Questions and Observations

A reasonable summary?  How about, ‘”let’s put aside partisan bickering because I need a political boost and spend half of what was spent on the stimulus to do exactly the same thing that hasn’t yet worked.”

As most predicted two things were evident in the speech.  A president out of ideas and trying once again to shift blame to Congress.  And the fact that he still doesn’t understand that the spending spree is over.

Instead of suggesting a regulatory roll back, or cutting government red tape, or even, horror of horrors, a corporate tax cut, we’re essentially get much of the failed stimulus plan repackaged.  The entire purpose of addressing a joint session of Congress (instead of doing the speech from the Oval Office) was to again attempt to establish the House GOP as the bad guys in all of this.

The proposal is simply a redo of the stimulus plan, something Obama has been trying to get Congress to do since the first one failed.  Obama proposed a payroll tax cut extension, an extension of unemployment benefits, the creation of an infrastructure bank, a new job training initiative, and providing aid to state and local governments, which have been hard hit by job losses.

The infrastructure bank is somewhat new, but aimed at the same sort of programs at which we previously threw over $800 billion in stimulus money.  How did that work out?  The payroll tax and unemployment benefit extensions haven’t produced more jobs yet, have they?  In fact some argue the continuing extension of unemployment benefits works to the opposite effect.   We’ve had job training programs since time immemorial and they too have very little positive effect.  The one key point that those who propose such initiatives always seem to miss is there have to be jobs available for such a program to be successful.   And finally, pumping money into state and local governments is a very temporary fix.  It allows them to keep employed workers who they otherwise couldn’t, at least for a while.  But, as they learned with the stimulus funds, once the money ends, so do the jobs.   Hardly what one would consider a “jobs program”.

Obama also tried to waive off criticism of cost by claiming his plan was all paid for.  AP disputes that:

OBAMA: "Everything in this bill will be paid for. Everything."

THE FACTS: Obama did not spell out exactly how he would pay for the measures contained in his nearly $450 billion American Jobs Act but said he would send his proposed specifics in a week to the new congressional supercommittee charged with finding budget savings. White House aides suggested that new deficit spending in the near term to try to promote job creation would be paid for in the future – the "out years," in legislative jargon – but they did not specify what would be cut or what revenues they would use.

Essentially, the jobs plan is an IOU from a president and lawmakers who may not even be in office down the road when the bills come due. Today’s Congress cannot bind a later one for future spending. A future Congress could simply reverse it.

Currently, roughly all federal taxes and other revenues are consumed in spending on various federal benefit programs, including Social Security, Medicare, Medicaid, veterans’ benefits, food stamps, farm subsidies and other social-assistance programs and payments on the national debt. Pretty much everything else is done on credit with borrowed money.

So there is no guarantee that programs that clearly will increase annual deficits in the near term will be paid for in the long term.

To actually pay for this, the revenue must be diverted from this years budget, not some future year(s) budget.  Again smoke and mirrors to sell more spending.   Eric Cantor caught all sorts of grief for claiming disaster relief needed to be paid for elsewhere in the budget.  That is how you cut and control spending.   What Obama has again done is use the old DC jargon that claims something is paid for if they say they plan for it in the future. 

That’s simply not acceptable.

Obama challenged the Republicans with a falsehood:

OBAMA: "Everything in here is the kind of proposal that’s been supported by both Democrats and Republicans, including many who sit here tonight."

THE FACTS: Obama’s proposed cut in the Social Security payroll tax does seem likely to garner significant GOP support. But Obama proposes paying for the plan in part with tax increases that have already generated stiff Republican opposition.

For instance, Obama makes a pitch anew to end Bush-era tax cuts for the wealthiest Americans, which he has defined as couples earning over $250,000 a year or individuals over $200,000 a year. Republicans have adamantly blocked what they view as new taxes. As recently as last month, House Republicans refused to go along with any deal to raise the government’s borrowing authority that included new revenues, or taxes.

So, as AP points out, the claim is fraudulent.  In fact, there are many things in the proposal that the GOP has been against.

And perhaps the biggest falsehood of the night?

OBAMA: "It will not add to the deficit."

THE FACTS: It’s hard to see how the program would not raise the deficit over the next year or two because most of the envisioned spending cuts and tax increases are designed to come later rather than now, when they could jeopardize the fragile recovery. Deficits are calculated for individual years. The accumulation of years of deficit spending has produced a national debt headed toward $15 trillion. Perhaps Obama meant to say that, in the long run, his hoped-for programs would not further increase the national debt, not annual deficits.

Perhaps.  But then if that was so, he should have said it, shouldn’t he?  Instead he played politics.

Probably most interesting was the man who has been driving the lead clown car in the political parade admonishing Congress to “stop the political circus and do something”.  It has taken the circus ringmaster 3 years to figure out this is what he should have been focused on from the beginning.   And for 2 of those years, he had an all Democratic Congress. 

They guy who called for an end to politics has done nothing but played politics throughout this whole ordeal.  And now, with his popularity at an all time low, his political future dimming and with him finally turning from his political agenda to that to which he should have been paying full attention from day one, he falls back on one of his favorite political tricks – blame shifting.

What he doesn’t seem to understand is this is all his now.   And while the GOP should consider the proposal, it should also be unremitting in pointing out that the proposal isn’t paid for, will add to the deficit and is simply another attempt at a second stimulus throwing money at old programs and ideas which have yet to prove their worth in either improving the economy or increasing jobs.

(UPDATE) If you really want to know how bad the plan is, Krugman liked it:

First things first: I was favorably surprised by the new Obama jobs plan, which is significantly bolder and better than I expected. It’s not nearly as bold as the plan I’d want in an ideal world. But if it actually became law, it would probably make a significant dent in unemployment.

Yeah, just like the last one did, huh Paul?

~McQ

Twitter: @McQandO