repeat.
The President kept saying that Republicans voted for this and that in some weak attempt to convince us that these are reasonable ideas or put pressure on the Republican members to support this plan. Really? Is that the best you have Mr. President?
Well, lets look at the plan:
Academic and Keynesian “old thinking” influence
- Build infrastructure – like FDR did – a textbook example
- Put money into people’s hands via tax cuts and they’ll spend it to stimulate the economy – another textbook example
The problem with these approaches are twofold:
- Both approaches are temporary and transitory. That is, once the money runs out, the “jobs” effect stops. See the last “stimulus plan” for an example. The temporary tax rebates are ineffective. No one can plan on receiving these in the future, so they are used as a one time “perk,” not to upgrade a home or purchase a car.
- Both approaches temporarily put money into people’s pockets but do not address the fact that our economy has changed since FDR’s time. We don’t buy American made goods for the most part. Tax rebates and temporary job pay are spent on computers, TVs, or to pay down consumer debt. This helps out China manufacturers and the banks, but does nothing for creating new jobs in the USA. Retailers won’t hire permanent employees because they sold a few more TVs or laptops this year.
Unions
We know Obama is pandering to the unions and trying to appease them for their support in the next election, but his latest proposal is just another blatant attempt direct your “borrowed” money to unions.
- Money for public works projects = union pocketbooks
- Money for teachers = union pocketbooks
- Money for local and state governments = union pocketbooks
- Infrastructure Bank = another huge government bureaucracy filled with unionized civil servants.
What about you and me? If we’re not in a union, where is our job plan?
Infrastructure Bank
The President proposed yet another new Washington based government SPENDING agency. (As if Fannie Mae and Freddie Mac weren’t losing enough money). I’m sure the voters in Philadelphia, Cleveland, Phoenix and Sacramento are just jumping for joy about borrowing more money to pay for this.
Payroll Tax Cuts and Personal Tax Cuts
This is the biggest problem with today’s Keynesian economists as well as the President’s plan. While we all agree that PERMANENT tax cuts are good and will help stimulate the economy and jobs, the fact is that TEMPORARY tax cuts do nothing for job growth.
Most politicians and academics can’t understand this simple fact. Maybe because they have no business experience or they’ve never done a 5 year business plan. They just don’t know what motivates businesses.
No business will make an investment or hire people based upon a tax cut which may expire in a year or two. Imagine a 5 year business plan that shows profitability in year 1, but no plan for profits in years 2 through 5. Who would borrow money and invest in this plan? Would you?
Likewise, no individual will make a long-term purchasing commitment based upon a rebate that may or may not arrive next year. They won’t buy a new car or a new home on payments without a reasonable expectation of receiving that money for many, many years. Common sense.
Wrap up: Economic Suicide
Perhaps the best description of the President’s latest plan came from David Stockman, former director of the Office of Management and Budget under President Ronald Reagan.
“This should scare the living daylights out of investors–it’s just more Keynesian poison,” said Stockman. “The money will go through the economy in a flash and leave nothing behind except a half-trillion dollars of more debt to our children.”
I was actually cheering for the President and hopeful that this speech would help our country economically, but I am truly amazed that this is the best plan he could muster.
President Obama is staring into an economic abyss and his best plan after 3 years is to spend more borrowed money on outdated and ineffective policies to save us. Worst than that, most of these same elements were in his $900 billion “stimulus plan” which did not work.
The President needs some new advisors and new ideas, and he needs them fast.
