Imagine my surprise when I got home tonight and found this in my inbox.
Dear Friend:
Thank you for writing. President Obama has heard from many Americans concerning the ongoing debate about our national debt and his budget for Fiscal Year 2012, and we want to make sure you are aware of some relevant information about these important issues.
The President is committed to working in a bipartisan way to solve the fiscal challenges before us while continuing to grow the economy and create jobs. The debt-ceiling compromise removes the cloud of uncertainty over the economy, and takes important steps toward reducing our deficit. This is just the first step, and the President supports a balanced approach to creating a larger plan for the long-term health of our economy.
Watch President Obama's statement on the debt compromise, learn more about the sources of our national debt, and hear from senior White House staff on a host of issues and topics:
www.WhiteHouse.gov/issues/economy/debt-debate
Learn more about the joint committee of Congress that is responsible for developing a bipartisan plan for reducing our deficit: www.WhiteHouse.gov/blog/2011/08/04/all-about-so-called-super-committee
Learn more about the American Jobs Act: www.WhiteHouse.gov/jobsact
Thank you, again, for writing. President Obama is grateful to hear from thousands of Americans each day, and we appreciate your taking the time to contact the White House.
Sincerely,
The White House
That's right. They read my e-mail. It took several months, but I finally got a form letter out of it. Plus, you know, the President finally decided to take on the Republicans and fight for something important, which was the thing I wanted in the first place. Given that I both got what I wanted AND actually got a response from the White House, how can I possibly complain?
Kudos, Whichever Member Of The Office Of Presidential Correspondence Sent Me This. You made my night.
Until next time, readers, keep spreading the word and fighting the good fight.
Wednesday, November 16, 2011
Tuesday, October 18, 2011
Examining the American Jobs Act: As Good As Half-Measures Get
Editor's Note: This was written before both the Senate's blocked cloture vote on the bill and the signing of the FTAs with Colombia, South Korea, and Panama. So...yeah.
In a somewhat shocking turn of events, I’ve actually received a request for a column regarding the American Jobs Act. Since I’ve never received a request to discuss a topic from anyone ever, I’m inclined to go along with it. So, once again, my column on our disastrous trade policy will have to wait for another day. I’m sure you’re all quite upset. In the meantime, though, I’ve decided to do something I rarely do, and even then it usually involves debunking the insipid talking points spouted by local yokels, Faux News “journalists,” or both. I’m going to go through the American Jobs Act, word for word as listed on their comprehensive fact sheet, and discuss the actual potential impact of every move, as well as the likelihood of each aspect surviving to the end without being bargained away or watered down. There’s going to be a report card and everything; I’ll be like Greg Easterbrook minus the pretentiousness and vendettas (well, at least the vendettas). You might want to sock this one away for when you’ve got a lot of down time; this might end up being my longest column yet. You can check out the comprehensive fact sheet, which I’m using for this Dr. Jack Ramsey-style breakdown, at http://www.whitehouse.gov/the-press-office/2011/09/08/fact-sheet-and-overview
Let’s start with the opening two paragraphs:
“The American people understand that the economic crisis and the deep recession weren’t created overnight and won’t be solved overnight. The economic security of the middle class has been under attack for decades. That’s why President Obama believes we need to do more than just recover from this economic crisis – we need to rebuild the economy the American way, based on balance, fairness, and the same set of rules for everyone from Wall Street to Main Street.
We can work together to create the jobs of the future by helping small business entrepreneurs, by investing in education, and by making things the world buys. The President understands that to restore an American economy that’s built to last we cannot afford to outsource American jobs and encourage reckless financial deals that put middle class security at risk.”
So far, so good. Most of this is stuff that I and many others have been saying for quite some time now (don’t believe me? Feel free to use the sidebar to check out the archive). Not quite enough blame here, but still, a good, forceful start. GRADE: A
“To create jobs, the President unveiled the American Jobs Act – nearly all of which is made up of ideas that have been supported by both Democrats and Republicans, and that Congress should pass right away to get the economy moving now. The purpose of the American Jobs Act is simple: put more people back to work and put more money in the pockets of working Americans. And it would do so without adding a dime to the deficit.”
