What To Look For In Obama’s Speech? Pretty Much Nothing

Dave Schuler links to this piece by Catherine Baum that I think pretty much summarizes what we’ll be hearing from the President tonight:

Let’s face it: If the president had a plan to create jobs, he wouldn’t have kept it under wraps until now. Why take flak from Republicans and heat from the public if you have what it takes to turn the economy and labor market around?

Barack Obama doesn’t have a plan to create jobs. Nor is that his job. The government’s role is to provide an environment in which the private sector will create them. That should be his goal.

For weeks, the White House has been hyping the president’s speech to a joint session of Congress. I suspect it will be full of pomp and circumstance signifying nothing (with apologies to Will Shakespeare). Obama will offer some warmed-over “stimulus,” including aid to the states, extended unemployment benefits, temporary tax breaks and infrastructure spending; mortgage relief for homeowners; and perhaps regulatory relief for business. The price tag, according to those briefed on the speech: $300 billion.

As Dave notes, the President and his advisers would do well to learn the lesson of the highlighted sentences. They won’t, of course, because the need to been seen doing “something” requires that they propose “something,” even if it’s pretty clear that it isn’t going to work.

My guess is that, after the speech is over, even the pundits who support the Administration will wonder why the President wasted everyone’s time on such an ineffectual, empty speech.

FILED UNDER: Barack Obama, Economics and Business, Politicians, Quick Takes, US Politics
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. Sam says:

    1: Blame
    2: Lies
    3: More blame
    4: More lies
    5: More of the same failed ideas as the last time he made a speech in front of the joint session.

    I know there will be a bunch of joint sessions around the country while he gives his new campaign speech.




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  2. Tano says:

    You seem to be aiming for some wise, yet cynical tone. But it just comes off as trite and lazy.

    Creating an environment in which the private sector proceeds to create jobs is important. It is not, however, the only job of the government. Of maybe it is, if you see that environment-creating in a broader sense than used here.

    For instance, there are millions of people who are seriously underperforming as consumers in this consumer=spending-driven economy of ours. They are out of work, or out of money, or underwater with their mortgages, and so they do not contribute to overall demand. Spending for infrastructure puts people to work and gives them money to spend. Providing unemployment benefits also puts money in the hands of people who will spend it immediately, spurring local economies. Aid to the states will also keep people working, and basic services being provided – all things that are certainly important to creating an environment conducive to growth.

    The rightwingers seem to somehow think that endless coddling of business elites is the only path to prosperity. Businesses are doing better than the average folks are. Collectively, they are sitting on 2 trillion dollars that should be invested in expanded growth. The last thing we need to do is to funnel more money into their hands.

    We need to address the lack of confidence that many of these businesses have regarding whether there will be sufficient numbers of customers, with sufficient dollars in their pockets, to buy whatever goods the businesses would produce from an expanded capacity.

    The ideas that it looks like the President is going to present seem well focused on doing just that.




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  3. john personna says:

    The government’s role is to provide an environment in which the private sector will create them. That should be his goal.

    That’s easy. Make the corporate tax rate smaller for every US employee on payroll.

    But you don’t want that. You’d rather “cut taxes and insert magic.”




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  4. Tsar Nicholas says:

    Obama is giving a speech tonight??




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  5. Andy says:

    @john personna:

    The last thing we need to do is subsidize big businesses more than they already are.




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  6. john personna says:

    @Andy:

    What I’m really highlighting is that there are two senses of “big.” There are hedge funds who make billions with a hundred employees, and retail chains who make millions with thousands of employees.

    If you want jobs, you don’t tax them equally. If you want to use the word “subsidize,” that’s ok. You subsidize the employer of thousands.




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  7. Polaris says:

    @Andy:

    The last thing we need to do is subsidize big businesses more than they already are.

    I would submit that if this is true, then the rest of the world is subsidizing them more. We not only need to give business (big and small) incentive to create jobs thus increasing the economy, but in a way that those jobs are created HERE and that means making the US a more friendly place to do business.

