Obama’s “Jobs” Plan: Nothing New
So much for “bold” and “new.” What we heard from the President last night was nothing more than a revamped and slightly smaller version of his failed 2009 stimulus package. His “new” plan sounded just like the prior stimulus, with few exceptions and little hope of actually working. Key points included:
- Tax credits to businesses who hire the unemployed
- More infrastructure spending
- State aid to delay public sector layoffs
- An extension of the payroll tax credit
- An extension of unemployment benefits
Other than giving tax credits to businesses who hire the unemployed, how is this plan any different than the 2009 stimulus? Aside from finding more creative ways to spend money we do not have, no. And none of these ideas will actually create the jobs President Obama and his allies claim.
Infrastructure spending, as we saw in 2009, is only temporary. When the money runs out or the construction is complete, the jobs disappear – such is the nature of construction, it does not last forever. We cannot base our recovery on temporary make-work spending, unless President Obama wants to turn our nation’s infrastructure into the Winchester Mystery House.
State aid to delay public sector layoffs was tried before, and guess what? When the money ran out, the layoff went forward as planned. It simply prolonged the recession and allowed state and local governments to postpone much needed decisions on how they spend money.
Extending the payroll tax credit and unemployment benefits will not create jobs and are not new ideas, they’re already in place. The payroll tax credit is small (according to President Obama it put $1,000 into the pockets of middle-class Americans this year, which amounts to just $86 dollars a month) and based off the faulty Keynesian belief that government can spur demand and create jobs. It’s hardly stimulating. Numerous studies have shown that extending unemployment benefits actually extend unemployment, as those people are less motivated to look for work than if there were no benefits.
So far the only “new” idea – tax credits to businesses who hire the unemployed – is a failed relapse from the 1970s. The scheme could lead to companies hiring a lesser qualified unemployed worker for the tax credit, as opposed to a slightly more qualified worker who is currently employed.
The fact of the matter is that the first stimulus didn’t work. President Obama said it would “save or create more than 3.5 million jobs,” but 1.7 million jobs have been lost since it was enacted. Trying the exact same idea all over again will do no more good for the economy than the last stimulus and only drive up federal spending and debt.
President Obama would be wise to try a different direction. Hey, maybe something like getting off of business’ backs by removing burdensome regulations and taxes? Just a thought.