Obama's New Stimulus
President Obama's speech to Congress was impressive. Good to see some leading from the front, for a change. The tone was commanding, confident, and purposeful. Crucially, he took the initiative and presented a detailed plan. No more, "I'm willing to consider this." No more, "I'd like to see that." Instead, again and again, "Pass this bill." They won't, but the point of last night's speech was not to persuade the House that this or any other new jobs plan makes sense. The House isn't listening. The president's goal was to regain public support, and hence make the GOP's fiscal-policy defeatism harder to sustain. Making the case for specific proposals was a vital part of that. Scored with this in mind, I think it was a fine performance.
I am sending this Congress a plan that you should pass right away. It's called the American Jobs Act. There should be nothing controversial about this piece of legislation. Everything in here is the kind of proposal that's been supported by both Democrats and Republicans--including many who sit here tonight. And everything in this bill will be paid for. Everything.
The purpose of the American Jobs Act is simple: to put more people back to work and more money in the pockets of those who are working. It will create more jobs for construction workers, more jobs for teachers, more jobs for veterans, and more jobs for long-term unemployed. It will provide...a tax break for companies who hire new workers, and it will cut payroll taxes in half for every working American and every small business. It will provide a jolt to an economy that has stalled, and give companies confidence that if they invest and if they hire, there will be customers for their products and services. You should pass this jobs plan right away.
On substance, the American Jobs Act has a lot of good ideas. (Short fact-sheet; long fact-sheet.) I especially like the employer and employee payroll tax cuts (with some of the relief tied to payroll expansion), the unemployment insurance changes (with support for work sharing), and the new credit for hiring the long-term unemployed. At just under $450 billion the aggregate fiscal impulse is too small: something twice as big, or more, is called for. But the White House could be right to think the public would have been scared rather than reassured by a larger number. Restoring confidence is part of the task in all this.
And then there's the politics. A moderately-sized plan will hurt the GOP more if they reject it out of hand. Presumably for the same reason, the proposal is tilted towards tax cuts rather than spending increases. You can argue the economics of that both ways, but again it is tactically shrewd.
The president emphasized throughout that the new stimulus (of course, he never used that word) should be paid for. It was a pity he didn't say how. Part two of the package is promised in another week, when the White House will release a new plan to cut the long-term deficit. This will apparently start from the debt-ceiling deal, with extra deficit savings to cover the cost of the new stimulus.
It's a balanced plan that would reduce the deficit by making additional spending cuts, by making modest adjustments to health care programs like Medicare and Medicaid, and by reforming our tax code in a way that asks the wealthiest Americans and biggest corporations to pay their fair share.
That doesn't sound like the kind of base-broadening tax reform the country needs. He's still telling 97% of households that their taxes won't be going up. Nothing on Social Security either, except to affirm its place in the American social compact. I wish he had been as bold and specific on long-term fiscal control as he was on the need for a new stimulus.
I also think he spent too many words connecting his proposals to a broader liberal world-view.
In fact, this larger notion that the only thing we can do to restore prosperity is just dismantle government, refund everybody's money, and let everyone write their own rules, and tell everyone they're on their own -- that's not who we are. That's not the story of America.
Yes, we are rugged individualists. Yes, we are strong and self-reliant. And it has been the drive and initiative of our workers and entrepreneurs that has made this economy the engine and the envy of the world.
But there's always been another thread running throughout our history--a belief that we're all connected, and that there are some things we can only do together, as a nation.
It's tired. It's beside the point. It moved the rhetorical focus from specific plans aimed at actual problems--challenging the GOP to explain its objections--to routine denunciation of caricature conservatism. For a moment it made the speech less urgent, and more overtly political. His accusation that conservatives are using the crisis to advance a bigger agenda is true, but instantly called to mind the White House's own declaration on that point (never let a crisis go to waste). Progressives had plenty of applause lines without this detour. For the wider electorate, I thought this subtracted rather than added.
Overall, though, the president did well. He set out a good economic plan, and he did it forcefully. He looked like a leader. I wish we had seen more of this President Obama before. We will find out whether he has left it too late.