Oh, boy. I was hoping that my good vibes would last past the third paragraph. Whenever I see the phrase “supported by both Democrats and Republicans,” my first thought is always “supported by the corporate establishment.” Also, the focus on the size of the deficit in the last sentence is alarming; it tells me that the President continues to allow the Republican think tanks to control the debate and also leaves me wary that this could be yet another half-measure where two whole measures are needed. Seems like squandering initial goodwill is becoming the hallmark of this Administration (see: US Plans To Veto Palestinian Application For Statehood At U.N.). The second sentence is solid, and the tone is a nice “my way or the highway” that’s nice to see even if it’s not likely to pervade the rest of the work, but I’m too leery of the rest to rate this any higher than average. GRADE: C
“The American Jobs Act has five key components:
Tax Cuts to Help America’s Small Businesses Hire and Grow
Putting Workers Back on the Job While Rebuilding and Modernizing America
Pathways Back to Work for Americans Looking for Jobs
More Money in the Pockets of Every American Worker and Family
Fully Paid for as Part of the President’s Long-Term Deficit Reduction Plan“
We’ll tackle each one in order, but initial impressions? 1 looks like bad news, 5 looks like really bad news, and 2-4 look pretty good.
1. Tax Cuts to Help America’s Small Businesses Hire and Grow.
The President’s plan includes new tax cuts to businesses that provide immediate incentives for firms to hire and invest. These tax cuts would be available to all businesses, regardless of size, but are designed to target their impact towards the smallest businesses:
A payroll tax cut to businesses, with a focus on small employers ($65 billion in combination with the payroll tax holiday for new wages).The President’s plan will extend the payroll tax cut to firms by cutting in half their payroll tax on the first $5 million in payroll. Next year, instead of paying 6.2 percent on their payroll expenses, firms would pay only 3.1 percent. The President’s plan would provide tax cuts for all firms, with focused relief on the 98 percent with less than $5 million in payroll.
If it weren’t for the word they themselves emphasized, this wouldn’t be a terrible idea. The whole issue with this comes from the choice of numbers: the 98% of companies that have payrolls under $5 million are mostly a long way under $5 million; while cutting the payroll tax in half for them will help some, it’s not going to be a majorly substantive amount of money. Consider a small local coffee shop that only carries 10 workers, not including the owners, who help out on a regular basis. We’ll assume 4 full-time employees at roughly $27,000 a year (probably a generous estimate) and 6 part-time employees at roughly half that (probably a very generous estimate). Total payroll is $189,000 per year. The amount that company saves in a year with this program? $5,859. Not bad, but not nearly enough be truly meaningful to a business walking the thin line between success and failure. By comparison, the 2% of companies at $5 million or more are, by definition, all above $5 million and will thus get the full benefit. The savings at $5 million is a cool $155,000; now THAT’S the kind of money that could really help a small business grow and develop. Had this been targeted only to companies with less than, say $3 million in payroll, this would have the effect the Administration is looking for with the notable benefit of costing substantially less. The majority of money for this program will end up going, yet again, to the corporate interests that don’t need it. GRADE: D+
A complete payroll tax holiday for new jobs or wage increases. In addition to the 3.1% payroll tax cut for all firms, the President’s plan provides a direct incentive to encourage firms to hire additional employees or raise wages for their current employees. The plan would completely refund payroll taxes paid on added workers or wage increases for current workers above the level of last year’s payroll. To focus the benefit of this tax cut on small businesses, payroll tax relief would be capped at applying to $50 million in new wages. This tax holiday would be augmented by targeted tax cuts for hiring the long-term unemployed as well as veterans who have been out of work six months or more.
