Weekly Issue #7 - 9/10/11 - The Obama Job Plan

Finally, Obama is addressing the real catastrophe of the job crisis rather than the false catastrophe of the national debt. I am of mixed feeling of Obama's actions during his presidency due to the dichotomy between his policy choices and his politics. Obama supports good policies but is willing to compromise to the point of capitulation in all but a few issues. Obama is a very nice person, but for a president this can often lead to a weak leader who will bend in the face of his insane adversaries. The jobs plan that Obama has just unveiled is a very good start on solving the jobs crisis that has plagued the USA in recent years, just as long as the Democrats can prevent it from being corrupted by the right wing lunatics.

The plan proposed by Obama is composed of a combination of infrastructure investment, tax cuts to incentivize hiring, and increased jobless benefits. All three of these initiatives have been proven to assist an ailing economy by increasing the buying power of the population as a whole, thus increasing demand for goods, and making it more likely that companies will hire domestically.

Investing in infrastructure is vital in the current economic climate both to stimulate the economy and to get the best value for cost on infrastructure projects. The private sector isn't hiring, thus reducing the buying power of the unemployed and demand for products. When the government spends money to hire people the buying power of the people rises, thus fueling demand for goods and hiring in the private sector. Our infrastructure is vital to society, thus government investment on infrastructure in this economic climate will facilitate the economy in the future and get people back to work now. Construction and labor costs are both very low currently due to lack of demand, leading to a decrease in the price of investment in infrastructure. If we waited for the economy to recover before fixing our infrastructure it would cost more and the jobs created by the investment would not improve the economy as much as they could.

Simply giving tax breaks to businesses no longer increases the amounts of jobs that they create. Globalization and automation have led to a decrease in demand for labor domestically, and thus many tax breaks for corporations are completely wasted or intended to shelter fragile industries (such as green energy). The small business tax cuts proposed in the Obama job plan are specifically targeted towards decreasing the payroll taxes of American workers and companies that hire Americans. By reducing the taxes on companies that hire American workers, companies have an increased incentive to hire people, which bolsters the economy. These cuts only benefit those who hire in this country and the workers that they hire, concentrating the positive effects of the cuts on American small businesses. A relatively new and untested aspect of the tax portion of the Obama job plan is the implementation of cuts based upon the number of people ion the company being paid a reasonable (above average) wage for their work. Hopefully this tax break will entice more employers to pay their workers a living wage as well as to hire some new workers.

Increasing jobless benefits in times of economic hardship both helps people survive when they would otherwise be unable to, and increases the buying power of the population. As a purely moral argument, we are the richest country and for people to be starving even in our recent economic hardship is simply wrong. By increasing jobless benefits, those without work will have enough money to survive and feed their family at least until they can find work. In economic depressions "the death spiral" is a phenomenon where joblessness leads to a reduction in consumption, which decreases demand and destroys more jobs. By giving people without buying power money for vital goods, their buying power is increased and demand is bolstered. Whether a moral or economic rationalization is used, the increase in jobless benefits is a good idea in the current economic climate.

While the Obama jobs plan is on the whole a good start, there are several issues that I believe may reduce its effectiveness. The first issue with the Obama plan is that the Obama white house and the Democratic party can compromise out of any advantageous position. If the plan is corrupted before it is passed through capitulation to the right wing, it may do no good at all. The Democrats must fight any interference in this plan tooth and nail, or they will fail even if a watered down plan is eventually passed. it may simply not do enough of a good thing. I would suggest much more (at least $1 trillion) infrastructure spending now in order to reap the most benefit for our investment in the long term. The deficit would increase in the short term, but these projects will get done eventually and this is the best time to do them. If the infrastructure spending isn't great enough, the plan may have a reduced effect. The tax breaks included in the Obama plan are stimulative, but they will reduce the input into social security and could imbalance the program and allow the right wing to attack it on insolvency grounds. The most nebulous, but potentially largest, problem with the Obama plan is that the cuts that will pay for the plan will be controlled by the super congress. The super congress is a hotbed of lobbying and potential corruption, which could allow the right wing to attack the poor under the banner of cutting spending. The Obama plan should go on the government credit card or paid for by defense cuts and tax increases on the rich. We should stabilize the economy and job markets before we worry about the national debt.

The Sarcastic Liberal