Obama's Jobs Plan

Calculated Risk:

Here is the fact sheet for The American Jobs Act

Some of the major proposals (total is around $450 billion):

1) Payroll tax cuts (approx $240 billion):

• Cutting payroll taxes in half for 160 million workers next year: The President’s plan will expand the payroll tax cut passed last year to cut workers payroll taxes in half in 2012 ...

• Cutting the payroll tax in half for 98 percent of businesses: The President’s plan will cut in half the taxes paid by businesses on their first $5 million in payroll ...

2) Schools and teachers / aid to states (approx $60 billion):

• Preventing up to 280,000 teacher layoffs, while keeping cops and firefighters on the job.

• Modernizing at least 35,000 public schools across the country,supporting new science labs, Internet-ready classrooms and renovations at schools across the country, in rural and urban areas.

3) Other infrastructure ($75 billion)

4) Extend unemployment insurance benefits ($49 billion).

5) Helping More Americans Refinance Mortgages (there are no details yet). "The President has instructed his economic team to work with Fannie Mae and Freddie Mac, their regulator the FHFA, major lenders and industry leaders to remove the barriers that exist in the current refinancing program (HARP) to help more borrowers benefit from today’s historically low interest rates."

I see this as another very temporary patch, which won't do much good.  The tax cuts didn't do much of anything before, and they won't now either.  I have no idea why businesses will get the payroll tax cut.  What are they going to do with the extra money?  I don't see any reason to expand production.  This is just one more "temporary" tax cut that will never go away.  It also will undermine Social Security and Medicare, probably leading to massive cuts.  The political optics on this plan are clear, but the economic optics are not.  While Obama's plan may not be any good, it is still better than the "cut taxes and job-killing regulations bullshit from the Republicans.  The President is unimpressive historically, but for the time frame he's Abe Lincoln.