Now THIS is a good idea. Wiping out the payroll tax for new hires or wage increases will put meaningful money into everyone’s pocket at a roughly equal rate. For comparison’s sake, let’s look at our coffee shop again. Business has been good, so they decide to add two more part-time employees and give everyone across the board a slight bump in pay to $28,000 and $14,000, respectively. That’s an increase in payroll of $35,000. The normal tax rate on that additional payroll would be $2,170; now, it’s $0. Coupling this with the previous tax cut now takes the total savings to $8,029, more than half a part-time employee’s salary. It’s still not a ton of money, but now it has the notable advantage of coming with a tangible benefit. Our fantasy corporation saves a good chunk of money here, too (adding $2 million in payroll would result in a tax cut of $124,000). While that again benefits the corporation more, it also means another $2 million going toward higher wages, new employees, or both; it means that the “job creators” actually start acting like it. What’s most important is that this is a legitimate incentive to bring on employees at a time where they can be at a lower cost to the company. If there’s one thing corporations and small businesses can agree on, it’s cheaper labor. GRADE: B
Extend 100 percent business expensing through 2012 ($5 billion).The President is proposing an extension of the 100 percent expensing provision that he signed into law in December 2010, which rewards firms for making investments by allowing them to deduct the full value of those investments from their tax obligations through 2012. Extending 100 percent expensing for an additional year would put an additional $85 billion in the hands of businesses in 2012. Most of this relief would be recouped by the Treasury as businesses regain their strength.
Liked this idea when they instituted it, still like it now. The ability to write off all major investments in infrastructure is a huge help to small businesses. I would have added a “buy American” provision (the investment can only be written off if the asset was made in the U.S.A.), but beggars can’t be choosers. GRADE: B+
Help entrepreneurs and small businesses access capital and grow. The President’s plan includes administrative, regulatory and legislative measures to help small firms start and expand. This includes:
Changing the Way the Government Does Business with Small Firms: The Administration will soon announce a plan to accelerate government payments to small contractors to help put money in their hands faster. The President is also directing his CIO and CTO to stand-up, within 90 days, BusinessUSA, a one-stop online platform that businesses could use to access the full range of government programs and services businesses they need to compete globally. These changes were called for by the President’s Jobs Council, the President’s Export Council and small businesses across the country. Finally, the Administration supports a delay of the Bush Administration-era rule requiring government entities withhold and send to the IRS 3% of payments made to contractors.
I don’t have a clue what any of this will accomplish, so I’ll withhold judgment. GRADE: INC
Reducing Regulatory Burdens on Small Business Capital Formation: As part of the President’s Startup America initiative, the Administration will pursue efforts to reduce the regulatory burdens on small business capital formation in ways that are consistent with investor protection. This includes working with the SEC to explore ways to address the costs that small and new firms face in complying with Sarbanes-Oxley disclosure and auditing requirements. The administration also supports establishing a “crowdfunding” exemption from SEC registration requirements for firms raising less than $1 million (with individual investments limited to $10,000 or 10% of investors’ annual income) and raising the cap on “mini-offerings” (Regulation A) from $5 million to $50 million. This will make it easier for entrepreneurs to raise capital and create jobs.
Yikes. Can anyone tell me the last time deregulation helped anything? Anyone? Still waiting…yeah, that’s right, it hasn’t helped. Ever. Every time regulations get relaxed or eliminated, there’s a boom for a short time, followed by massive corruption, a huge scandal, and colossal expense to the taxpayers. Between the savings and loan scandals of the ‘80s, the energy firm deregulation of the late ‘90s and early ‘00s, and the housing/derivative/Wall Street deregulation of the late ‘00s that CAUSED THE VERY PROBLEM WE’RE TRYING TO FIX WITH THIS BILL, there hasn’t been an example in the last 30+ years of reduced regulation resulting in anything but fraud and corporate malfeasance. I know this is smaller in scale, but it’s still asking for trouble. GRADE: F
Helping Small Businesses Compete for Infrastructure Projects: Small businesses are also a vital part of our efforts to invest in and re-build our nation’s infrastructure. In order to ensure that small firms have the tools they need to compete for and win bids on infrastructure projects, we are calling to temporarily increase the limit on SBA-guaranteed surety bonds from $2 million to $5 million.
