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Red Planet's picture

Obama's Jobs Plan. Not Bold. Not Imaginative. All to be paid for by the Super Committee.

Unavoidably missed the speech, so I didn't get to hear the tone that others here have complimented. But here's a quick break down of the proposal itself, based on reporting by Reuters.

[Note: All comments are my own first thoughts. Maybe it's going to be better than it sounds. It was more $$bucks than I expected, but digging into the details suggests its considerably less bang than I hoped. Anyway, these are first, late night, reactions after reading the Reuters summary of the proposal.]

HIGHLIGHTS (MINE)

  • 16% of the President's jobs plan is fraudulent (maybe more).
  • 39% hands Republicans another excuse to gut Social Security
  • 100% is to be paid for by the corporate-owned Super Committee

Here's the breakdown:

EMPLOYEE PAYROLL TAX HOLIDAY

Obama is proposing a $175 billion one-year extension and expansion of the employee payroll tax holiday that would halve the tax rate to 3.1 percent in 2012. 

Commentary: Putting this money in the pockets of workers is a good thing, but characterizing it as a Social Security payroll tax holiday will bite us in the butt. Yes, I know that Treasury is directed to make the Trust Fund whole, but who is listening to that? A more direct way to do this would be to revise and extend the earned income credit, temporarily, to cover everyone whose income is below the payroll tax maximum. Disconnect it from Social Security. Same effect, better narrative. But Obama wants to portray it as a tax cut, I guess to make the Tea Party happy.

EMPLOYER PAYROLL TAX HOLIDAY

Obama is seeking $65 billion to encourage small businesses to hire more workers. This includes halving employer payroll taxes to 3.1 percent for the first $5 million of a company's wage bill in 2012, which the administration says will reach 98 percent of small businesses. He also wants a complete payroll tax holiday for increasing the size of the payroll by up to $50 million above the prior year, either by hiring new workers or raising the salaries of the existing labor force.

Commentary: a) This is outright fraud. Does Obama really think employers will hire workers they don't need in order to get a tax break. Open letter to Obama: tax cuts are do not cover the cost and are not worth the hassle of taking on new employees. What will they do, stand around the shop counting up the tax profits? Employers will take advantage, of course, if they are hiring anyway for other reasons. I feel certain Obama knows that.

HOUSING

Obama wants to broaden homeowner access to mortgage refinancing and help the battered housing market by allowing households to take advantage of ultra-low borrowing costs that would help them put their finances on a sounder footing.

Administration officials say he hopes to push forward with a plan in the next few weeks. To hammer out a proposal, the Treasury Department is talking with U.S. mortgage finance giants Fannie Mae and Freddie Mac, and their regulator the Federal Housing Finance Agency, to figure out ways to broaden access for homeowners by removing barriers to refinancing.

Commentary: Reserved, pending details, and lots of detail will be needed on this one. Who qualifies? What's the program? Who profits? Who takes a loss? What will it cost? Will the Super Committee have to pay for this too? Will it be every bit as effective as HAMP?

EXTENDING 100 PERCENT COMPANY EXPENSING INTO 2012

At a cost of $5 billion, Obama wants to extend a 100 percent expensing tax break for companies, allowing them to immediately take a tax deduction for investment in new plant and equipment.

Commentary: More fraud. Companies may take advantage of this, but watch out for manipulation of this program. a) It will be used to fast-track deductions for investments that would have been made anyway, and b) a substantial portion of the investment will be in new plant and equipment that reduces the need for labor, long-term. Think "productivity gains," all coming these days at the expense of American labor.

$85 BLN IN AID FOR STATE AND LOCAL GOVERNMENTS

-- $35 billion to keep teachers, firefighters and police officers in their jobs, of which $30 billion would go to schools and $5 billion to police and firefighters.

Commentary: More, please.  And how about working with schools to reduce and subsidize tuition for higher education? How about partial forgiveness of predatory student loans?

-- $30 billion to modernize schools and community colleges.

Commentary: More, please.

-- $15 billion to rehabilitate and refurbish vacant and foreclosed homes.

Commentary: Reserved pending details. Spending the money will put some idle contractors and carpenters back to work and may improve some neighborhoods, but what happens when the homes are refurbed? How are they returned to productive use? Who will occupy them? Much detail needed here, though this could be good. If so, much more money will be needed.

-- $5 billion to help low-income youths and adult workers, supporting summer and year-round jobs for young people and support subsidized work for unemployed low-income workers.

Commentary: This sounds good but is ambiguous. What does it mean to "support" summer and year-round jobs? What is subsidized work and who profits from it? If we want to put these folks to work, and I do, let's don't pay private companies to hire them for their own profit. Believe me when I say companies are sitting on Scrooge McDuck's wet dream of profits already. Let's put these people to work on projects that benefit us all. This situation is crying out for the 2011 version of the WPA. One idea, why not hire them to go neighborhood by neighborhood and do basic energy conservation retrofitting of homes and small commercial properties at an affordable cost to property owners, even subsidized where it makes sense to do so? Should this $5 billion be added into the potential fraud column?

ROAD, RAIL AND AVIATION INFRASTRUCTURE SPENDING

Obama seeks $50 billion to invest in highways, transit, rail and aviation, including upgrading U.S. airports and supporting Nextgen Air Traffic modernization.

Commentary: Sounds good. Problem with highways is, build them and we will come, driving our new SUVs. Emphasis on transit, please. 

INFRASTRUCTURE BANK

Obama wants $10 billion to capitalize an infrastructure bank to leverage private and public infrastructure investment "without earmarks or traditional influence," the White House says.

Commentary: WTF? We, the public, can borrow money at 0% effective rate of interest from the Treasury to fund these projects. Why not borrow $500 billion or a trillion or even two at that rate and get the country rebuilt? We would wind up owning the equivalent assets. Instead, Obama would rather borrow money from private investors at exorbitant rates? Another public-private partnership? Who will control this program, to benefit whom? Who will own the infrastructure and who will pay for it? What does it mean to make public investments "without traditional influence? Does that mean the public doesn't have a say? I can't put down the suspicion that this $10 billion should also be added into the fraud column.

EXTENDING UNEMPLOYMENT INSURANCE, BRIDGE TO WORK

-- $49 billion for a one-year extension of long-term unemployment benefits that would otherwise expire, which the White House says prevents 6 million jobless Americans from losing benefits. It includes reforms to the jobless aid system and a "bridge to work" program to help get unemployed people back to work.

Commentary: Good. Must be done. No brainer, except that "bridge to work" program. Is that the one where we pay the employees and force them into free labor at Walmart? Instead, let's wrap it into real work building infrastructure for the next generation.

-- $8 billion for tax credits for long-term unemployed.

Commentary: Okay. Details needed, but, more please.

SUPER COMMITTEE (not mentioned by Reuters)

Obama promised that the Super Committee will pay back the entire cost of the program. That's a deal killer. Just mentioning that the jobs program has to be paid for is a deal-killer. But handing off the repayment plan to an unaccountable super committee of the already unaccountable American Plutocracy is worse.

