I’m not a fan of the kind of political rhetoric that Barack Obama employed for much of his speech last night. “Pass this jobs bill” is not exactly “tear down this wall.” And at the risk of getting nitpicky, it’s difficult to say that “America can be number one again” and “America will be number one again” towards the end of the speech, only to finish with the assertion that “America remains the greatest nation on Earth”: my reaction was “wow, that was quick.”
But, as Paul Krugman says, there’s a lot to like in the nitty-gritty of the proposals, even if most of it was hard to discern in the speech itself. This, in particular, comes close to something I’ve been advocating for a while:
The President’s plan will completely eliminate payroll taxes for firms that increase their payroll by adding new workers or increasing the wages of their current workers (the benefit is capped at the first $50 million in payroll increases).
There are two things I’m less than ecstatic about here. First is the $50 million cap; second is the elimination of payroll taxes just for handing out pay rises, rather than for actually hiring people. But maybe there are logistical reasons why it’s hard to measure the number of employees, rather than just the total payroll in dollars.
But the idea of this bill, I think, is to attack the jobs crisis on multiple fronts, rather than placing a lot of faith in any one tax cut or similar. There’s the tax credit for hiring unemployed veterans, which is a great idea, along with another tax credit for hiring anybody who’s been unemployed for more than six months. There’s infrastructure investment, concentrated on schools, along with the return of our old friend the National Infrastructure Bank. That was a great idea when Obama first proposed it during the presidential election campaign, and it will remain a great idea when it’s proposed again every few years or so.
And! The wholesale mortgage refinance proposal managed to make it into the bill as well. That’s a great little stimulus program, which will cost the government little or nothing. It probably won’t create much in the way of jobs, but we need growth as well as jobs, and it will help, at the margin, on the growth front.
My least favorite part of the bill is probably the conceit that, as Obama put it, “everything in this bill will be paid for. Everything.” This is a particularly obvious symptom of the virulent disease which has long reached pandemic proportions in Washington — taking a headline from George Magnus, I call it Deficit Attention Disorder.
This is a stimulus bill; stimulus bills, by their nature, can’t be revenue-neutral or fully paid-for. And this one isn’t. Instead, it seems like Obama is going to tot up the cost of the bill — $447 billion is the number doing the rounds — and add it to the $1.5 trillion that the deficit supercommittee is being charged with cutting from the budget over a decade-long period. That’s not paying for a bill, it’s passing the buck to someone else.
And it’s pretty sad commentary on the state of American politics — and the way that the horrible personal-finance metaphor seems to have become embedded in the national psyche — that Obama considers this both necessary and a good idea.
The bottom line here, I fear, is that the best we can hope for is that this second stimulus will manage to keep the economy slightly above stall speed, and thereby help us avoid the job losses associated with a nasty double-dip recession. Avoided job losses are very good things, but they’re not new jobs. And they don’t get you re-elected.