Look, if you want to help small businesses get the venture capital together that they need, why not just make this program larger in scale and ignore the deregulation idea all together? GRADE: B
Passing Patent Reform: Small businesses are critical to developing innovative products and services. Reforming our outdated patent system will allow them to get their ideas to market faster and will help accelerate their potential to transform and grow our economy and create the jobs of the future.
The patent system in this country has heavily favored corporations since the days when Thomas Edison was blatantly stealing and patenting other peoples’ inventions every ten minutes. I have my doubts that this will do anything other than increase the stranglehold corporate interests have over the patent system. Still, if it does make it easier for small businesses to innovate and keep the rights to their innovations longer, this could ostensibly help. GRADE: C
2. Putting Workers Back on the Job While Rebuilding and Modernizing America.
Note: This section is really, really long on the fact sheet. I’ve taken the liberty of excising a few things to save space.
A Helping Hand for Veterans: The President believes we have an obligation to make sure our veterans are able to navigate this difficult labor market and succeed in the civilian workforce, and that is why he is proposing a plan to lower veteran unemployment and ensure that service members leave the military career-ready:
A new Returning Heroes Tax Credit of up to $5,600 for veterans who have been unemployed six months or longer, and a Wounded Warriors Tax Credit of up to $9,600 that will increase the existing tax credit for firms that hire veterans with service-connected disabilities who have been unemployed six months or longer.
Forming a Department of Defense-led task force to maximize the career-readiness of all service members, and enhancing job search services through the Department of Labor for recently transitioning veterans.
Despite my personal issues with the name of the first tax credit (sorry, Lynndie England Fan Club members), I’m pretty heavily in favor of this plan. I know, I know, I’ve put way too much support into tax cuts and their effects will be minimal at best. I’m not going to come out against any plan that will help take care of veterans, whose disproportionate hardship has been overlooked for too long. Veterans with legitimate qualifications to perform any number of jobs in civilian life can’t get those jobs because of arbitrary requirements (the Administration likes to reference a decorated Army medic and first-responder who couldn’t get hired as an EMT after being discharged because they didn’t have a college degree). Anything that can solve that while also helping to insure that people coming off the front lines are ready and capable of being civilian workers (for some of them, the military is the only career they’ve ever known, and the transition is not unlike what it’s like for professional athletes who suffer career-ending injuries without anything to fall back on) is OK in my book. GRADE: A-
Preventing Teacher Layoffs and Keeping Police Officers and Firefighters on the Job ($35 billion):The President’s plan will invest $35 billion to prevent up to 280,000 teacher layoffs and keep police officers and firefighters on the job.
This one depends entirely on how the money gets used. $5 billion is set aside for first-responders and emergency personnel, which leaves $30 billion for teachers and police officers. There need to be extremely strict guidelines on how this money gets used, or states (read: red states) will find ways to roll it into related-but-not-the-same projects (vouchers for private schools, helicopters that ostensibly belong to the police department but can be used to take the governor to his kid’s soccer game, etc). On top of that, whenever money is given in this way to states, there’s always a chance that someone trying to score political points (Bobby Jindal, please pick up the white courtesy phone) will just send the money back or refuse to use it. Teacher shortages have become an epidemic and overcrowding is just as out of control in schools as it is in prisons (Chicago’s average class size this year is now over 30). This has to be fixed properly, right now, or America will continue to fall behind intellectual powerhouses like Turkey and Belgium. GRADE: INC
Modernizing At Least 35,000 Public Schools – From Science Labs and Internet-Ready Classrooms to Renovated Facilities($30 billion): The President’s plan calls for substantial investments in our school infrastructure, modernizing and upgrading America’s public schools to meet 21st century needs. The cost of maintaining more than 100,000 public schools is substantial for already overstretched districts. The accumulated backlog of deferred maintenance and repair amounts to at least $270 billion. Schools spend over $6 billion annually on their energy bills, more than they spend on computers and textbooks combined. For children in the nation’s poorest districts, these deferred projects too often mean overcrowded schools with crumbling ceilings and a lack of the basic wiring infrastructure needed for computers, projectors, and other technology. The President’s plan will invest $30 billion in enhancing the condition ofour nation’s public schools – with $25 billion going to K-12 schools, including a priority for rural schools and dedicated funding for Bureau of Indian Education funded schools, and $5 billion to community colleges (including tribal colleges). The range of critical repairs and needed construction projects would put hundreds of thousands of Americans – construction workers, engineers, maintenance staff, boiler repairman, and electrical workers – back to work.