META-COMMENTARY

Look, reducing the tax bite on workers is okay by me. But it's caving to the Tea Party narrative, once again, rather than creating a Progressive narrative. It's only indirectly job-creating. Lots of folks on this site don't seem to think that narrative matters. But we are human beings. We are people of the story. Ronald Reagan and Frank Luntz understand that. Billy Graham and George Bush understand that. John Kennedy and Bill Clinton understand that. Give us a story to believe in and we will live and die for it.

We are all storytellers here. Why do we do it if we don't think it important?

The story of the Obama jobs program is simply this: let's cut taxes and jobs will happen. He's already working by executive fiat to cut regulation. Okay, and let's spend a little money on infrastructure that's piled up 20 years of deferred maintenance while we're at it, and throw a sop to sniveling homeowners, even though everyone knows they are the ones responsible for the mess we're in. And let's all put our faith in the revered Super Committee, the one that's going to solve our real problem, which is not jobs, but the deficit.

It's the Republican narrative. In case you can't tell, I'm sick of it by now, even when I hear it from Democrats.

But mostly, where are the millions of jobs and wage improvements in this jobs program that we must have to get back to a healthy economy? Where are the investments in energy and efficiency, in the job-creating technologies of the future, in manufacturing, in the work that must be done today to make American once again a first-class developed nation?

And why does he think that every dollar he spends on indirectly trying to encourage employers to create jobs has to be accounted for by the Super Committee, where it will be paid back by sucking our society dry?

Oh yes, and I forgot to mention, why can't Obama articulate an argument that repatriating the trillions of dollars spent on illegitimate Bush-Cheney foreign wars and using those funds to create jobs at home would be a win for America, a win for the Middle East and a win for the economy of the developed world?

Because he doesn't want to stop spending those trillions of dollars on illegitimate Bush-Cheney-Obama foreign wars.

His donors make a *ton* of money from these wars. Wouldn't be prudent to anger them with an election on the horizon and all. He figures the Democrat voters are stupid ... they'll vote for him no matter what, major donors are a bit more selective and actually withdraw support when a politician acts against their interests.

You would have to be even more stupid to not vote for him.

The Republicans started those failed wars, and the GOP is the party of the war profiteers, anyone should know that by now.  After tens of thousands of dead and wounded it is, unfortunately, expected by some Americans who have given of their blood that these fiascoes reach some kind of conclusion short of a Vietnam-like departure from the rooftops by helicopter.

McCain and Graham are loudly protesting the expected withdrawal of all but a few thousand troops from Iraq this year. The same pair criticized the Obama Afghan draw down plan earlier this year. Graham even said Obama has 'created the perception that we are leaving' Afghanistan.

That is demonstrative hogwash. Democrats voted for these wars en masse ... opposition was in the single digits. These are fully bipartisan wars. Democrats are simply pussies who refuse to accept even a scintilla of responsibility for their own actions - at least most GOPers stand behind their votes for the wars instead of trying to pretend they never happened.

IMO, an important part of avoiding a Vietnam-like departure from the rooftops by helicopter would involve crafting and implementing a rational plan for getting the hell out of these places before the locals create Vietnam-like conditions for our soldiers. The longer we stay, the more likely such an outcome.

And why the fuck do we care what McCain and Graham say? They aren't even particularly influential with republicans, let alone anyone else. The only significance I see in highlighting their protests is that Obama is such a total loser that he can't even stand up to two fucking senators.

Democrats do realize that when they are given leadership of the nation .... sometimes that requires you to actually lead and do stuff Republicans disagree with .... right?

Fully bipartisan wars.

Yes, alas, they are. I'm beginning to think it will take a Republican to end them. 

Go Mornin' Joe!

You would have to be even more stupid to not vote for him.

That's not how the most affluent and politically successful among us do it.

Actually, it is. They often donate money to both (major) parties, although maybe you see that as supporting your original point! (As for how they actually vote, we don't really know that, but one can imagine. However, their votes aren't worth any more than yours or mine*. It's their money that counts.)

*Unless they're Diebold, of course

The important part is that they donate money to whichever major party (or individual politician) has correctly responded to their inputs. If they don't see a donation as advancing their interests, they don't make it ... they hold on to their check.

They have money. We have votes. They are successful because they withhold their money unless they get what they want. Wonder what would happen if those who held the votes started leveraging their interests like the people with money do?

History seems to get rewritten quickly in Idaho KGB, or memories are short.

John McCain was the GOP candidate for the Presidency the last election for the office.

He received 60 million votes.

He and Graham appear almost weekly on major news programs.

He may not deserve influence, but he has it among our our intellectually bankrupt right wing Base and the MSM.

Elections are not 'bought'. The money is successful because so many voters are dumb as dirt, and believe any crap they see on TV the last 30 days before elections. That is if the voters are not already totally brainwashed by Fox News.

When that is no longer the case, we will not need to worry about the rich buying elections, and politicians won't need to go pandering and begging for money.

Yeah, yeah ... and Sarah Palin ran for Veep. Just another long-winded way of saying our president doesn't have the guts (or desire) to stand up to a couple of Republican senators who are both terribly unpopular in their own caucus and the functional equivalent to Bill Kristol and George Will in the minds of the TV consuming public. McCain is post-defeat Dole for chrissake .... while the ascendant Tea Party has a sizable and vocal anti-war contingent eager to tie war spending to the deficit that is bleeding into the republican mainstream. If Obama can't leverage the current dynamic into pulling out as many troops as he wants ... he's either the worst politician in the history of America or he simply doesn't want to.

Did you realize that Fox has something like 20 million viewers and there are over 300 million Americans?

Nice analysis.  Thanks for doing it.  

I didn't listen to the speech either -- just saw highlights and some commentary on my local Fox station including some from Cantor   I really, really hope the Republicans use him more and more as their spokesman.  He is so not impressive on video.  Not really his fault.  That is just the way the medium is.  It flatters some and demolishes others.  

Cantor's a piece of work and the camera shows it off. But I worry that that's why his fans like him.

Thanks for your comment.

1. Analyzing a speech without watching said speech, hmmm.... Okay I'll keep my keyboard stifled on this note

2. The speech itself was excellent, the ideas were pretty good, but you missed the look on the faces of Republicans as the Road Runner ran them over... meep meep mfer's to quote Andrew Sullivan, who didn't just watch the speech and live blog it, but certainly gives an honest analysis of said speech.

3. There is proof that the Republicans are already pretty scared of the President and his  Americas Job Act :

Speaking to reporters after the President Obama’s jobs speech last night, House Majority Leader Eric Cantor (R-VA) sounded a bit upset with the way the President delivered his proposal. ‘The message was: either accept my package as it is, or I will take it to the American people. I would say that that’s the wrong approach.’ The GOP leader then had the audacity to claim ‘what we’re here to do is try to transcend differences, not let them get in the way in the areas we can make progress on.'

This is a line we haven’t heard recently from Republican leaders. Perhaps they are responding to recent poll numbers suggesting historically unprecedented anger at their inability to compromise.

Hahahaha, he doesn't like it when the Pres speaks to the people! Hahahahaha...

Then there is the Jared Bernstein analysis, and he did watch the speech.

