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Monday, November 30, 2009

Uh-Oh! Obama and Dems Talking About Jobs Again

In Washington the White House and Congressional Democrats are working on another spending spree that is meant to create jobs in 2010. Given their inability to understand the $787 billion "stimulus package" passed in February the American taxpayer, and worker, has cause for concern. You remember the stimulus package, it was supposed to limit unemployment to 8% (now over 10%) create or save millions of jobs (three and half million jobs lost since its passage) and help our economy recover.

It appears the Obama Administration and Democrats cannot remember what they passed since the bill was set up for almost none of the $787 billion to be spent in 2009. The spending from the stimulus package was meant to begin in 2010, to coincide with re-election plans in November and maintaining the majority in both Houses. Further, over $540 billion of the funds are not scheduled for expenditure until 2011. Ooops.

It is now evident that the severity of the economy was misjudged and perhaps more of the funds from the bill should have been spent this year. At the time the timeline was to inject some funds before the 2010 midterm elections and then have the bulk of the funding hit in 2011 so by the 2012 elections, including one for President, the economy will have recovered and Congress and Obama could point to the spending as being the cause.

Now looking at the political and economic landscape, the House Democrats up for re-election in 2010 are pressuring the White House to do something so they can pump more money sooner into their Congressional Districts before unemployed voters go to the polls and vote them out. Not willing to wait for the money already scheduled to be spent in 2010, some are worried their constituents (and by that we do not mean voters do we?) will be out of work, furloughed or otherwise facing reduced paychecks and with those reduced checks comes reduced support.

From a Press-Telegram article on the jobs issue here are some statements from Congressional Democrats showing how out of touch they really are:

The stimulus boosted employment but "did it in a way that was not as highly visible as a lot of people would like," said Rep. Betty Sutton, D-Ohio, one of the House members devising the jobs bill. "It did so in somewhat of a scattershot approach - a job here and a job there, trickled out over time. ..."

Ms. Sutton, it is not high visibility people want but actual jobs. When doling out pork the results tend to be scattershot, a skate park here, a walking path there, raises and not jobs over there...

"I hope we don't play around the edges with this and we do what will work. Invest the money now," said Rep. Barbara Lee, D-Oakland, who chairs the Congressional Black Caucus.

$787 Billion is playing around the edges? But when you voted for and passed the bill Obama said it would create millions of jobs, that's not the edges.

"The American people have an anger about the growth of the deficit because they're not getting anything for it," she (Speaker Nancy Pelosi) said in a conference call.

No, we are angry about the deficit because we are having to pay for it, and we will not get anything for it today or tomorrow. It appears her approach is give something to everyone out of the public trough and we will be happy. Typical politician trying to find the price point when buying votes. This works for special interests, like unions and fellow government employees, but it fails for most Americans who think beyond today when they vote.

The one line in the article that really showed how limited the group intellect and how narrow-minded the thinking is in Washington was this:

"House members also are considering a plan to funnel aid to state and local governments with the assurance the money would be used to preserve jobs."

Whose jobs would they be preserving? State and local governments that are cash strapped and facing huge deficits need to cut spending, the number one expense as with any business is salaries and benefits. By giving a one time shot of cash to a state or city to "preserve jobs" are we putting off the inevitable correction to budgets for one year, and adding another year of future benefit payments? This is a direct payment to government employees, the only organized labor sector that has grown in the past decade, who vote overwhelmingly Democrat, and who would be able to keep their jobs until the 2010 elections.

Let's review the attack on jobs and businesses thus far from the 111th Congress with encouragement and support from the Obama White House. Keep in mind two things: first, businesses, particularly small businesses, employ the overwhelming majority of Americans--they also lay off the majority of unemployed workers; second, our economy is Consumer-centric, with consumer spending responsible for approximately 70% of our economic activity. Fewer jobs means fewer consumers means fewer businesses able to stay in business--and hire workers.

The stimulus package was passed and added $787 billion to the budget and deficit. The funds are primarily targeted to public works, which puts most of the funds through government bureaucrats which leads to inefficiencies and loss of funds as it trickles down to the job site; as well disproportionate amounts of funding go to public works contracts not with private contractors but with public employees--keeping those jobs on city, county and state payrolls and budgets.

