President Obama wants to spend $447 billion on a stimulus plan that will not stimulate a thing. Will any of it pass? The consensus is Expect ‘Yes’ on Tax Cuts, ‘No’ Elsewhere.
The real takeaway from President Barack Obama’s jobs agenda?
Workers probably can count on continuing to pay lower Social Security taxes. Employers may not have to pay as much, either. The long-term unemployed probably will keep drawing jobless benefits. Congress can be expected to ratify new trade agreements with South Korea, Colombia and Panama.
But don’t expect Congress to funnel tens of billions of dollars into rebuilding schools and blighted neighborhoods, or helping local governments pay teachers and firefighters, or setting up an “infrastructure bank” to leverage federal loans for roads, water systems and other public works projects.
“Enough of the stimulus,” House Majority Leader Eric Cantor, R-Va., said Friday on CNBC. “We can’t afford to keep spending money we don’t have.”
Last December, Congress passed a one-year cut in Social Security taxes, reducing the rate for workers from 6.2 percent to 4.2 percent for 2011. Employers still pay the 6.2 percent rate, which is applied to wages up to $106,800.
Obama proposes to extend the tax cut for a year and make it bigger, reducing the Social Security taxes paid by workers to 3.1 percent for 2012. He’s also now proposing to extend the payroll tax cut to businesses on the first $5 million of their payroll. About 98 percent of companies have payrolls below the $5 million threshold, according to the White House.
“This proposal would make the already arduous challenge of finding bipartisan agreement on deficit reduction nearly impossible, removing our options for deficit reduction for a plan that won’t reduce the deficit by one penny,” said Rep. Jeb Hensarling, R-Texas. “It’s not the role of this committee to spend more money we don’t have on jobs we don’t get.”
Republicans also have qualms about the almost $50 billion cost of extending for one more year a jobless benefits program that allows up to 99 weeks of benefits for the long-term unemployed and covers about 5 million laid-off workers. But GOP leaders may go along with the idea after Obama embraced reforms, such as expanding to other states a Georgia program that uses unemployment funds for on-the-job training.
“I don’t think they want a fight over that,” said Jack Howard, a GOP lobbyist.
The White House promises to send up soon a list of ideas on how to pay for it all.
Spend Now Cut Later
Obama will come up with a list of ideas soon. Rest assured all of them will involve cutting future spending years from now or other sleight-of-hand magic like cutting programs that were not in the budget. Also possible are tax hike proposals that will be dead on arrival in the House.
Ultimately it will be up to the gang-of 12 to figure out how to make this plan balanced. They have a difficult enough time already.
Please appreciate the dilemma of Rep. Jeb Hensarling, R-Texas who said “It’s not the role of this committee to spend more money we don’t have on jobs we don’t get.”
Business Owner from California Chimes In
A business owner from California responded to Dissecting the Lies in Obama’s $447 Billion “Shock-and-Awe” Reelection Ploy; Dead-on-Arrival in Congress? Alternative Proposal Will Not Cost a Dime
I own and operate a contracting business in the San Francisco bay area in California. I can confirm that the motivation to hire more people due to a payroll tax rebate is zero.
I did hire several workers in our spring ramp up as a normal course of business. It was nice to see payroll tax reductions, but it didn’t motivate me at all to hire more, nor would it today, or ever.
However, I avoided hiring one additional person that we would normally hire in July because of economic uncertainty and implications of “Obamacare”.
In regard to public works, we frequently do public works jobs here with merit shop workers. They certainly enjoy the extra pay and benefits (we pay fringe benefits in cash), but I would put my men up against any local union. Their skills are as good and their work ethic/attitude is far better.
Union rules are toxic to the workplace and productivity.
I have written my rep. and senators but unfortunately Senators Boxer and Feinstein are as liberal as they come.
Business owners and those we do not hire are the ones who suffer from the misguided policies of liberals.
That is one email from person, but I strongly suspect it represents the majority opinion of most business owners.
Mike “Mish” Shedlock
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