So, how about that jobs speech?

I thought the President introduced a great jobs plan tonight–a plan that accomplished a number of important goals:

–the package is of a magnitude that could help a lot of folks get back to work.  I agree with Paul Krugman:  “if it actually became law, it would probably make a significant dent in unemployment.”

Wait, Krugman believes the plan would make a significant dent in unemployment. Oh yeah and Krugman watched the speech.

And then there is this, the Mark Zandi analysis: Zandi also watched the speech.

–President Obama’s jobs proposal would help stabilize confidence and keep the U.S. from sliding back into recession.

–The plan would add 2 percentage points to GDP growth next year, add 1.9 million jobs, and cut the unemployment rate by a percentage point.”

Bernstein has the pdf of the complete analysis with numbers crunched and everything. But of course these are people who watched the speech and then analyzed the speech, they also are folks who seemingly know something about economics.

As a note, Mark Zandi is chief economist of Moody's Analytics, where he directs research and consulting.  The pdf is an excellent read, I suggest that anyone who reads your bizarre analysis from not watching the speech read, it covers the credit crisis, monetary policy, the need for an influx of money to the system, the need to head off a double dip recession and how this bill could alleviate and stave off that recession, state and local governments around the nation in need of an influx of infrastructure spending which does create jobs. According to Zandi:

State and local governments have cut close to 700,000 jobs since their employment peaked three years ago and are continuing to shed workers at a stunning rate, averaging nearly 40,000 per month. Many of those losing their jobs are middle-income teachers, police, and other first responders.

Page 7 of the pdf assesses the plans components, this is another excellent analysis. More than 100 billion dollars in the plan are slated for infrastructure projects,  according to Zandi:

Such development has a large bang for the buck, particularly now, when there are so many unemployed construction workers. It can also help remote and hard-pressed regional economies and produces long-lasting economic benefits. Such projects are difficult to start quickly—“shovel ready” is in most cases a misnomer—but since unemployment is sure to be a problem for years, this does not seem a significant drawback in the current context.

Take particular note on page 11, which assesses the economic impact of the jobs plan. Hopefully you and others will read Zandi's analysis and there can be a rational, fact based discussion of the speech.  Zandi points out there was a no plan for homeowner relief, but does discuss the political atmosphere which is stifling progress.

One thing to note though, Boehner didn't look orange last night, he actually looked tan, he must be playing golf all day long, since the House literally does nothing anymore.

Have a good day, we finally got our summer.

Thanks for all of those references, it put's the positive effects of the plan in perspective. I know as a small business owner I will take advantage of the tax breaks the best way I can, and conceivably hire a new person. I bought new equipment this year a little ahead of my needs in order to take advantage of a 100% tax write off. I might do so next year as well, if there is a carry forward provision. I can tell you that a lot of small business owners will be writing their Congressman to get these payroll deductions and tax credits passed. Far from applying it to something I was going to buy anyway, I'm more likely to buy something ahead of my needs because equipment lasts a long time and the fast depreciation is money in my pocket immediately.

I thought the facial expressions of Republicans were priceless. What a group of sad sacks. Of course I want to interpret it as beneficial to Obama. But my take was, this guy looks serious! Crap, he might just put us into a corner.

Thanks Oxy, your personal example is excellent!  I hope it can stimulate job growth all over the nation.  But mostly it is good that one more person in your community could get a job, that is important.

It will only be a net positive if (a) Oxy's blog-speculation truly translates into hiring action when applied to the business in physical reality and (b) other businesses in the community don't end up laying people off at the same time.

I certainly hope *something* stimulates job growth all over the nation. Sadly, Obama's speech is unlikely to be that thing.

Maybe that's great for a business that managed to stay in front of the economic disaster tsunami. From my business's perspective, if he doesn't do something to refocus capital and get it flowing to the small business community again in a big way, he's just spinning wheels.

It doesn't even need to come to my business directly ... it just needs to get out there so entrepreneurial enterprise starts moving again.

Tax cuts have already reduced many personal and business tax liabilities to literally zero, and it simply didn't accomplish what was needed for many (most?) of us. Throwing more tax cuts at the problem just leaves everyone the first (dozen) rounds didn't help even farther behind, doesn't address what is really wrong, and leaves us with even less revenue with which to craft an effective response strategy..

1. Analyzing a speech without watching said speech, hmmm.... Okay I'll keep my keyboard stifled on this note

Wise. It's commonly acknowledged that the best way to accurately analyze the meaning of words is to read and digest them. On this point it is notable that all of the members of the live audience (congress, SC justices, etc.) were provided written copies of the speech which many followed along with while Obama spoke.

Thanks for the attempt to keep your keyboard stifled, tmac. Even though it did snark through there early and often, like a leitmotif in a Wagner opera. I'm certain I would have enjoyed the tone of Obama's speech, and any discernible discomfort on the faces of Republicans. But those feelings wouldn't change the content.

And thanks for a thoughtful response and Bernstein-Krugman-Zandi links. I'm just now getting time to look at some of the various reactions to the speech.

To me, the takeaway paragraph from Krugman's analysis was not the weak endorsement, but this:

O.K., about the Obama plan: It calls for about $200 billion in new spending — much of it on things we need in any case, like school repair, transportation networks, and avoiding teacher layoffs — and $240 billion in tax cuts. That may sound like a lot, but it actually isn’t. The lingering effects of the housing bust and the overhang of household debt from the bubble years are creating a roughly $1 trillion per year hole in the U.S. economy, and this plan — which wouldn’t deliver all its benefits in the first year — would fill only part of that hole. And it’s unclear, in particular, how effective the tax cuts would be at boosting spending.

I'll have to catch up on my Zandi.

It's heartening to hear Oxy speculate on the possibility that the tax incentives may encourage him to hire another employee. His business must be growing, which is wonderful. That's not what I hear from my small business clientele, however. They'd hire, if they had customers. They won't add employees just to get a little bit back in a one-time tax break. The dollars don't add up. But maybe enough employers will be encouraged, like Oxy, to go ahead and fill a position they think they need now in anticipation of returning demand, and that could help. I continue to suspect that most of this money will be gobbled up by companies that would be hiring during this period anyway, and there may be little net increase in hiring from the incentives.

There's much about the plan to like, as my original comments noted. First of all, it's good that Obama is now talking about jobs. And much not to get too excited about. 

But I have to wonder whether you wonder, as I do, what's up with Obama's promise that the Super Committee will pay for all of this? Do cuts in Social Security, Medicare and Medicaid spring to mind? With Obama's blessing?

Do cuts in Social Security, Medicare and Medicaid spring to mind? With Obama's blessing?

Uuuuuummmmm ....remember the Obama Debt Commission?  The report he commissioned by executive order literally came back with "Well, this has nothing to do with the deficit we were supposed to be addressing, but let's cut Social Security and Medicare." To which Obama responded, "makes sense to me."

And during the debt ceiling debate, what, three weeks ago ... he explicitly put SS and Medicare on the table and told everyone to quit whining about being asked to tighten their belts.