Notable details: 40% of the money will go to the 100 largest high-need school districts (which hasn’t worked out very well for plans like this in the past); the remaining 60% will be given to the states to allocate as they see fit (uh oh); investments can also target ways to make schools better community centers, including additions to potential adult education and job training centers (not really related). As the above paragraph itself mentions, the backlog is over $270 billion. This is less than 1/9th of that. Summed up in six words: good idea, but not nearly enough. GRADE: B
Immediate Investments in Infrastructure ($50 billion): In order to jumpstart critical infrastructure projects and create hundreds of thousands of jobs, the President’s plan includes $50 billion in immediate investments for highway, highway safety, transit, passenger rail, and aviation activities – with one fifth of the funding advancing a transformation of how we finance transportation infrastructure and what we finance.
Details: $27 billion to improving the highway system (big thumbs up); $9 billion to improve mass transit and an additional $2 billion to modernize passenger rail (both long, long overdue); $2 billion to modernize and upgrade airports (also overdue); $50 million for improving employment and job training opportunities for women and minorities (not really related, but still probably necessary); $10 billion for innovations in infrastructure, including $4 billion toward development of high-speed rail corridors and $5 billion for the TIGER and TIFIA programs (hell yeah!). Cannot stress enough how important this section is. If it were up to me, this would be at least double the size it is here, probably by virtue of eliminating the whole payroll tax cut. This really isn’t enough for this area, either, but I assume the President aimed low because the Republicans fought him tooth and nail on it for the stimulus package (then bitched about how there wasn’t enough money for infrastructure spending to maintain their hypocrisy levels at the required “ludicrous” state). However, because this won’t just save jobs but create many, many more (it should be noted that the 7% of stimulus money that went to infrastructure spending created over 40% of the jobs), it’s still greatly important. GRADE: A+
National Infrastructure Bank ($10 billion).To direct Federal resources for infrastructure to projects that demonstrate the most merit and may be difficult to fund under the current patchwork of Federal programs, the President is also calling for the creation of a National Infrastructure Bank (NIB), based on the model that Senators Kerry and Hutchison have championed with bi-partisan supportin the Senate. It also builds on legislation by Senators Rockefeller and Lautenberg, the work of long-time infrastructure bank champions like Rep. Rosa DeLauro and input from the President’s Jobs Council.
There are details on the fact sheet, but quite frankly, they aren’t entirely clear, and what they do explain leads me to believe that it’ll end up being an even more corporate-defined version of the Federal Reserve (the NIB right now looks like what Andrew “Crazy Old Slave Owning Indian Murderer” Jackson thought the Bank of the United States was when he destroyed it and most of the country’s economy). I’m withholding judgment for now. GRADE: INC
Project Rebuild: Putting People Back to Work Rehabilitating Homes, Businesses and Communities($15 billion):The bursting of the housing bubble and the Great Recession that followed has left communities across the country with large numbers of foreclosed homes and businesses, which is weighing down property values, increasing blight and crime, and standing in the way of economic recovery. In these same communities there are also large numbers of people looking for work, especially in the construction industry, where more than 1.9 million jobs have been lost since the beginning of the recession in December 2007. The President is proposing Project Rebuild to help address both of these problems by connecting Americans looking for work in distressed communities with the work needed to repair and repurpose residential and commercial properties. Building on successful models piloted through the Neighborhood Stabilization Program (NSP), Project Rebuild will invest $15 billion in proven strategies that leverage private capital and expertise to rehabilitate hundreds of thousands of properties in communities across the country.
