President Obama, detailed his job creation plan September 8, 2011. In that speech he laid down some specifics as to what he wants to accomplish and how he plans on accomplishing job creation. The primary focus of the speech, suggested that the following are his intent:
1. Revamp Education
2. Infrastructure Improvements
3. Small business tax credits
4. Payroll tax cut for working Americans.
I will detail each of Mr. Obama’s intents, as to its economical possibility and my personal agreement or disagreement. Overall, I like the President, and believe he is doing as good as a job as prior Presidents (despite Obama Hate Radio campaign of the Glenn Beck type). However, I know for a fact that during his inauguration, he mentioned Infrastructure improvements as a possible job creation factor. Yet only a small percentage of actual jobs were created with funds received through the American Recovery Act 2009. Obama’s plan, called for $130 billion to states and local governments, under the American Recovery and Reinvestment Act of 2009. (Mishak) I was living in the state of Nevada at the time. Nevada received a total more than $2.1 billion in federal money for infrastructure projects, such as roads, bidges and higway improvements. Although the funds did preserved nearly 4,500 jobs.(Lieb) The funds did not create as many new job opportunities as Obama and his administration planned. For infrastructure, Nevada received $270 million in infrastructure grants, $201 million of which is for highways. It was reported that, these funds basically were used to maintaining the current job projects, that the state had back logged. Thus no new jobs were really created with these funds.(Molly) So it will be interesting to see if the Presidents, new infrastructure actual creates jobs and how it will be monitored.
Revamping education: in his speech the president made it clear that education is important to society, for it is an externality that is a spillover benefit to society. (Brux 84) I couldn’t agree with him more. The ideal that the American children have to be educated in run down buildings, is a terrible dis-justice to our nation. The President pointed out, that 44% of principles have voiced opinions, that the inadequate conditions of the school had a negative effect on the child’s education. To remedy this, the President stated that he intends to refurbish/or build 35,000 schools across the county. Putting to work, some of the 2,000,000 million unemployed construction workers. To ensure that these allocated funds are distributed correctly, the President stated that a National Infrastructure Bank would be establish to issue loans, based on two simple criteria. First, how badly is the project/school in need of service? Second, how will it affect the overall economy? This is inefficiency at its best, as detailed by Brux. (Brux 85) Again, the President is considering a spillover benefit that not only provides updated schools, but also helps the unemployment rate in many states, with construction employment.
The President continued his speech, expressing sentiments for economic growth. (Brux 4) The President, boldly stated to Congress, that if this bill is pasted, small business owners will see a difference tomorrow. His plan (upon passage of this bill) is to provide small business owners with a tax cut for hiring new employees. Small businesses will also have their payroll taxes cut in half. The Presidents, example was that if a small business hired 50 new employees that would amount to $80,000 in tax cuts. The President especially made this incentive an opportunity cost for Congress, when it comes to the employment of Veterans. (Brux 4) Small businesses would receive a $4,000 tax credit for hiring an unemployed Veteran. If the veteran was injured in the line of duty, that tax credit is increased to $9,000. The President, gave a brilliant, powerful example of opportunity cost again, when he state…” Should we keep tax loopholes for oil companies? Or should we use that money to give small business owners a tax credit when they hire new workers? Because we can’t afford to do both. Should we keep tax breaks for millionaires and billionaires? Or should we put teachers back to work so our kids can graduate ready for college and good jobs?” (Opportunity cost Brux 4)
I thought it was interesting the way the President went on to detail global production factors,with the production possibilities curve. (Brux 2) The President used a global perspective, when explaining available consumer choices, scarcity, available resources, efficient use of resources, quality, quantity and out dated technology. (Brux 2) He brought up a good point, not only for American consumers, but also for the worlds manufactures: …”If Americans can buy Kias and Hyundais, I want to see folks in South Korea driving Fords and Chevys and Chryslers. (Applause.) I want to see more products sold around the world stamped with the three proud words: “Made in America.” Not only will this remedy unemployment, but it will give a much needed boost to our GDP. (Brux 22)
Like many, I hoping that the Presidents intentions are seen through as Congress reflect upon their own Conservative verse Liberal ideologies and it relevance in economics. One of the primary reasons, I like Mr. Obama so much is his continued call for bi-partisan action. He believes that with bi-partisan action, the American Jobs Act can get passed. This would involve both Democrats and Republicans, to consider their own perspectives. Maybe they can walk the fence of bi-partisan action when it comes to economics and the welfare of our great nation.
I’d also like to mention, (seeming I have followed unemployment and Tier benefit allocation on this blog since 2008) that for the first time, the President sounded concern about the plight of 99’ers. Although he did not mention them by their “given id name, 99’ers” (too much of an shameful on part of Congress). He did state that something would be done to extend unemployment benefits to those who have not worked since this crisis began.
Ball, Molly, “Nevada’s per person share low”, Las Vegas Review-Journal, Feb 23, 2009
Brux, M. Jacqueline, Economic Issues and Policy, 2008 Thomas South-Western , Ohio
Lieb, A. David, “Obama jobs plan spits leaders of strapped states,” Associated Press, Sept 12, 2010
Mishak, Michael, “Not a cure-all, but stimulus money helped Nevada,” Las Vegas Sun, Dec 23, 2009