So we've been standing by all week for Obama's big jobs speech, promised in response to the awful jobs numbers last month. Here are the details, as outlined by the White House; I've added in the amounts on the major categories as best I can figure them:
Tax cuts: $250 billion
- Payroll tax rebate on first $5 million in payroll, which the president says will reach 98% of American companies, plus complete rebate for new hires or raises
- Extending payroll tax cut
- Extending 100% expensing of business investment
- (A bunch of regulatory streamlining that is likely to have little effect and is bizarrely classed as a tax cut)
- Tax credits for hiring unemployed veterans, particularly those with service-connected disabilities
- $4,000 per worker for hiring workers who have been unemployed for more than six months
Infrastructure: about $100 billion
- $50 billion for new infrastructure projects
- $10 billion for an infrastructure bank
- $15 billion to rehab vacant and foreclosed homes/businesses
- Some undisclosed sum for getting high speed wireless to "98% of American"
- $25 million to rehab schools
Direct assistance: About $100 billion (?)
- Continuing the extension of unemployment benefits
- Various retraining/wage support ideas that are supposed to help the structurally displaced to transition into new careers.
- $35 billion for preserving/hiring teachers, cops and firefighters
- Federal assistance in refinancing to current mortgage rates
All this will be paid for by asking the Supercommittee to find another $400 billion or so in new taxes and spending.
So, what do I think?
That the president apparently has some sort of numerical compulsive disorder which has caused him to become fixated on "98%"; his stump speeches have always been larded with promises that 98% of American families would get all manner of goodies, while paying absolutely nothing in new taxes, but the mystical figure is now being extended into the realm of companies and high-speed wireless internet subscribers.
But aside from the snark, I think that it's generally solid on the spending/tax cut side. The targeted employment stuff is basically a decent plan--we should be aggressively looking for ways to keep the long term unemployed from turning into the permanently unemployed
. At worst, we put a little extra money into the pockets of taxpayers. The biggest worry is that the stimulus from the accelerated depreciation won't actually make much difference in America--Austan Goolsbee's work suggests that these sorts of tax cuts mostly end up in the pockets of people who produce investment goods, and many of those people are not in America.
The infrastructure stuff will be fine, if we choose good projects--America needs roads and airports and so forth. But as we discovered with the previous round, the better the project, the worse the stimulus. There are no terrific infrastructure projects sitting around, waiting to break ground next week . . . nay, not even if we streamline the regulatory red tape.
For that matter I'm not even sure that the president has the authority to streamline most of that red tape, and I'm highly skeptical that Congress is going to get busy undoing several decades worth of environmental and anti-corruption protections. So most of that $100 billion is not going to be spent next year--presumably, even the school rehab is going to have to wait until summer, when what we need is jobs right now.
The direct assistance stuff is a little bit mixed: yes to unemployment insurance extension, meh on maintaining government payrolls. Transition assistance is good in theory, but in practice, all the programs I'm aware of have very little proven success at actually improving peoples' employment prospects.
But while all the proposals are well enough, they're hardly an exciting new direction for the administration. These aren't new ideas; they're things we're already doing, like unemployment assistance and the payroll tax cuts, or things that Obama has been proposing for a while, like the infrastructure bank. Even the "new" proposals, like added money for infrastructure, is a retread of ARRA.
Economically, this is mostly treading water while we wait for something to change. And politically, though liberals are cheering the more aggressive tone of the speech, I'm pretty skeptical that this is going to turn around Obama's sliding poll numbers: as one of the talking heads on Fox News said, he needed a game changer, and this was small ball.
That's if it passes. And there's rather a big poison pill for Congress in here: Obama has proposed no pay-for. Or rather, he proposed that Congress figure out how to pay for it:
The agreement we passed in July will cut government spending by about $1 trillion over the next ten years. It also charges this Congress to come up with an additional $1.5 trillion in savings by Christmas. Tonight, I'm asking you to increase that amount so that it covers the full cost of the American Jobs Act. And a week from Monday, I'll be releasing a more ambitious deficit plan -- a plan that will not only cover the cost of this jobs bill, but stabilize our debt in the long run.
One gets the dreadful feeling that the more ambitious plan may consist of asking Congress to find another couple of trillion under the couch cushions.
As MuniLass said over Twitter,
Obama: "Here's the deal: I take credit for the new spending now; you take credit for making politically unpopular cuts later."
This is becoming a signature move for Obama. As far as I can recall, he has never taken the risk of proposing anything even potentially unpopular; even with something like health care, he let Congress take the lead. Eh voila--anything you like in the plan is a product of his wise leadership, while anything unfortunate is, y'know, the not-perfect stuff he had to sign in order to get Americans health care.
But it's hardly been a rousing success when Democrats tried to maneuver
the Republicans into putting their sticky little fingerprints all over the unpopular parts of their plans while taking credit for the successes, which is what this boils down to. During the speech, Justin Wolfers tweeted to the effect that the GOP wouldn't dare vote against these hard-to-dislike provisions. I take it that this sentiment is common among liberals, who expressed approval that Obama was finally taking it to Republicans.
I'm less sure. For one thing, they've got a legitimate critique: it isn't paid for. Of course, if you want more stimulus, you don't want it to be paid for next year . . . but it isn't paid for at all. Select committees are turning into the Laffer Curve of the left: every time you want more money to pay for something, assign a committee to make unspecified cuts years in the future.
Republican complaints that the spending will happen and the pay-fors won't aren't unreasonable, and I suspect they'll get some traction with independents.
For another, they don't have to let it come to the floor; they control the House, and they have the filibuster in the Senate. Six months from now, how many constituents will even remember that this speech took place? Unfortunately for Obama, most of the people who will remember live in DC, which doesn't have any votes in the legislature.
Should they pass it? Yes, at least the tax credits and the extension of unemployment benefits. A career is a terrible thing to waste.
But it's hard for Obama to call for altruism on the part of Congressional Republicans when he wasn't willing to take the manly risk of saying out loud what taxes he'll raise or spending he'll cut. The speech may have appeased his base. But I doubt it did much to advance either of what were clearly his twin goals here: enacting policy, and wooing independents.