By most accounts, President Obama’s $800 billion “stimulus” bill that was passed in February 2009 with the promise of keeping unemployment below 8 percent was an absolute failure. However, last night in a speech to a joint session of Congress, the President demanded that it spend another $450 billion on more of the same “stimulus” that has left America with zero job growth and continued economic stagnation. But don’t worry. His top economic adviser Gene Sperling told NBC that this one would likely get us down to 8 percent.
Despite Sperling’s predictions, there are a lot of problems with the broad outlines in the President’s proposal, not the least of which is the fact that President Obama is insisting Congress immediately pass a bill that doesn’t exist. No legislative details have been offered; nothing has been scored by the Congressional Budget Office; there has been no debate or negotiation; and there is no accompanying plan on how to pay for it. President Obama only promised he would talk about paying for it in the weeks to come, and that onus likely will fall on the congressional “super committee” that was supposed to be focused on reducing our debt.
“Minor” details such as the lack of an actual bill or money to pay for it aside (or the fact that $450 billion in one year is more than twice as costly as the annual sticker price of Obama’s last foray into stimulus spending), there are serious substantive problems with the ideas the President proposed. Last night, Heritage’s experts provided their reactions to some of those proposals:
Unemployment Benefits: President Obama wants to extend unemployment benefits yet again as a way to boost the economy. That just won’t work. Heritage’s James Sherk writes, “For welfare reasons Congress wants to help workers who cannot find jobs. This is understandable. That doesn’t mean it will help the economy, no matter how much the President wants it to.”
The stimulus bill extended unemployment benefits, Congress has kept them in place several times since then, and the federal government has spent over $300 billion on unemployment benefits since Obama took office. It hasn’t stimulated the economy before. It’s not going to stimulate it now.
Reviving the Failed Hiring Tax Credit: In order to help businesses create new jobs, the President proposed a tax credit for businesses hiring new workers. The trouble is that he’s been there, done that, and it didn’t work. Why try it again?
Heritage’s Curtis Dubay explains the problem with the proposal: “A credit of a few thousand dollars, a mere fraction of the cost of hiring a worker, does nothing to change that calculation. The only positive effect on hiring the credit could have would be on temporary positions if it makes adding a few new temps profitable in the short term. But once the credit expires businesses will let those workers go.”
Tax Hikes on Job Creators: Taxing those who create jobs as a way to help create jobs is entirely counterintuitive, but the President proposed it anyway. Even though he has agreed that tax hikes slow economic growth and deter job creation, last night he proposed raising taxes on investors, businesses, and entrepreneurs. Dubay says, “This is akin to bailing water into an already-sinking ship.” And with businesses looking for more certainty, continuing to threaten more tax hikes will only dampen America’s chances of real recovery.
Infrastructure Banks That Won’t Build the Economy: Throwing more money at building roads and bridges, President Obama tells us, will create new jobs. So he is proposing the creation of an infrastructure bank that would require a whole new bureaucracy. Heritage’s Patrick Knudsen says that increasing spending on these projects “simply moves resources from one place to another — it may employ construction workers, but only by reducing jobs in other sectors.” And taxpayers end up paying the price, all without creating net job growth or boosting the economy in the near term.
Going the Wrong Way on Education: America’s education system needs less federal involvement, not more. But the President used his jobs speech as a way to shoehorn the federal government further into the education business, proposing that Washington spend billions on school construction and new jobs for teachers. Never mind that since 1970, school enrollment in public elementary and secondary schools has increased just 7 percent, while staff hires have increased 83 percent. Heritage’s Lindsey Burke explains, “On a per-pupil basis, federal spending on education has nearly tripled since the 1970′s.” And for all that spending, Washington hasn’t improved results.
There’s more the President proposed, as well, but much more he didn’t mention, too. He demagogued his political opponents for favoring smaller government and the “rigid ideas” of what government can and cannot do.
He presented one false choice, among many, between reducing government regulations and protecting the American people. He also promised to “root out” unnecessary regulations, as he has for four straight years, while only adding more costly rules to the books. He proposed a puzzling plan to allow refinancing of mortgages without explaining the details or who pays for it. He proposed extending the payroll tax “holiday,” which won’t create jobs. He ignored serious ways to grow the economy, like pursuing domestic energy production, which he himself has stalled.
President Obama has spent two and a half years increasing federal spending, growing government, and punishing businesses with burdensome regulations, and today 14 million Americans remain unemployed. Now the President is demanding more of the same at an even higher price. That is not a plan to create new jobs–that is a politically motivated message that ignores the reality of America’s economic crisis.
- Authorities are investigating a possible al-Qaeda plot to use a car bomb to attack bridges or tunnels in New York City or Washington around Sunday’s anniversary of the 9/11 attacks.
- For the second time, guns from the federal government’s Fast and Furious operation have been connected to a violent crime in America, this time in an assault on two undercover police officers.
- Bank of America may cut 40,000 jobs during the first wave of a restructuring effort designed to boost profits amid concerns over the slowing economy, mortgage-related losses, and lawsuits.
- A U.S. military reconnaissance plane was forced from the skies by a North Korean electronic attack in March, according to a report issued by South Korea’s defense ministry.
- Lunchtime Chat: Join us for a live Web chat with Heritage’s Curtis Dubay, today from 12 pm to 1 pm ET. We will be discussing jobs, the “super committee,” and how tax rates affect job growth.