Obama has directly stated he wants to see "entitlements" cut. At this stage, if someone wants to assert Obama's plan does not involve paying for general expenditures using money invested by Americans believing it would be a retirement future or a catastrophic medical backstop ... they need need to make that case.

By all appearances, if someone or something doesn't stop him, Obama plans to devastate the social support structure as America has known it for generations.

Maybe you can write a blog about how the Commission's recommendation "devastate" SS.

No point. This has already been done in minute detail by professional actuaries and such back when the recommendations were made. This is actually a long-debated and meticulously documented issue. Ironically, much of the documentation was produced by Democrats back when you guys were opposed to precisely what Obama has been orchestrating..

I'm not your research fellow ... if you want to challenge my characterization, let's hear your case. Google. It's your friend.

That a Democratic president can call Social Security and Medicare "entitlements" says just about everything that needs to be said.

These are earned benefits, paid for by every taxpayer, and relied upon by millions when age sneaks up on them and employers don't (surprise!) want to employ them any more.

Real reform of Medicare and Medicaid is needed, but can only happen in the context of real health care reform. Despite abuses, and despite the prescription drug wealth transfer arrangement designed to benefit Pharma by Republicans and Democrats alike, Medicare continues to be the most cost-effective health insurance program we've got. It's the industry-wide practices that must change, but the ACA will be very slow in making those changes. 

And why is Social Security a part of the discussion? Why is it attached to Medicare? Anyone who says, as almost everyone does, that the deficit problem is Social Security and Medicare, is probably lying, and probably knows it. Or else its someone who doesn't pay attention to detail.

 

Are you not entitled to what you've earned? When did we accept that "entitlements" is a dirty word? What's next, are we going to shun the words "liberal" and "progressive"?

I suspect that someone will claim I'm being "too cute", suggesting or stating outright that "everyone knows" what "entitlements" "really means". I call bullshit. Let's take back the word "entitlement" and not let conservatives win that battle.

Good argument.

Of course Entitlements isn't a dirty word. But Medicare and Social Security aren't entitlement programs.  Full stop.  To hear a Democratic president -- a really sharp Democratic president -- refer to them as such is discouraging.  It's further ground he's conceded to the right.

if they aren't entitlement programs, means one is not entitled to SS and medicare. You're not making sense.

Wrong.  You've been snookered by the right.  Read this.

This is same verbiage.  The argument: Social Security can not be labeled an entitlement because the money being issued to recipients of the program is actually theirs to begin with!

Thus, if one uses the English language, if one the money is theirs, they are entitled to it, just as you are entitled to the money in your checking account.  Or at the end of the pay period, you are entitled to your pay check.  If you ask for your vacation time off, and your boss denies you, your response is - I'm entitled to two weeks off a year.  This isn't rocket science.

 

Moreover, the mismanagement of the surplus funds done by both Dems and Repubs after the Reagan and Greenspan "reform" has nothing to do with the notion of entitlement and the current efforts to correct the mismanagement.  In effect, we all have benefited and suffered from the use of the surplus to fund increases in the budget without a corresponding increase in taxes.

...from the use of the surplus to fund increases in the budget without a corresponding increase in taxes.

You HAVE been listening to too many Republicans. That isn't what happened at all.

The government issued interest-bearing bonds and we invested our money in them. Just like grandad did back in the day with his US Savings Bonds. Americans find it patriotic to earn money by investing in our nation. Besides, it was hella better than getting China or someone to buy them because in the end, while it wasn't free money for the government, the interest paid ends up benefiting American citizens directly instead of going to a foreign nation or corporate institution. That means the interest paid actually has the bonus of finding it's way back into the US economy directly in the hands of retail consumers - where rumor has it being most effective at stimulating economic growth. Spending said interest in the local economy results in taxes collected thereby increasing general revenues. A totally kick-ass arrangement.

While they're playing it through a couple of layers of obfuscation, the fuckers essentially want to default on our bonds, pay Goldman Sachs and China at 100% and call it a deficit reduction rather than just pay their fucking taxes. Nobody mismanaged anything - rich people stopped contributing shortly followed by the economy blowing up and revenues tanking.

no this is what is happening - a $1 in surplus comes into the SS. It is given over in investment to the US (bonds or whatever) which promises to pay back $1.50.  Now the US has in the current $1 to apply to the current budget and the $1.50 is a mere liability that will come due some day (hopefully many moons away). 

The problem for the US govt is the moment when the SS people turn to them and cash in those IOUs.  To simply things, the current budget is based on $1 of SS counted as revenue for expenditures amounting to $10.  Our revenue is $8, so we have to go China and elsewhere for the additional dollar.

Then we come to the SS people asking for $1.50.  Not only does the govt have an additional expenditure of $1.50 not figured into into the budget, they have have $1 less in "revenue." 
 

That isn't Republicans talking.  That is just reality. Deal with it.

Right. We've known about the baby boomers since like 1950. The need to take care of them obviates the need to build up a surplus. Which we did. We invested that money in bonds issued by the US government. Like China, like Goldman Sachs ... like grandpa. These bonds have all the properties and benefits to the American economy as I described.

They aren't IOUs that can be randomly called in, they are interest bearing securities. It is equally stupid to say China is going to come asking for payback on their IOUs. That simply isn't how sovereign debt instruments work. Bonds pay out and mature on a regular basis. For the SS trust, this combines with collected revenues and is weighed against needed expenditures with any investable excess rolled into new bonds. Actuaries are paid (hopefully quite well) to keep all of this proper and calculate the amounts that should be kept liquid or invested to meet the needs of the active and future benefits pool. These things are totally accounted for in our budget and revenue projections, so that last sentence makes zero sense whatsoever.

And to be clear, everything you say here that isn't simply factually incorrect applies to every damn bond issued by the government to anyone anywhere. And like I said, you guys seem to want to default on the bonds issued to the American people and pay everyone else 100% on the dollar. That sure seems to be what you are saying.

And yes. It is a huge issue that revenue is in the dumper. Just like I said. Quite predictably , this results in only $8 in revenue to cover $10 in expenditures. A responsible society would address this by adjusting their taxation policy - maybe even insisting some of the folks who literally pay zero on the vast majority of their income chip in - not by robbing the savings bonds from retirement accounts of the damn workers who actually pay taxes on every penny they earn.

You may not consider yourself a Republican ... but you sure have absorbed their totally dishonest talking points and recite them with a frightening ease.

Social Security is essentially a pay as you go system, not a savings plan.  So any talk about either "investment" or "savings" is really a bit euphemistic.  A US Treasury Security issued by one government account and held by another government account is in effect just a promise taxpayers have made to themselves to pay a certain amount into the latter account at some point in the future.

I agree that since a person is entitled to anything they have truly earned, then switching from "entitlement" to "earned benefit" doesn't make that much of a difference.  On the other hand, just because everything one has earned is something to which one is entitled, it doesn't follow that everything to which one is entitled is something one has earned.  For example, someone might be entitled to a share of another person's estate simply on account of their rights under relevant inheritance laws, even if they have done nothing to earn that share.  So "earned benefit" does add a little bit of appropriate specificity.