The basic idea is to put construction workers back to work rebuilding and repurposing foreclosed homes and failed businesses to attract either new companies, new homeowners, or property developers who want to cut down on overhead. It’s an interesting idea and a clever solution to the problem. I’m not sure how well it will work, but it’s certainly worth a shot. This idea screams “will be killed by the Republicans at first chance,” though. GRADE: B+
Expanding Nationwide Wireless Internet Services For the Public and the First Responders, in a Fiscally Responsible Way: The plan follows the model in the bipartisan legislation from Senators Rockefeller and Hutchison in including an investment to develop and deploy a nationwide, interoperable wireless network for public safety. The plan includes reallocating the D Block for public safety (costing $3 billion) and $7 billion to support the deployment of this network and technological development to tailor the network to meet public safety requirements. This is part of a broader deficit-reducing wireless initiative that would free up public and private spectrum to enable the private sector to deploy high-speed wireless services to at least 98 percent of Americans, even those living in remote rural and farming communities. In addition, freeing up spectrum from the private sector through voluntary incentive auctions that were included in both the Rockefeller-Hutchison bill and the House-passed Budget would raise money to pay for these investments in public safety and also reduce the deficit.
Meh. I’m pretty sure the recent decisions regarding net neutrality mean that this paragraph reads “We’re going to increase the availability of high-speed broadband access so companies can gouge you even more than they already do.” GRADE: C
3. Pathways Back to Work for Americans Looking for Jobs
The President’s plan would help out-of-work Americans and their families by extending unemployment insurance to prevent 6 million Americans looking for work from losing their benefits, while at the same time reforming the system to help support programs that build real skills, connect to real jobs, and help the long-term unemployed. The President’s plan is targeted to address long-term unemployment in an aggressive, multi-pronged way, drawing from ideas about what is working from around the country and from both parties.
Here we go. Let’s see where this leads, because if the President is serious about reforming unemployment coverage and addressing long-term unemployment, this could be the biggest economic stabilizer of all.
Reform Our Unemployment Insurance System to Provide Greater Flexibility, While Ensuring 6 Million People Do Not Lose Benefits ($49 billion): Drawing on the best ideas of both parties and the most innovative States, the President’s plan will equip the unemployment insurance (UI) system to better address our current long-term unemployment challenge. In these times, the federal emergency unemployment system must offer not just a weekly check, but also an aggressive strategy to connect the unemployed to work – through reforms ranging from rigorous assessment and job-search assistance to flexible work-based uses of federal UI to smart strategies to prevent layoffs in the first place.
Details: drastically increased support for finding work for the long-term unemployed, ranging from job search assistance to referrals to training programs (good stuff); work sharing (i.e. using unemployment funds to cover lost hours, allowing companies to keep staff while still reducing payroll costs, a really excellent idea that has worked in multiple countries); “Bridge to Work” programs (programs by which the unemployed take very low-paying jobs to obtain skills and training and unemployment insurance helps cover the shortfall in their wages; not exceptional because they’re opening the door to the elimination of minimum wage, and anytime Eric Cantor is in support of an idea I have to wonder what the catch is); wage insurance (using unemployment funds to make up the difference when unemployed workers have to take much lower wages just to have a job; this idea is unbelievably important for communities where outsourcing and corporate greed have wiped out most of the good-paying manufacturing jobs); and new business incentives (allowing unemployed entrepreneurs who start their own businesses to continue to collect unemployment benefits for a time). Plenty of good ideas here. In particular, I’m a big fan of wage insurance; the majority of people who’ve gotten new jobs in the last three years have had to take far lower wages than they had at their previous position (in some cases less than half of their previous salary), which makes it even harder for those people to save for retirement. Work sharing is also a stellar idea; instead of a company with 800 workers laying off 400 of them, that company instead keeps them all, but cuts their hours in half. With work sharing, the employees not only keep their jobs, but keep most of their pay as well. The whole section screams “this will lower unemployment AND grow the economy,” but because unemployment benefits are socialism, none of this will ever pass. GRADE: A
Tax credits for businesses that hire the long-term unemployed ($8 billion):The President’s plan includes a special bonus credit of up to $4,000 for firms that hire the long-term unemployed.
