President Obama’s Jobs Bill Joins the Republicans’ Job Plans on the Dusty Shelves of Uninspired Visions

While some of the ideas in the President’s bill have merit, he knows that his big government approach will not have support from Republicans and will die on the cutting floor of the political process. Neither the Republican’s ideas for job creation by tax and regulation derivatives nor President Obama’s big government jobs bill deals with the underlying consumer demand, business and consumer credit restrictions, and housing and consumer debt issues that have stymied our nation’s demand for jobs. Without removing these major obstacles or creating an environment to sustain demand for a new products or services, any proposed solution will be a temporary band-aid that increases the debt and that delays providing real, implementable, and effective solutions.

I am therefore beseeching both parties on behalf of the American people to put us first. Meet in the middle with win-win proposals that will solve our nation’s jobs dilemma. Go back to the drawing board, be inventive and be bold. Thus far, our government has fallen far short of our needs, but we will count on you to try again and to succeed. A review of the President’s jobs bill follows.

The president’s bill adds $452 billion in new stimulus costs that have minimal permanent job increases and that creates new agencies such as the American Infrastructure Financing Authority and the Public Safety Broadband Corporation to administer new programs that will add “government” jobs through a larger government approach.

His plan will save some government jobs that might have otherwise been pared down to match the realities of permanently lower state and local budgets as a result of popping of real estate prices and subsequent taxes. It will also move construction work forward in time to add jobs near term at the expense of longer term jobs and will fund some jobs that otherwise would not occur by increasing government spending.

The employer/employee sections of the bill will provide temporary stimulus across the private sector to workers and owners. It will also incentivize bringing private industry investment forward to 2012. In addition, it incentivizes shifting employment from civilians to returning vets. However, because of the temporary nature of the stimulus, the provisions have little impact on new jobs.

The teacher and first responder stimulus does keep workers in place for those municipalities that would lay off these workers as part of paring down their oversized governments. However, the effect of these provisions is to delay needed cuts in local government budgets that grew too large as they took advantage of windfall property taxes from the housing bubble that increased their budgets beyond historical norms to increase their employee base. By covering teacher and first responder pay, the plan enables other areas of local governments to continue on when they should otherwise be cut.

The school construction stimulus has the combined effect of advancing the President’s agenda of redistributing wealth to the disadvantaged and to improving learning conditions of schools while at the same time providing short term stimulus to the building construction industry by increasing federal government debt.

The infrastructure construction stimulus has the combined effect of improving deteriorating infrastructure and providing short term stimulus to the infrastructure construction industry while advancing the President’s agenda of shifting government contracts to disadvantaged businesses that hire a greater percentage from lower socioeconomic classes, job retraining for those with less skills, and support for state and local budgets by transferring their costs to the Federal budget.

The Infrastructure bank provisions allows for infrastructure construction to be done on credit over time as opposed to being paid by ongoing budgets. The effect will be to increase short term employment but also to increase the federal debt by bringing forward billions of dollars in construction. The provisions also advance the President’s redistribution agenda by providing $15 billion to purchase excess housing and make it available for low income housing rentals.

The public safety broadband network is an admission that the billions invested thus far in our nation’s public safety networks for interoperability have not been successful and must be given a broad stroke of expensive and inefficient transfer of resources to a new federal agency. It also advances the slippery slope of selling off government assets to pay for our debt.

The extension of unemployment benefits extends a disincentive to remain unemployed without giving the unemployed real opportunities to find employment. The other provisions of the return to work sections have merit but are not bold enough to have a substantial impact and, as a result are a costly option for minimally improving employment.

The anti-discrimination section adds ineffective regulation to already bulging base of regulations.

Details of bill:

Employees and Businesses

Sec. 101. Temporary Payroll Tax Cut for Employers, Employees, and the Self-Employed – increases consumption across the board for calendar year 2012 but savings may be hoarded because of economy concerns.

Sec. 102. Temporary Tax Credit for Increased Payroll – provides a one year tax credit to employers. Not sufficiently long to make long term hiring decisions but could help increase temporary employment.