Congress tried, and thankfully thus far has failed, to pass Cap and Trade. A massive tax burden on American businesses meant to prevent "global warming." News is coming out that much of the scientific study has been skewed and the books cooked to prevent dissenting views and research on the subject from coming to light. The Cap and Trade bill would increase taxes on American businesses hundreds of billions of dollars with no return. It would lead to job losses in the United States as manufacturers take even more jobs out of the country.

The Senate and House are working on massive health care bills that if passed will increase taxes across the board for health care insurance, medical devices (virtually everything you buy for health and personal care from tampons to toothbrushes), employers and individuals. More taxes means less money to spend on other items, such as microwaves and bicycles, which dampens further the economic engine of America.

My reaction to the Democrats and White House working towards another jobs bill is that we will end up with another couple of hundred billion dollars in spending with them looking for who to pay for the tab. You can bet that whoever gets stuck with the attendant tax bill are those who are currently employing millions of Americans, or have the ability to hire as many if they had the funds to do so.

If they are serious about creating jobs they need to get over their "the rich must pay" rhetoric, quit defining "middle class" as their union supporters, and enact tax incentives for businesses and consumers. After the Bush tax cuts in 2000 the annual revenue to the U.S. Treasury from tax collection increased every year until 2008. Making those cut permanent and adding marginal cuts across the board will put money back on the balance sheets of small businesses, increase disposable income for the American consumer and boost the economy as spending and hiring slowly increase.

Unfortunately Congressional Democrats and members of the Obama Administration think they can spend money more wisely and efficiently than the average American, who evidently cannot be trusted with their own financial decisions. Unfortunately they have no sense of history, economics or memory as to what bills and spending packages they have already passed.

Bad news for the American worker and economy, the people who brought us Stimulus I are working on Stimulus II.


Bob Schilling said...

Hmmm...when this was being considered early this year, I seem to recall that many conservatives argued that it wasn't needed, or that it was too much. Now, it seems, it wasn't enough.

Payments to states were not designed to be a long term solution. The (admitted) hope is that the money will keep the states going until their revenue recovers. California may be a special case, where more drastic action is needed.

Your criticism is accurate, although I don't agree with all the details. The basic conundrum is that the short term money for unemployment, food stamps, and medicare is vital but doesn't do much to produce jobs. Investment in infrastructure does produce jobs, but it normally takes several years to get the projects started.

Just less than $200 billion of the Stimulus money is dedicated to tax cuts. That said, I don't think tax cuts are the only tool available to improve the economy. Low tax rates might be an incentive if there was lots of opportunity, but right now there isn't. Low interest rates should also be helping, but as far as I can see, those rates are not being extended to small businesses. That's not a government problem -- that's the banks.

In California, the housing market still seems badly damaged (you would know more that I), and it's such a vital part of the economy that it's hard to imagine an overall recovery without it. There, the tardy pace of mortgage resolution, I think, is preventing the market from finding a level where robust sales can begin again. Again, the banks....

It's probably fair to accuse the government of unwarranted optimism on the assessment of jobs "created" or "saved" by their efforts. The economy has clearly lost jobs, and the best that can be said is that the rate of loss has slowed in recent months.

At the same time, it's hardly fair to accuse them of not doing enough after doing everything possible to keep them from doing anything, as is the case for the Republicans. Once more, it appears that blind opposition to all actions taken by the government has overtaken reasoned, sharply drawn criticism -- criticism rendered impotent by the Republicans' evident intention to reject all compromises and to vilify those who propose them.

Dennis C Smith said...

What compromises? I have seen/heard of none being offered by the Democrats on any legislation, well except paying off Senators with more money for their states. The new jobs summit/discussions are only between the White House and Democrats, the health care reform meetings have been only the White House and Democrats. Any amendments offered in committees have been denied presentation or automatically voted down by the Democratic majorities. Certainly their right, they won enough elections to give them the majority, now they have to step up and accept the criticism that goes with governing, especially when the criticism is deserved.