A meaningless waste of money. This is the Adam Dunn of the bill. GRADE: F
Investing in Low-Income Youth and Adults ($5 billion):The President’s plan for jobs and growth offers a particularly aggressive strategy to expand employment opportunities for communities that have been particularly hard hit by the recession, and that may take longer to get back on their feet due to greater income losses and smaller savings than higher-income workers. In August 2011, African Americans had an unemployment rate of 16.7 percent and Hispanics had an unemployment rate of 11.3 percent. The numbers were even worse for youth: 45 percent of youth between the ages of 16 to 24 were employed last month, including only 33.8 percent of African American youth. In fact, only 21 out of every 100 teens in low-income families had a job this past summer. Building on highly successful Recovery Act programs that provided job opportunities for low-income adults and youths, the President’s Pathways Back to Work Fund will make it easier for workers to remain connected to the workforce and gain new skills for long-term employment.
This is an absolutely crucial aspect targeting one of the most underserved groups hit hardest by the recession. The unemployment rate amongst the recently-graduated is astronomical. Most high school students are having major difficulty finding part-time work, and summer work in many communities has completely dried up, swallowed by older workers willing to take anything just to have a paycheck. Part of the problem is that many young people aren’t learning the skills necessary to fill the positions that ARE available. If this helps address the problem, then a number of birds (high unemployment, low tax revenue, issues with alleged juvenile delinquency, etc.) could be killed with one stone. Thumbs up. GRADE: A-
Ending Discrimination Against the Unemployed: Recent reports have highlighted companies that are increasingly expressing preferences for applicants who already have a job. Specifically, some companies are posting job listings that include language such as “unemployed candidates will not be considered” or “must be currently employed” or “must be employed within the last 6 months.” The exclusion of unemployed applicants is a troubling and arbitrary screen that is bad for the economy, bad for the unemployed, and ultimately bad for firms trying to find the best candidates. This is particularly true at a time when so many Americans have found themselves out of work through no fault of their own. New Jersey has passed legislation to address this practice, and members of Congress have also introduced legislation. The President’s plan calls for legislation that would make it unlawful to refuse to hire applicants solely because they are unemployed or to include in a job posting a provision that unemployed persons will not be considered.
Story time! When I left my job at Walgreens after three months (long story, not going to explain here), I went full-bore after jobs that would allow me to use my degree and the considerable skills related to it. Mind you, you’re not reading the words of a slacker; I graduated in the top 1% of my class in one of the most challenging undergraduate fields in the country with a double minor and relevant work experience in the industry. It took NINE MONTHS for me to find a job, any job, that would take me, and that job ended up being in food microbiology, an area where my abilities were completely useless. Even they were leery of hiring me because I had been out of work so long (no joke, they told me this). It took another eight months of working for that company before I finally landed my current job in biopharmaceuticals. If you include the two months after graduation before I ended up at Walgreens, that’s nearly TWO YEARS AFTER GRADUATION before I ended up in my chosen field. And this is coming from someone who was well qualified for a position right out of college! What kind of chance do people looking for work in fields completely unrelated to their original specialty have? How can we expect to end the problem of unemployment when companies refuse to hire the unemployed? How many people who are well qualified for work get turned away because of circumstances beyond their control? This needs to stop NOW. I consider this law as important as the one in the health insurance reform bill eliminating discrimination due to pre-existing conditions. GRADE: A+
4. More Money in the Pockets of Every Worker and Family
The President’s plan would put more money in the pockets of working and middle-class Americans by providing tax relief to 160 million workers – extending the payroll tax cut passed last December:
Cutting Payroll Taxes in Half for 160 Million Workers Next Year($175 billion):The President’s plan will expand on the tax cut enacted in December by cutting employees payroll taxes in half next year. Rather than having 6.2 percent of their wages deducted in Social Security taxes, workers will pay only 3.1 percent next year. This extension will provide a payroll tax cut worth $175 billion to American workers in 2012.
