Is Obama's Job Creation Strategy Any Good?

[SpartanDem]

Is Obama's Job Creation Strategy Any Good?

The president's speech today to the Brookings Institution today isn't exclusively a job creation speech. It's more like a summary of the Obama administration's domestic policy pegged to job creation plans. But still, all the new stuff is in the job creation plans, so let's get to it. How do these ideas stack up?

First Obama begins with small business assistance, since small businesses have "created roughly 65 percent of all new jobs in America" over the past 15 years, according to one oft-recited statistic. He proposes increasing small biz loans, eliminating capital gains taxes on small biz investments and extending write-offs to encourage them to pocket more money and hire more employees. Furthermore, he suggests that he is willing to support a tax incentive for companies who hire -- an idea that has received a lot of attention recently. These are fine ideas that will receive bipartisan support -- Republicans love their tax incentives and their small businesses -- and that is something they don't share with the next proposals.

The second big idea is to spend more money on infrastrucutre projects. Obama explains that the Recovery Act passed this year was always designed to spend more aggressively on infrastructure over the next six months than in the last six months. There's a decent economic reason for this. Unemployment usually lags a recession, so you want public spending to last longer than the actual downturn in production to stem rising joblessness. But I'm torn on Obama's trumpeting this point. One the one hand, it's good for employment, and Obama, that we have a lot of infrastructure stimulus left over from the first round. On the other hand, it's bad for employment, and Obama, that we didn't haven't used enough infrastructure stimulus already, especially considering that the CBO and Obama's economists consider itone of the most efficient methods of priming production.

Third, Obama turns to clean energy. He wants to incent homeowners to retrofit their homes to become more energy efficient. David Leonhardt did a great job explaining why this plan is smart -- if used properly, homeowners save energy costs and help the planet to boot -- but also why choosing how to retrofit your home is a really, really complicated process that even befuddled him. It's unclear how homeowners will take advantage of this credit. The president will also expand tax credits for companies to make energy-efficient updates.


http://business.theatlantic.com/2009/12/is_obamas_job_creation_strategy_any_good.php


I would say so this is basically a second stimulus.

[waterscalm]

1. so, what is he waiting for?

[laughingliberal]

2. Two things:

1) Define 'small business.'

2) Will the tax incentives be for each new hire or for net increase in employees? Cause if it's each new hire I see them gaming that system. Hire a worker. Fire a worker. Hire a worker...

[SpartanDem]

6. I think they'd probably use the SBA standards

this is the table of standards for different businesses.

http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf

[laughingliberal]

9. Thanks

I was leary due to the Republicans pushing ideas they say will be good for 'small business' that don't do much for small business. Case in point is the exemption for small business in the HCR bill (senate, I think) that was defined as companies with payrolls less than $500 million.

[Fire1]

3. I don't see small business hiring filling the unemployment gap

by any significant degree. Infrastructure projects are temporary. Retrofitting homes for tax credits? I don't see alot of folks taking advantage b/c they can't afford it. I'm waiting to hear things like the repeal of Glass-Steagel, EFCA, regulating derivatives, taxing and regulating extended corporations and the like. I do not believe a service economy is sustainable. Manufacturing has got to come back.

[laughingliberal]

10. I'm not sure President Obama is promoting this as the total answer to unemployment

I could be wrong as I did not hear his speech but all the things you have mentioned are being looked at in the House and/or Senate.

[amborin]

13. it's a myth that small businesses provide bulk of new jobs:

"Conventional wisdom about the job-creating prowess of small businesses rests on misleading interpretations of the data. (2) Many previous studies of the job creation process rely upon data that are not suitable for drawing inferences about the relationship between employer size and job creation. (3) Large plants and firms account for most newly-created and newly- destroyed manufacturing jobs. (4) Survival rates for new and existing manufacturing jobs increase sharply with employer size. (5) Smaller manufacturing firms and plants exhibit sharply higher gross rates of job creation but not higher net rates. "

<http://www.nber.org/papers/w4492>

<http://papers.ccpr.ucla.edu/papers/PWP-MPRC-2008-053/PWP-MPRC-2008-053.pdf>

[Raineyb]

18. Exactly!

Shuffling money around doesn't create a sustainable economy. And who are supposed to be serviced if there's no one manufacturing to create wealth in the first place?

[NC_Nurse]

4. Let me check my Magic 8 ball...

hell if I know...:shrug:

I hope so.

[hayu_lol]

5. He has a job creation strategy?

Don't see anything happening around here.

Small business help and they usually only pay minimum wage.

Infrastructure jobs? We've done that before...the workers who get these jobs generally travel long distances and the money they earn goes someplace else. It is rare for locals to get these jobs.

Downsized 16 months ago. Couple of us are too old to get hired anyplace else. Of the 20 of the crew downsized left, three have found jobs(min. wage).

Nope...don't see no stinking job strategy going on 'round these here parts.

[hfojvt]

7. I see two out of three that look bad

the business journal loves the tax credits, but I do not. Sounds like Reaganomics to me - economic growth through tax cuts, and tax cuts apparently for people who do not work but make their money from 'capital gains'. Yuck. Color me unimpressed with that.