My personal preference would be to switch the focus from the recipient to the contributor in our discussions of Social Security.  Rather than describe Social Security from the recipient's point of view as either a program of entitlements or earned benefits, think of it from  the contributors' point of view as a program of filial community obligations.

My FICA contributions from each paycheck are not being set aside and saved for me.  They go directly into making Social Security payments to the nation's retirees.   Just as I send my parents a certain amount of money each month to help support their retirement, I also contribute to sending America's other retired parents and grandparents a certain amount each month.  I'm proud to do so, because they are fellow Americans, and it is the duty of the young and the healthy to support the generations of elders that came before them and worked hard to build the world we all now live in.  I take pride from being a responsible working adult who can fulfill his duties to others by supporting them economically.

It might take some years of progressive work to rebuild the national and social fabric, and to displace the deeply selfish and perversely individualistic habits of thought that have been promoted by contemporary conservatives, people like Paul Ryan who appeal without shame to thinkers such as Ayn Rand for inspiration.  But I think we can do it.

Social Security is essentially a pay as you go system, not a savings plan.  So any talk about either "investment" or "savings" is really a bit euphemistic.

I'm not necessarily disagreeing, but I don't see your point. It is nominally conceived so that present-day contributions cover the extant pool (who's contributions serviced the previous pool). That only works if generations are roughly the same size. Hence the need to build up a surplus. We can't pretend as if this surplus does not exist, as it is crucial to the program's viability.

As far as I'm using the word investment, it is to indicate what we do with the excess revenue that is not required to service the current pool. In that regard, we are indeed investing and achieving a return in a literal sense. We don't HAVE to put it in government bonds ... we choose to.

A US Treasury Security issued by one government account and held by another government account is in effect just a promise taxpayers have made to themselves to pay a certain amount into the latter account at some point in the future.

And a US Treasury Security issued by one government account and held by a private entity is in effect just a promise taxpayers have made to someone other than themselves to pay a certain amount into the latter account at some point in the future. It seems a distinction without difference to me. Why would we treat ourselves crappier than we treat corporate investors?

Social Security is solvent to 100% benefit ... for decades, at least. It doesn't contribute to the deficit. Any way it goes, using it to balance the deficit is taking funds that were indeed set aside by me, my parents, and grandparents specifically so that they would be available to American workers upon retirement. Call it savings, call it investment, call it whatever you want ... we've been putting aside for Social Security more than required to service the contemporary benefits specifically as a plan for the future.

Today that money is really, really attractive to people who want to say they cut the deficit but also don't want to pay taxes. Fuck that. If, a few decades down the road, we still haven't addressed the economy and gotten revenue back up to speed - we may need to boost the FICA tax by as much as 20%. Yeah, it would suck to pay 7.44% instead of 6.2 ... but seriously, that's the worst possible outcome of the so-called crisis here. This whole discussion is bullshit.

And I think you are spot-on with how we need to change the way this is discussed. Absolutely  that is how I view it as well. Are we seriously willing to subject our parents and grandparents (and ourselves) to a miserable end of life experience simply to save 1% on our fucking taxes?

We can't pretend as if this surplus does not exist, as it is crucial to the program's viability.

The surplus is not crucial to the program's viability.  The treasury bonds in the trust fund are assets of the Trust Fund but they are liabilities of the general fund.  So from the standpoint of our aggregate national account, its a wash.  If X billion dollars of bonds mature in year Y, and those X billion dollars are to be used in year Y to pay Social Security benefits, then the taxpayers in year Y will have to raise X billion dollars to pay off the bonds.  The same effect would be accomplished if there were no bonds, but the taxpayers raised their FICA taxes in year Y to produce $X billion more in revenue that year.

If the government, which has some surplus in its possession, invests the surplus in government bonds, that just means one part of the government it makes a trade with the general fund - another part of the government.  It gives some dollars to the general fund - which are then presumably spent - and the general fund gives a promise to the trust fund to pay it back.  The value of issuing the bonds is that the promises behind the planned payments are more secure than a mere legislative promise.  It will be harder for the taxpayers in year Y to weasel out of the commitment to Social Security.

The government isn't some external party.  It's you and me.  If you and I purchase a 10-year bond that we ourselves have issued, then we haven't really "saved" or 'invested" anything.  And the bond we possess is unrelated to our solvency or viability 10 years hence.  It's not like 10 years from now we could pull out our bond in a tight pinch and say, "It's a good thing we have this bond!"

[Edit - Reply posted below so it can be read ... too narrow]

Beautifully explained, kgb.

I don't understand why anyone thinks the SS Trust Fund exists to force feed the General Fund, apparently against the General Fund's will.

The Trust Fund receives tax revenues from you and me, and purchases securities from Treasury. Treasury then takes that money and does whatever it does, understanding that, like every other security it issues, some day there will be a call to pay it back.

The point is, SS has not created additional indebtedness. Treasury has only borrowed what it would have borrowed anyway.

It's striking to hear people say "but that money was just spent by the government!" Duh, what do they think happens to borrowed money?

Let me see if I got this straight. When government borrows money from you and me, government spends that money and therefore should not be expected to pay it back.

But, and this is a big but, when the same government borrows money from Goldman Sachs and China, that money is wrapped in baggies and buried under the White House lawn, where it is never touch so it will always be there when payback time comes.

Is that about the argument?

 

Thank goodness there is at least someone else who gets it.

What the hell happened to Democrats?

Why does it feel like we're Daffy Duck in the Bugs Bunny/Daffy Duck hunting scene? What is an "entitlement program"? Are they not programs we're entitled to? Are we not entitled to Medicare and Social Security? Once we start saying that they're otherwise, we begin to make the Republicans' point that we're not entitled to them!

Don't overestimate the Republicans' ability to play with words. Don't use their weapons against yourself.

Actually one should want a politician to call SS an entitlement.  An entitlement is a right granted by law or contract.  An earned benefit is only guaranteed to the extent that it can be proven that a law or contract entitles the recipient to make a claim on those benefits. 

Somewhere along the way, the term entitlement has become a negative word.  In large part, I believe, thanks to the conservatives attack on the "welfare culture" and its "sense of entitlement."  Entitlement becomes simply a state of mind and expectation on the individual's part, usually unjustified. 

In the end, I can say with assurance "I am entitled to SS benefits."  Therefore it is an entitlement.  This derived from the nature of the program which through the law takes funds from me now, entering me and the federal government into a contractual agreement.

Fair enough.

Seconded.

You are welcome.

I don't wonder at all about the Super Committee, I care that congress does nothing at all, 0, zilch, nada, to do anything for the country, I worry that they don't care about anything but themselves and rather than caring about the future of the country they care more about themselves personally oh and their special mission to make sure Democrats cannot govern. I care about that.

Are you saying that there are no reforms needed in Medicare? You should try to account for the disparity in State by State reimbursement for the same services if you are going to bring that up. Or maybe you don't know about that.

Today, Medicare reimburses providers under a fee-for-service system, basing payments to doctors and hospitals on the amount of procedures completed and the number of patients seen.  This system creates a financial incentive to order more and more procedures.  According to many studies, this increased number of procedures does not result in better outcomes for patients.
There are vast geographic disparities in Medicare reimbursement schemes. These disparities result from the fundamentally flawed Medicare payment ... safety, quality, cost and outcomes data (e.g., physician fee schedule, hospital rates). Should payment really be based on volume rather than quality?

