COMMENTARY | There are no great expectations of the president's jobs speech slated for tonight. The bottom line is that the economy needs at least 150,000 new jobs per month to break even, and GDP must grow at a minimum of 3 percent.
In simplified terms, there are two opposing political philosophies at work.
There is the Keynesian model of getting federal money into the economy by one means or another. People who hold this view believe that past Obama stimulus plans failed because the government didn't spend enough on infrastructure jobs, unemployment benefits, federal hiring, 'green' technology, and social welfare.
This view holds that, with enough government spending, consumers will feel flush with cash and confidence will return, leading to growth in the national economy.
Then there is the view of conservatives that the best way to stimulate the economy is through encouraging private sector expansion. Private sector job creation is the goal, and they support a variety of measures aimed at bringing jobs back to the U.S. and encouraging private sector business expansion.
It is within this context that President Obama will challenge Republicans in his speech tonight, announcing an expected $300 billion in new stimulus spending. The "stimulus" word will be necessarily excised from the president's speech because it has the stigma of past failures.
The Expected
Payroll tax cuts will likely be announced by Mr. Obama. Putting money into consumer's pockets in this way helps people buy things but hasn't spurred the type of growth necessary to achieve real economic growth.
An extension of unemployment benefits also puts money into the hands of consumers. Spending on necessities by unemployed workers has been helpful but not as helpful as an increase in employment would be.
Infrastructure construction jobs contracted by government can spur growth in a variety of related industries. Past infrastructure plans were not "shovel ready" and didn't help much. But infrastructure projects create debt, and debt can undermine both currency and confidence.
Aid to cash-strapped states helps state budgets. How it would be delivered is an open question which Mr. Obama will answer in his speech tonight. The Build American Bonds of the 2009 stimulus package, with a 35 percent subsidy paid by the taxpayers, delayed public school layoffs for a year but school budgets are still hurting from decreased real estate tax income from foreclosed housing.
The Unexpected
Unexpected developments in the president's speech are not likely and would consist of adopting Republican ideas. Many of those ideas were presented in the MSNBC hosted GOP debate last night from the Reagan Library.
A tax holiday on corporate overseas profits was popular with GOP candidates and is an option for President Obama, too. Corporations keep their money overseas because of favorable corporate tax rates on profits in other countries. Lowering the repatriation costs permanently has been mentioned as a way of encouraging businesses to increase activities in the U.S. Critics of this view feel that it doesn't work and amounts to corporate welfare.
Repealing or revising Dodd-Frank won't be mentioned in the president's speech but several GOP candidates claim that Dodd-Frank regulations have encouraged businesses to hoard cash rather than invest in jobs. Whether there is a direct cause-effect relationship is debatable but the new slate of regulations have created uncertainty and haven't done much to remedy the "too big to fail" phenomenon which led to the 2008 liquidity collapse.
Anthony Ventre is a freelance writer who has written for weekly and daily newspapers and several online publications. He is a frequent Yahoo contributor, concentrating in news and financial writing.
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