Here’s my short take on President Obama’s job speech last night: On the economy and job market, it was better than what I feared he would offer, but it was far short of what’s needed. It was a mix of both some good, moderate ideas — mainstream, tested, effective to varying degrees — and some bad ideas. And, unfortunately, it also left out important potential initiatives.
Politically, Obama at least scores high marks for reintroducing job creation as the nation’s central immediate challenge. True, it’s late, after he already lost much public confidence. And his promised revised deficit plan and the ongoing “Super Committee” debate will distract from the jobs focus, just as the debt ceiling farce did this summer.
Even worse are the president’s befuddling, muddled attempts to lure Republicans into bipartisanship by negotiating with himself before even offering a proposal. Everyone in the world except Obama seems to understand what Republicans will do. They will support most of his bad ideas, then either block the good ones or bargain for even deeper concessions from Obama as the price for agreeing to a tiny fraction of his good ideas.
But Obama’s hodge-podge bipartisanship also loses the opportunity to present a coherent message that government action — emphatically including running a deficit until the economy is well on the road to recovery — is needed to boost demand for goods and services. That’s what’s needed to get big corporations to invest the trillion-plus dollars in profits they’re hoarding and hiring more employees. That means more direct government employment, contracting, investment and income support so that sales improve for private businesses that can then hire more people and feel greater confidence about the future and invest.
Instead, he presents a confused picture of what ails and what might revive a troubled economy — making unnecessary concessions to Republicans’ mistaken arguments that the problem is too much regulation, too high tax rates, or too little profit. And especially when he also continues to talk about trimming Medicare, Medicaid and Social Security, despite his punchy demands to “pass this jobs bill,” he has to leave a lot of the working and middle class majority wondering, “Which side is he on?”
Here’s some of the good, bad and forgotten high points:
- It’s good that it’s a $447 billion proposal, tilted to the first of its two years, not the $300 billion rumored. But more than half of the package is designed to preserve the status quo and avoid pushing the economy off a cliff, such as renewing existing policies, mainly long-term unemployment and employee payroll tax cuts, or preventing teacher layoffs. Good and needed, but not a new kickstart. Also, the Economic Policy Institute calculates that the economy needs a stimulus of $350 billion a year over and above the renewal of these existing policies.
- All of Obama’s proposed direct stimulus proposals are good — modernizing schools, surface transportation funding, rehiring teachers and first responders, an infrastructure bank, neighborhood housing rehab, a wireless initiative. They will produce more jobs and growth per dollar than nearly anything except unemployment insurance will. But it’s a total of only $140 billion, far less than could be absorbed. Obama should have embraced the more ambitious direct public service employment goals proposed by Rep. Jan Schakowsky (D‑IL). And the plan retreats greatly from the green jobs initiative of the first stimulus that an EPI and BlueGreen Alliance study found quite successful, despite shift of so much green manufacturing to China and elsewhere.
- But more than half of Obama’s package goes to tax cuts, worst of all new payroll tax cuts for employers across the board, which are unlikely to generate any jobs and, as Michelle Chen says, “will be weighted [to benefit] the pockets of higher income-earners rather than the working poor.” Even tax cuts tied to hiring more workers or increasing wages can be gamed and are not likely to yield many jobs unless demand increases.
- Obama smartly proposes expanding work-sharing, which subsidizes wages of workers who are retained for reduced work hours as an alternative to layoffs. But his embrace of the Georgia Work$ model of having the unemployed serve as temporary workers (in “training”) for employers for only their UI compensation (and a potential stipend) is not justified by Georgia’s track record (and may violate unemployment insurance laws). Although the macroeconomic impact may be small, Obama also deserves credit for proposing incentives to hire the long-term unemployed and legal prohibition against discriminating against them. But wage insurance could turn out to be a short-term adjustment to long-term loss of good wages.
- New trade deals with Korea, Colombia and Panama at best will not produce jobs for years but are in any case more likely to cost U.S. jobs. On the other hand, bringing troops back from the Middle East or pressuring China to allow its currency to revalue against the dollar would generate jobs and probably fairly fast.
- Although it’s not clear how the federal government will do it and how many homeowners will be helped, his proposal to facilitate refinancing home mortgages at current low interest rates could be a big boost out of a recession induced by a broken housing bubble.
In the end, one of the better contributions of Obama’s jobs speech was his ringing endorsement of the public and collective role in making the economy serve everyone and for more progressive financing of government. If only the policies matched the rhetoric.
David Moberg, a senior editor of In These Times, has been on the staff of the magazine since it began publishing in 1976. Before joining In These Times, he completed his work for a Ph.D. in anthropology at the University of Chicago and worked for Newsweek. He has received fellowships from the John D. and Catherine T. MacArthur Foundation and the Nation Institute for research on the new global economy.