The kneejerk, don't touch my Medicare isn't an adequate response as there is much about that system that needs reform. The battle against the American Medical Association (AMA)-led process that favors higher payments to specialists at the expense of primary care physicians (PCPs) is quickly escalating into a war, with the filing of a lawsuit in federal court by six Georgia PCPs. The issue dates back a long time as this pdf indicates. This interactive map goes a long way to highlight the discrepancies illustrated in the links I've included.

I almost forgot, there was this news just two days ago.. a blog by OGD at Once Upon a Paradigm reminded me of this: Thanks OGD! Medicare sting nets 295 million in fraud charges. Why do you think no reforms can take place?

 

I've read and re-read what I wrote here to see where I said no Medicare reforms should be allowed to take place. Can't find it.

Maybe you were responding to someone else?

Tmac, apropro your concerns about Medicare abuses, which I do share, by the way, the President doesn't seem to be on our side. Rather, he appears to be on the side of the providers and private insurers who are participating in ripping off beneficiaries and Medicare itself.

Here's the link. That's the kind of reform we don't need.

Excellent info here as well as Red Planet's rundown as well  ...  HOWEVER ....

The business sector isn't hurting for cash ...  they're hurting for customers - big difference here. It doesn't make any sense to manufacture/produce wares if all they're going to do is sit on a shelf because there isn't enough consumer demand. Also, that shelf costs money because it's occupying space (property, taxes, utilities, structure, shelving, inventory management, computers, software and so forth) that must be added to the cost too ... a real vicious cycle. In other words inventory that doesn't move thru the system quickly costs both manufacturer and consumer. So business is reluctant to hire and produce so long as demand is on an extended vacation of unknown duration. And what they do produce is subject to discounts to make the sale which cuts into the business profit expectations ... no point in producing anything if the profit isn't meeting minimum expectations.

As I see it so far, everything both GOPer's and Obama are promising are to business's benefit. I can't see the purpose of helping someone who is already self sufficient which from what I'm reading is what the big jobs proposal was all about.

On the other hand, it's those 14 million people unemployed and 11 million under employed where they should be concentrating their efforts ... and they're not. People are too careful with their money simply because they're not sure what the future holds ... better to have a little pot of gold in the bank in case you find yourself in the unemployment line. So demand is slack, which in turn means manufacturing is laying people off to keep from going under financially.

To break the cycle, the government needs to build consumer confidence in the business sector to stimulate growth in both economy and job market. I don't see that  happening in this jobs proposal. Nothing I've read so far indicates an effort to encourage people to drop their defenses. They're still only going to make necessary purchases that must be made ... no more frills. And those basic purchases aren't the ones necessary to move the economy to make employers begin to hire.

What is really missing in Obama's job proposal argument is a service-sector economy isn't stable for the country ... it relies too much on the public always consuming wares to keep the economy stimulated. In other words, a service- sector economy creates a disposable society that has to amass large amounts of personal junk in order to keep the economy moving forward.

What he should have proposed was a shift back to a manufacturing economy where we begin to actively compete in the world markets in those areas where we were once masters. That way consumption would be global and there would be a positive cash flow into the country rather than a negative cash flow out of the country.

Beetlejuice, well said.

Everything you're advocating here rolls back the trend that began about the time I entered the business community, in the mid-60s. 

In those days the theme coming from Futurists (a booming punditry in the 60s) was that America was no longer going to have to do the dirty work. We were going to ship all those labor-intensive tasks overseas, where they could be done more cheaply. Meanwhile, we would proudly become a service sector society, using brains rather than brawn to dominate the world's economy. By the year 2000 our problem would be that the middle class would be so large, and so financially secure, and have so little actual work to do, that the leisure time would just pile up and we'd not know how to handle it.

In other words, this service sector economy we have now was an intentional feature, not a glitch. And by the way, if you're not old enough to remember how silly the Futurists were, just think about Tom Friedman.

That apparently remains our strategy. Wonderful, isn't it, how Americans have a monopoly on brains in this world? Thank god the Indians in Bangalore and the Chinese in Shenzhen can never hope to be our intellectual peers. Otherwise, where would our marvelous strategy be?

I used to think it a personal failing that I didn't understand how this was going to work. And now, look where we.

It will be a long, hard slog to grind our way up out of Walmart servitude. I don't see anything like the first step toward that in the President's plan. He did say he wants to reboot manufacturing. But the details of his desire are missing.

Thanks for the vote of confidence!

I'm just putting into practice what the GOPer's do with their talking points ... wash, rinse and repeat over and over again.

Perhaps Obama will get the subtle message ...

IT'S THE UNEMPLOYED, STUPID !!!

This appears to be simply an analysis developed to reinforce a particular narrative, which means it really doesn't hold much weight.

What is obvious is that you want more money to be spent and that these expenditures to be added without a 5 to 10 year adjustment in spending to accommodate these new expenditures. 

Given that it is the Congress (aided by the Super Congress) that hold the purse strings, what your analysis lacks, which ultimately makes it just become a rant, is any serious solution as to how Obama or any president could make your kind of jobs package this a reality in the very short-term. 

Just your first suggestion - putting a target on the earned income tax credit - something pretty much every Republican wants to do away with - by offering it up for revision is off base.  It was created and revised in the past with a very specific goal in mind.  An attempt to morph it into something entirely different is a good way to get it killed completely.

ROTFLMAO. The president is a worthless turd pandering to idiots ... and he totally suits you.

Obviously, you viewed the speech through a preconceived notion of who and what Obama is, just like me and everyone else.   You're just fallen into the name calling realm, however, but I guess that suits your ability to address the topic at hand. 

From previous comments, you seem to believe a speech is only that, so you are in the camp that the bully pulpit has no power.  If you would like to then explain how the president gets around the Congress holds the purse strings issue...oh wait, forget that.  Just some more name calling should do the trick.

 

It should be obvious by now that we all come here with our own points of view, Trope. Does your particular point of view make your analysis worthless?

We also, over the last three years, have had an opportunity to observe team Obama and learn from it. Should we not bring that perspective to our current analysis?

And it's clear, as you point out, that I want more money to be spent now to grow the economy, and I don't see the benefit of promising that the Super Committee will pay it back. I don't trust the Super Committee. Do you?

There's not nearly enough in Obama's proposal, even if it were fully enacted, to suggest we'd see a short-term turnaround in job creation.

Is it better than doing nothing? It would be difficult for me to answer that in the negative, but we all know that sometimes half-measures, like the original Obama stimulus, prolong the pain and invite further problems down the line. Like those we are experiencing today.

As I stated in my response to kgb above, we all come in with our preconceived notions, and of course we armed with our existing paradigms.  We cannot but see the world but through are mental filters.  As a post-structuralist, I could go on but I won't.

The quest in attempting an analysis of something like Obama's speech is to quiet down conclusions based on the truisms, assumptions, etc that swirl around the actual events (understanding we cannot get ultimately direct access to those actual events because of that textual paradigm in our mind). 

