Bob Burnett – Berkeley writer; retired Silicon Valley executive – Posted: 9/18/11 11:10 AM ET
One week after President Obama addressed a joint session of Congress and proposed the American Jobs Act, House Speaker John Boehner responded for the Republicans. Not with a plan to address the U.S. jobs’ crisis, but with conservative talking points that indicate how difficult it will be to pass meaningful legislation.
The Problem: The two Parties disagree on the origin of the crisis. In his September 8th address Obama indicated the crisis resulted from erosion of America’s social compact: “[belief] in a country where everyone gets a fair shake and does their fair share — where if you stepped up, did your job, and were loyal to your company, that loyalty would be rewarded with a decent salary and good benefits.”
In contrast, in his September 15th response Speaker Boehner blamed the Federal government, “there’s a fundamental misunderstanding of the economy that leads to a lot of bad decisions in Washington, D.C.” “Private-sector job creators of all sizes have been… slammed by uncertainty from the constant threat of new taxes, out-of-control spending, and unnecessary regulation.” “Job creators in America are essentially on strike.”
Neither side admitted the real problem, the American economy is broken. A healthy economy depends upon steady consumption by working Americans. But starting with Ronald Reagan, Republican ideologues have assumed that rich folks buying yachts and vacation homes would catalyze the consumer economy. This didn’t happen. In 2011 average Americans aren’t consuming because they either don’t have the money or are saving it because they are fearful. Republican dogma fractured the U.S. economy and caused massive unemployment.
One Solution, Cut Taxes: Obama’s plan would cost $447 billion. Of this amount, tax cuts comprise more than half. $175 billion would result from cutting employee payroll taxes in half in 2012; this would affect 160 million workers and typically result in $1,500 tax savings per household. Another $65 billion in tax cuts would result from cutting employer payroll taxes in half in 2012.
Speaker Boehner didn’t reject this aspect of the President’s proposal but he minimized it: “It strikes me as odd that at a time when it’s clear that the tax code needs to be fundamentally reformed, the first instinct out of Washington is to come up with a host of new tax credits that make the tax code more complex.” Boehner trusts business to do the right thing so long as the “threat of government” is eliminated — “[Businesses] are trying to help create more jobs, but the government is getting in their way.” The speaker called for reduction in regulations, taxes, and “the spending binge in Washington.”
Another Solution, Rehire Workers: After tax cuts, the remaining $202 billion in Obama’s plan funds reemployment programs. Of this amount slightly less than half — $99 billion, goes for two items: infrastructure and Unemployment Insurance. Obama proposed $50 billion for “immediate investments in infrastructure.” After infrastructure, the next largest amount, $49 billion, is allocated to “reform our Unemployment Insurance system to provide greater flexibility, while ensuring 6 million people do not lose benefits.”
Speaker Boehner chose not to address most of the President’s specific proposals and instead spoke in generalities: “…much of the talk in Washington right now is basically about more of the same. More initiatives that seem to have more to do with the next election than the next generation… initiatives that seem to be more about micromanaging economic decisions than liberating them.” “We need to liberate our economy from the shackles of Washington.”
Boehner did comment on the infrastructure proposal: “…if we want to do it in a way that truly supports long-term economic growth and job creation, let’s link the next highway bill to an expansion of American-made energy production.”
The Price Tag: In his September 8th speech, President Obama proposed to add the additional $447 billion to the work of the Joint Select Committee of Congress: “The agreement we passed in July… charges this Congress to come up with an additional $1.5 trillion in savings by Christmas. Tonight, I am asking you to increase that amount so that it covers the full cost of the American Jobs Act.” On September 12th, the White House said they believed the bulk of the cost of the American Jobs Act could be raised by: “limiting the itemized deductions, such as those for charitable contributions and other expenditures, that may be taken by individuals making more than $200,000 a year and families making over $250,000 a year.” Speaker Boehner rejected this notion: “Tax increases… are not a viable option for the Joint Committee.”
The Bottom Line: The latest New York Times/CBS News poll indicated that Americans support Obama’s jobs plan. Strong majorities favor his proposals for small business tax cuts and infrastructure investments. Nonetheless, “two-thirds of Americans from broad majorities across party lines are doubtful that Congressional Democrats and Republicans will be able to reach an agreement on a job-creation package.”
Obama has staked out a strong position but Republicans will do everything they can to deny him a win. That’s the nature of politics in 2011. Bad news for an economy that’s been shattered by 30 years of misguided Republican policy.