Infrastructure spending, the second point, is sexy to me just like it is to Rachel Maddow (and admittedly I sorta have the hots for her too. Not sure why I bring that up except that I remember how she pushed infrastructure, infrastructure, infrastructure during the debate on the last stimulus bill (I almost called it the first stimulus bill, but there was an earlier one that involved sending out $300 checks again in February 2008, (and more for rich people with kids). Talk about a stimulus bill that didn't work - hello Republicans, do you remember the one that was ALL tax cuts? Were you concerned about the deficit then?)

And I say yuck to the 3rd one, although I would not mind getting some money to help me pay for siding or a new furnace. I already applied for the latter once, but the program ran out of money in approximately three hours and fifteen seconds. Similar to the cash for clunkers program, this looks like another tax break for rich people (in my view people who buy new cars are pretty well off. At age 47 I have yet to do that or be able to afford it (sort of)). I am not sure how these credits even work. Unless they are refundable I will not even be able to take advantage of them because I don't pay income taxes. Again, it looks Reaganesque to me - tax breaks for richer people.

[SpartanDem]

12. I would point out

pretty much anything thing that money into the hands of small business is a good thing. Cash for clunkers was tax break for the rich? not everyone, not even the majority of people who buy new cars are rich. I also would say try telling layed off autoworkers who got recalled that cash for clunkers was a waste.

[hfojvt]

17. the vast majority of people who buy new cars

are richER (richer) than people who don't buy new cars. I am also not at all impressed by small businesses, or throwing money at them, especially when 'small' is usually defined to include some fairly large businesses, ones with millions worth of sales and hundreds of employees. Look at this list http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf - a department store with $27,000,000 in sales is considered 'small' and so is a foundry with 500 employees. So if I have 400 employees and I make a mere $1 an hour for every hour they work then I make $800,000 a year and Obama is gonna give me a tax break to stimulate the economy. Hurrah for Reaganomics!! The best way to help people who don't have jobs or who have low-paying jobs is by giving tax breaks to rich people.

No doubt though, if they get a tax break that will probably provide income to people who sell plasma TVs! :woohoo:

[dysfunctional press]

14. i'm a homeowner- but there's no way i could afford to retrofit anything right now...

'tax credits' mean jackshit when you don't have any money. i'm disabled, and my wife has been unemployed for several months now, with no prospects on the horizon.

[TexasObserver]

8. Talk is cheap, and so far, that's what he's done about jobs.

The failure of this administration to make JOBS a priority in 2009 is obvious. I defended them until mid summer, but their lolly gagging the second half of the year is inexcusable.

I want to see them kick it in high gear, and create jobs now, not in two years.

[Subdivisions]

11. I watched him deliver that speech and even he doesn't believe any of it. n/t

[dysfunctional press]

15. "a tax incentive for companies who hire"

it would have to be a pretty big 'tax incentive' to cover the cost of adding employees just for the heck f it...all this will do is give a break to the companies that would be hiring anyway.

[Cessna Invesco Palin]

16. No, it sucks just like everything else Obama does sucks...

...because he sucks and his policies suck and he probably also sucks as a friend and will be the guy who drinks all of the beer and then pees in the corner of the living room after everyone else goes to sleep, then sets the house on fire to cover up his shameful crime.

Then, just when you think it's over, he will come back to your house and come onto your property and kick your dog.

[Skittles]

19. I...............ER...........

:o

[hfojvt]

20. so you really think it's a good idea? We should cheer Reaganomics-lite?

[Cessna Invesco Palin]

22. How is supporting small business and spending money on infrastructure...

...Reaganomics-lite?

None of what he's proposing sounds particularly unreasonable.

[hfojvt]

23. the second part is not., the infrastructure was the part I liked.

but you conveniently over-look the third part. Something like a $5,000 tax credit and who gets that tax credit? People who a) pay more than $5,000 in taxes and b) can afford to spend $10 - 20,000 on home improvements. Or it may just be a $500 credit for buying a new refrigerator. Who gets that credit? Only people who pay more than $500 in taxes. Currently, any family of four making less than $44,000 pays no income taxes. Ergo most of those credits goto families making over $50,000 and is supposed to trickle down to the poor and unemployed.

As for "supporting small businesses"

"He proposes increasing small biz loans, eliminating capital gains taxes on small biz investments and extending write-offs to encourage them to pocket more money and hire more employees."

Eliminating capital gains taxes. That doesn't sound Reaganesque to you? Sure because it says "small business" you think it's gonna include a bunch of hard working little guys and their little businesses, (and it would, but I had a business for seven years that already paid zero taxes because it made zero profit) but lots of money would also flow to lots of quite well off people who own businesses that are classified as 'small'. Your local doctors, your local pharmacists, and dentists, etc. There's no way in hell I support eliminating income taxes for people making $200,000 or $300,000 or $700,000 a year just because they are considered a "small" business investor.

[Union Yes]

21. Unless it includes a repeal of all "NAFTA's".