    1. Cut the Coporate Tax Rate. 35% is outrageous by international standards and is indeed the highest in the world.

    2. Cut or elminate capital gains tax. This is what businesses (big and small) use to invest. Indeed in many places in the world (and not the third world either by a long chalk), the capital gains tax rate is ZERO.

    -Polaris




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  8. john personna says:

    (A strictly impartial tax system has psychic attractions. It’s just so simple. And in that simplicity we often hope it will accomplish our goals. There is actually no such guarantee.)




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  9. Andy says:

    @john personna:

    The problem with your proposal is it benefits large firms at the expense of small firms even if they are in the same business. Walmart, with it’s ton of employees, will be getting a huge tax break compared to a regional store not to mention a local store. Our system already has a lot of perverse incentives that benefit large firms more than small firms – we don’t need anymore of those. Consider the bigger implications of your proposal – it’s a tax break for mergers, for example since a combined company will be paying a lower rate than the separate companies since it’s got more employees. That’s just one example.




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  10. john personna says:

    @Polaris:

    Remember, that 35% is statutory and not effective:

    In its August 2008 report, the GAO estimated that “[t]he average U.S. effective tax rate on the domestic income of large corporations with positive domestic income in 2004 was an estimated 25.2 percent.” Further, in its Paying Taxes 2009 publication, based on its 2009 Doing Business report, the World Bank-International Finance Corporation estimated that the United States has a lower effective rate of current corporate tax than several developed economies, including Germany and Italy. Moreover, in June 2007, the Treasury Department concluded: “If special provisions were eliminated, the top corporate tax rate could be lowered to 27 percent or more than 40 percent expensing could be provided to all businesses for new the cost of tangible investments, and the tax system would produce the same level of revenue.”




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  11. john personna says:

    @Andy:

    Again, if you want employment then you do rank that higher than “at how ‘big’ a firm.”

    But you raise an interesting point about Walmart. You know their scam is to have few full-time employees, right? So make my proposal “per full time employee” and watch them squirm.




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  12. john personna says:

    (The merger thing could be finessed at the margin. I haven’t said how big this delta should be.)

    This is more a thought experiment about what you’d really do, if you really wanted jobs. As opposed to waiting jobs at the natural rate.




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  13. Polaris says:

    Even if you squint real hard and say the “real” corporate tax rate is 27% or whatnot, that’s still too high. A strong case can be made that it should be zero.

    -Polaris




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  14. john personna says:

    @Polaris:

    Even if you squint real hard and say the “real” corporate tax rate is 27% or whatnot, that’s still too high. A strong case can be made that it should be zero.

    In the abstract, or with current spending?

    I’ve suddenly noticed that we’ve had a full decade of promises “for a tax cut today, I’ll gladly repay you with spending cuts on Monday.”

    (“My ‘m’ key is starting go go out. LOL, if I start saying ‘spending cuts on Nonday’ you’ll know what happened.)




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  15. Andy says:

    @john personna:

    Why would Walmart squirm? With their currently number of full-time employees, they would stand to receive a substantial tax break, correct? So if they changed nothing your plan would simply pad their bottom line.

    Would it incentivize them to convert part-time employees to full-time employees? Maybe – that would be subject to a cost-benefit analysis and who knows what the result of that might be, but I’m pretty certain it’s not going to make them squirm.

    Regardless, Walmart is big enough with enough full-time employees (about 800-900 thousand in the US alone) that it would receive a bigger tax break than any of its competitors (Target, for example, has about 350k total employees). Again, I don’t see any advantage in making big companies more profitable than little companies, especially since it’s not clear that a tax break would result in more hires.




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  16. john personna says:

    @Andy:

    While the company brags that 70% of its workers are full-time, at Wal-Mart “full time” is 28 hours a week, meaning they gross less than $11,000 a year.

    They play the system, keeping hours low enough that they don’t have to provide benefits mandated for full time, as in 40 hour, workers.

    Are those 800K workers 40 hour plus, with benefits? Then sure, they are doing God’s work.




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  17. Andy says:

    @john personna:

    I never said they’re doing God’s work, nor am I defending Walmart – quite the opposite in fact since I’m criticizing a proposal that would greatly benefit Walmart and give them a competitive advantage.




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