The alternative is to embrace the truisms, assumptions, etc looking for evidence that support their validity,  This would embracing one's narrative.  It doesn't mean everything in the analysis is false or has no value.  Only that the analysis has its conclusion decided before the analysis begins. 

The easy example to go for would be starting with the notion that all politicians are either liars or pandering to voters.  One could easily find evidence to support these notions in any major speech by any politician, especially on the national political stage.  But such analysis would have little value in understanding any actual speech, given the realities of politics in America.  Of course they are throwing lies around, and pandering like there is no tomorrow.  It comes with the territory. 

From what I hear on the economic analysis of the whole package, the optimistic view is that it might get unemployment down from 9% to 8% (and yes yes real unemployment is much higher).  The Obama team won't go on record as to what they see as the outcome on the unemployment.  Rather they just want to get things moving in a positive direction, to get positive momentum.  And then cross our fingers.

So this package is not being presented as the cure to all our problems.  It is not being presented as the means to the era of prosperity, but rather a first step in a journey of thousands miles, a journey during which there will be continued hardships and misery by many Americans.

But even this limited plan has a shaky chance of becoming reality.  I am with you in that I want something bigger, but to expect, or demand, Obama to seek that larger liberal bill one would have to address the situation described by Sam Stein in his blog Obama's Jobs Plan Has Few Avenues For Passage or a Vote, Save the Super Congress.

Moreover, one can draw conclusions based on the Super Committee being an absolute failure. One might be right.  But it is all we (and Obama) have now.  Just as the Congress we have (with its Cantors and its Pauls) is all we have now.  I suppose we could just give up on this wacky experiment in democracy and give power over to just one soul.  We might get the trains to run on time.

"The Super Committee...is all that we have now."

Really? 

What kind of experiment in democracy is that?

This is outright fraud. Does Obama really think employers will hire workers they don't need in order to get a tax break.

 

No There is a lag between when a  company calculates it is economic to increase staff(for example  it's paying more for overtime  than the cost of a new hire) and when it actually does that. The tax break will shorten that period. .There'll be X number of new hires in Sept/Oct of 2012 which otherwise would have occurred in 2013. 

 

 

For many companies,  especially in smaller companies (say 500 employees or less), there is a more complex equation involved than just profit / bottom line in the here and now.  During hard times, most companies (like mine) cut things down to the bone.  One makes good with the bare minimum.  Yet this means that those that remain are pushed as far as they go, doing the work of two or three people.  It works for a while.  But burn out, frustration, and bitterness starts to emerge.  The long run costs of turn over due to employee discontent can be more costly than hiring one or two other people to share the load.

Moreover, a number of the employers of such companies that I know sincerely want their employees to be happy workers.  Yes hiring one or two employees at 40K plus benefits will cut into their bottom line but they would see such a move not only something that will improve the overall morale in their company.  Moreover, they live in the community in which their company operates and would see such hiring as "doing their part" to improve the quality of life in the community.  Giving an added incentive (like providing a tax deduction for charitable contributions) isn't the only answer to the problem (just like the charitable tax deduction doesn't make everyone give a charitable contribution), but it will help (just like the charitable tax deduction).

Yes. And X needs to be in multiples of 10∧6. Do you see that happening as a result of these tax incentives?

But that is not fraud.

 

Tmac, I've read my Moody-Zandi now. 

Interesting read. 

Zandi recognizes that monetary policy alone is insufficient to work our way out of the hole we're in, and he supports using fiscal policy, which is good. It's nice to have someone inside the financial community arguing for that. And he points out that state and local government retrenchment is a big drag on the economy. Again, here's a private-sector financial guru making a useful argument against government cut-backs.

I think he's most enthusiastic, though, about the things that I'm most concerned about. 

  • Tax breaks for employers. Yes, employers will take the money. But will the tax breaks create new jobs? Tax incentive programs have been around for a long time, in various forms. Employers are good at creating rationales for taking the money, but there's little evidence that tax breaks actually result in a net increase in jobs.
  • Unemployment insurance reforms like the Georgia "work for free" plan which, Zandi says "seems to have had some success since it began in 2003."
  • The "creative" infrastructure bank to build new toll roads or user-supported energy facilities or airports." In other words, more privatization of public goods, this time with additional public subsidy of the new private owners. I say, if we need it, let's borrow money from the treasury, build it and own it. This notion that the private sector knows better than the public sector is stupid.

Glad Zandi brought up housing. It's a huge hole in the President's plan, so far. Maybe he's got something up his sleeve.

But here's the other side of Zandi you might want to consider. He insists, as does the President, on paying for every dollar of this new spending with spending cuts (and no new revenues).

In fact, Zandi appears to be a big supporter of Obama's $4 trillion grand bargain, provided the $4 trillion all comes from spending cuts. Here's a quote from Zandi in the WaPo on July 15:

"Here’s how that can work. Approximately $2 trillion in cuts would affect discretionary non-defense spending, defense outlays and entitlement programs. (After all, there is no way to address our budget problems without meaningfully changing Social Security, Medicare and Medicaid.) Another $1 trillion would come through cuts in tax expenditures — the exclusions, exemptions, deductions and credits that riddle the tax code, costing the government more than $1 trillion each year. The mortgage interest deduction alone is worth some $1.4 trillion over the next decade. But there are hundreds more, indirectly funding student expenses, health insurance, child-care costs, local property taxes and on and on."

That's a fascinating list of tax expenditures, isn't it. Mortgage interest deductions, education, health insurance, child-care costs, local property tax exclusions. When we talk about closing tax loopholes, some of us would have thought of a different list. So let's make sure we understand that, in Zandi's world, it's good for a hedge fund billionaire to pay little or no taxes, and bad for that single mother who lives next door to receive a break on her child-care costs.

That's supporting the President's plan, all right, but not in a way that I can endorse. Not by a long shot.

 

Here is the deal RP, getting into a protracted back and forth is a pointless endeavor, you and I are at a standstill.  I basically support what the President is doing and understand the constraints he is under, you don't.  I presented information in your blog, backed up by interesting links and analysis by professionals, who not only watched the speech but then tried to analyze the plans in the speech with their professional tools.  So your reading Mundi is great, but his take away as a professional is much different than yours. I am not an economist, so I try to form my opinions by reading professionals in the field. It should be noted that your analysis diverges with those economists.  Their learned opinions carry weight in a purely academic sense, and of course Mundi did some initial number crunching, I have to see your data and your analysis of that data before what you write carries weight with me.  Hey you should be happy, I read your piece and I disagree with everything you wrote.  However, you can be happy about this,  I presented your piece to the political discussion group I run, we discussed it for a bit yesterday.

 

 

Well Tmac, if I understand your "deal" it is this: if you or I have original thoughts we will not use Dagblog to discuss them. Only deference to our betters is allowed here.

Seems a strange attitude to carry into a forum such as this but if that's how you feel, then you are right, there need be no more back and forth between us.

