For weeks, the American people (and the world) have been waiting for President Barack Obama’s job speech.
To date, everything that Obama has tried to do in terms of job creation has failed. Last month, there were exactly zero jobs created. The unemployment rate stayed unchanged, but that isn't important because it merely reflects the fact that more people left the work force.
Obama is supposed to give his long awaited speech tonight. However, details of the plan have already been leaked to media sources.
Unfortunately, it is the same old policies that have failed over and over.
According to the sources, the president is going to call for more infrastructure spending, an extension of the payroll tax cut, and aid to state and local Governments. The package will cost $300 billion and be financed by taxes on the “rich.”
Infrastructure spending is a good idea: According to the American Society of Civil Engineers, the country's infrastructure needs $2.2 trillion in new investments over the next five years. In the original stimulus package, which was touted as an infrastructure plan, only about 10 percent of the approximately $850 billion went toward infrastructure. This was a huge missed opportunity. Throwing another $100 billion or so won’t help, unless it is on a massive scale, like the president originally claimed.
Payroll tax cuts are a really dumb way to cut taxes. They were part of the December 2010 tax cuts, and the result has been zero job creation in the past month, and an economy that is slipping into recession or is already in recession. Since these tax cuts are temporary, most workers will likely save the money, instead of spending it. Therefore, it will produce little economic growth, as the past several months have demonstrated.
Part of the original stimulus package was a huge aid package to the states. The states really needed the money, but there were no conditions placed on it. Instead of using the money to get their fiscal houses in order, many states just took the money and spent more. New York State for example, increased spending from $252 billion in 2008, to $275 billion in 2009. The president will likely bail out the states again unconditionally.
Finally, if the economy is as bad as the president claims, increasing taxes on people making more than $250,000 will likely decrease revenue instead of increasing it.
Apparently, Obama still hasn't learned the famous phrase: "Insanity is doing the same thing over and over again but expecting different results."
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