Sec. 111. Extension of Temporary 100 Percent Bonus Depreciation for Certain Business Assets – could accelerate certain business asset purchases into 2012.

Sec. 112. Surety Bonds – Increases size of projects available to small businesses at reduced bond costs that has the effect of shifting workers from larger companies to smaller ones – little effect on increasing employment.

Sec. 113. Delay in Application of Withholding on Government Contractors – Delays collection of government funds that ultimately must be paid – little effect on increasing employment.

Sec. 201. Returning Heroes and Wounded Warriors Work Opportunity Tax Credits – Incentivizes hiring of veterans over civilians which may be necessary as we bring home soldiers. On the margin, may influence hiring but should have little effect on increasing employment.

Sec. 202 -215 – Teacher and first responder stabilization and First Responder Stabilization – $35 billion – The goal is to stabilize employment but will have little effect on increased employment.

Sec. 221 – 231 Modernizing Schools – $25 billion – Repairs schools, allocates a significant portion to schools with a high percentage of students below the poverty level – The redistribution program funds repair of educational facilities – As the funds are supplemental to other programs, it should increase construction jobs

Sec. 241. Immediate Transportation Infrastructure Investments – $27 billion – for highway projects, $2 billion – for airports, $1 billion – air traffic control – transfers construction jobs from later years to 2012, $4 trillion for high speed rail, $2 trillion for Amtrak, $3 trillion for general grants – allocates a third of the funds to disadvantaged businesses. Adds expenses without fitting into a national improvement plan.

Sec 242-259 – American Infrastructure Financing Authority – Establishes an infrastructure bank that funds the development of new infrastructure estimated to cost $225 billion a year for the next 50 years. – The bank allows state and local governments to build infrastructure on credit that is paid over time. Substantially increases national debt to narrowly fund employment in a specific industry.

Sec. 261 – Project Rebuild – $15 trillion – Allocated for local governments to purchase and maintain excess housing for low income individuals to rent.

Sec 271-278 – Auctions of Spectrum and Spectrum Management – Auctions private use of government spectrum for additional government revenues. Advances the slippery slope of selling off government assets.

Sec 281 – 299 Public Safety Broadband Network – Creates a national public safety broadband network that is managed by a new authority, the Public Safety Broadband Corporation to develop a federally mandated interoperability among safety workers. Provides funding to pay for inefficiencies of transferring to this network. Some initial jobs will be developed to create the infrastructure and systems. The cost and inefficiencies of transferring billions of dollars of existing infrastructure is not appropriately discussed.

Sec. 311-316 – Extension of Emergency Unemployment Compensation Program and other unemployment programs– extends unemployment benefits another year and provides other unemployment assistance

Sec 321-331 Reemployment NOW Program – Provides supplemental funds to subsidize employment – Could provide temporary job growth.

Sec 341 -346 – Short-Time Compensation Program provides unemployment for workers that get less hours in lieu of being completely laid off – Provides some flexibility and reduces full effects of unemployment.

Sec 351 – Long-Term Unemployed Hiring Preferences – Provides tax credit to hire long term unemployed, incentivizes shifting hiring from short term unemployed to long term unemployed.

Sec 361 – 368 – Pathways Back to Work – Provides $5 billion for employing and training disadvantaged youth and low income individuals.

Section 371-378 – Prohibition of Discrimination in Employment on the Basis of an Individual’s Status as Unemployed –creates new regulations prohibiting not hiring because of a person’s unemployed status

Sec 401-451 – Reduces tax deductions for higher income individuals and repeals other deductions and subsidies plus an increased target of the joint committee to pay for the bill’s costs.

SEC. 4. Buy American – Use of American iron, steel, and manufactured goods – Must use American goods unless the cost will increase by more than 25 % or not enough goods eg. Steel, exists in America. This is a capitulating and insufficient clause to deal with the deeper issues of non competitive costs and insufficient supply.