 

I am curious by your assertion,  which as I understand things was  based on the initial reports of Reuters, that part of the president's proposal is "fraudulent."  I'm not sure you really mean that the president has perpetuated or is perpetuating an actual fraud on the American people.  Perhaps you could explain where the fraud lies.  I am inclined to consider your reference to a fraud as not serious and more reflective of your dislike of the president.

It just seems to me that there is no fraud here.  And I think that the fraud charge is a "divisive" charge. wink

I think I'm more inclined to adopt the analysis of Paul Krugman.  To Krugman, the jobs proposal is necessary, but hardly sufficient, and a commendable move by the president nonetheless--particularly in light of political realities on Capitol Hill.  I assume you disagree with Krugman.

 

 

Here's why I call it fraud, bslev. I should clarify that it's the kind of "wink and a nod" fraud that's often seen in politics, not the kind of fraud that people go to jail for. I expect everyone knows this these tax breaks are an incentive to employers to support the program, since the breaks put money in their pockets, but that the tax breaks will not actually incent much de novo hiring. In other words, these breaks are intended to broaden political support for the plan, with a wink and a nod to job creation.

Krugman, Dean Baker and others point out that our low employment rate stems from lack of demand. When demand for goods and services is low, what reason does a business have to add employees?

Employers appear to agree with Krugman, Baker et al. There's an interesting article in today's NYT - Employers Say Jobs Plan Won't Lead to Hiring Spur - and here are some interesting pull-quotes from the article.

"As President Obama faced an uphill battle in Congress to win support even for portions of the plan, many employers dismissed the notion that any particular tax break or incentive would be persuasive. Instead, they said they tended to hire more workers or expand when the economy improved. "

--

“You still need to have the business need to hire,” said Jeffery Braverman, owner of Nutsonline, an e-commerce company in Cranford, N.J., that sells nuts and dried fruit. While a $4,000 credit could offset the cost of the company’s lowest-cost health insurance plan, he said, it would not spur him to hire someone. “Business demand is what drives hiring,” he said.

--

"But the plan also includes incentives for companies to hire more workers, including a payroll tax cut for businesses and a $4,000 tax credit for those employers that hire people who have been out of work for six months or more.

To the extent these measures could be used, many employers said they would most likely support people whom companies were planning to hire anyway."

No employer is saying they won't accept the tax breaks. What they are saying is that the tax breaks will have only a marginal impact on their hiring decisions.

So it's a way to put money in the pockets of employers. And if employers have more money in their pockets, maybe they'll spend some of it which will provide indirect stimulus, similar to the payroll tax holiday for employees. Or maybe they will use it to pay down debt. But it is unlikely to cause much hiring that wouldn't have been done anyway.

By the way, Krugman's my hero these days, so no, I don't disagree with him. Here's the takeaway paragraph from Krugman for me (cited previously above in a response to Tmac):

O.K., about the Obama plan: It calls for about $200 billion in new spending — much of it on things we need in any case, like school repair, transportation networks, and avoiding teacher layoffs — and $240 billion in tax cuts. That may sound like a lot, but it actually isn’t. The lingering effects of the housing bust and the overhang of household debt from the bubble years are creating a roughly $1 trillion per year hole in the U.S. economy, and this plan — which wouldn’t deliver all its benefits in the first year — would fill only part of that hole. And it’s unclear, in particular, how effective the tax cuts would be at boosting spending.

 

 

But this is what Krugman writes immediately following the part of his column  you excerpted, and here's where Krugman is ultimately coming from:

Still, the plan would be a lot better than nothing, and some of its measures, which are specifically aimed at providing incentives for hiring, might produce relatively a large employment bang for the buck. As I said, it’s much bolder and better than I expected. President Obama’s hair may not be on fire, but it’s definitely smoking; clearly and gratifyingly, he does grasp how desperate the jobs situation is.

 

But his plan isn’t likely to become law, thanks to Republican opposition. And it’s worth noting just how much that opposition has hardened over time, even as the plight of the unemployed has worsened.

 

Krugman's endorsement of the plan doesn't appear to be overly enthusiastic. Basically, he says it's "a lot better than nothing." I don't disagree with that. Earlier he says it's not nearly enough, and I don't disagree with that, either.

But if his highest praise of the hiring incentives is that they "might" be productive, that's not much to go on. I'd love to understand why he thinks so.

My own experience with the way employers use hiring incentives (as an economic developer several years ago) is much more in line with the NYT article. I hope I'm wrong.

Krugman's final paragraph in that Op-Ed is important:

The good news in all this is that by going bigger and bolder than expected, Mr. Obama may finally have set the stage for a political debate about job creation. For, in the end, nothing will be done until the American people demand action.

If this speech truly marks a change in tone by the administration and an opportunity for honest discussion about job creation, then it will have been a winner. And it is time for us to demand action.

 

[Response to Kyle Flynn upthread on the Social Security discussion]

The treasury bonds in the trust fund are assets of the Trust Fund but they are liabilities of the general fund.  So from the standpoint of our aggregate national account, its a wash.

What the hell are you talking about? The Social Security trust has NOTHING TO DO WITH the aggregate national account.

From the U.S. Code:

EXCLUSION OF SOCIAL SECURITY FROM ALL BUDGETS Pub. L. 101-508, title XIII, Sec. 13301(a), Nov. 5, 1990, 104Stat. 1388-623, provided that: Notwithstanding any other provision of law, the receipts and disbursements of the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund shall not be counted as new budget authority, outlays, receipts, or deficit or surplus for purposes of - (1) the budget of the United States Government as submitted by the President, (2) the congressional budget, or (3) the Balanced Budget and Emergency Deficit Control Act of 1985.

This is the ESSENCE of the battle between those who want to protect Social Security (previously Democrats, now, apparently, nobody) and those who want to eliminate it (previously Republicans, now, apparently, everyone) and steal all of the money to cover their tax-evasion-derived deficit.

You have it dead wrong. The Social Security trust is not a "part of the government" as you are characterizing it. The Social Security trust did not issue itself a bond. If even you guys can't keep that straight ... the Republicans are right, there is no way in hell we can let government enact a single-payer health program.

Yes. We the taxpaying American people who have accrued debts in our general fund will have to pay them back. ALL OF US. This is true of all of our debts. Even the ones to folks like China where the investors might actually raise a fuss and possibly shoot at us if we default (unlike, apparently, moron Americans).

By mischaracterizing the nature of the relationship between "The Government" and Social Security trust, you are saying you see it as a totally viable approach to paying these debts by defaulting on the Bonds held by American people setting aside more than needed for today's Social Security to protect the Social Security of tomorrow - under the auspice that because our government is involved we are obligated to accept being ripped off.

I am saying that the people capturing like 80% of the wealth in our nation aren't paying taxes on 99% of that income. That, to a significant extent, is where the hole in general fund revenue is coming from. You don't fix that hole by ripping me off. You fix that hole by fixing taxation and spending. If simply forcing the top earners to start chipping in again isn't enough to do it ... the other 20% may just have to get over all these bullshit tax cuts, incentives and credits and actually start paying their taxes again too (or maybe we could end these stupid wars and EVERYONE could just pay lower taxes legitimately). That $4 trillion is only going to last so long before it's gone too ... then what?

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