Oooh boy. You know that tax cut you got for this year, the one you barely noticed because it’s barely covering the cost of inflation? You get to keep that for next year, and all it costs is $175 billion that could go to something productive like further infrastructure spending or trade assistance for when the awful free trade agreements with Colombia and Panama go through. Yeah, because it’s worked so well thus far. This is the most likely aspect of the whole thing to pass; it’s also one of the five least likely to have any noticeable effect on the economy. It’s still money in the average person’s pocket, so I can’t complain too much, but come on, you can do better than this. GRADE: D
Helping More Americans Refinance Mortgages at Today’s Historically Low Interest Rates: 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. This has the potential to not only help these borrowers, but their communities and the American taxpayer, by keeping borrowers in their homes and reducing risk to Fannie Mae and Freddie Mac.
Won’t work. Fannie and Freddie have no incentive to help anyone pay lower interest rates because they’re on the ropes as is. Major lenders and industry leaders have no incentive to help homeowners and other borrowers refinance because it could reduce their profits to “sizable” from their current “astronomical.” Half the stuff in the last economic regulation bill hasn’t been enforced; what makes the administration think any of this will be? GRADE: D-
5. Fully Paid for as Part of the President’s Long-Term Deficit Reduction Plan.
To ensure that the American Jobs Act is fully paid for, the President will call on the Joint Committee to come up with additional deficit reduction necessary to pay for the Act and still meet its deficit target. The President will, in the coming days, release a detailed plan that will show how we can do that while achieving the additional deficit reduction necessary to meet the President’s broader goal of stabilizing our debt as a share of the economy.
And…that’s it. Really. There’s no explanation of what “fully paid for” entails. Since this was released the President has discussed raising taxes on the wealthy so that millionaires aren’t paying a lower effective tax rate than the average American (the so-called “Buffet Rule”), as well as eliminating loopholes in the tax code, ending oil subsidies, and changing capital gains rules. All well and good, but none of these got passed when it was plausible that they could be. There’s no chance that any of these, even if they somehow avoid the filibuster (a word which now brings to mind a different f-word) in the Senate, will get through Boehner The Blotto and The Norquists in the House. I’ll put any judgment on this on the waiting list, but I’m not holding my breath. GRADE: INC
One last category: Intangibles: Since he gave the speech, the President has taken exactly the right tone with it. No more “I look forward to working with Republicans to find something we can all agree on.” No more “We have to work together so everyone’s views are represented.” Now it’s “Pass this. Now.” The wishy-washy, compromise-heavy, Great Conciliator Obama appears to be gone for the time being, replaced by the forceful, take-no-prisoners leader we thought we were getting in November 2008. THIS is the President who saved the crew of the Maersk-Alabama by wiping out a whole ship’s worth of pirates. THIS is the President who made what might be the ballsiest call since Truman fired MacArthur. Finally, he sounds like he’s ready to kick ass and take names. As someone’s who’s been critical of his willingness to bargain away pretty much everything in negotiations, all I can say is that it’s about damn time. GRADE: A+
So, using a scale from 11 for an A+ to a -1 for an F, with INC being worth 4 (same as a C, since I’m assuming neither the best nor the worst), and taking an average over every category (24 in all), the overall score for the plan is a 5.7, which I’ll be generous and round up to a 6. That’s a B-, which is probably a little harsh, but those idiotic tax cuts and deregulation initiatives really hurt the score, much like they’ll hurt the economy. All told, though, the plan is mostly solid, with enough measures for actually tackling the root causes of long-term unemployment that we might finally see some progress. Also, any bill that includes major infrastructure spending will always get my approval. If I ignore my numbers I’d probably on first glance give this a B+: good, but not great.
With all that said, I don’t think there’s a chance that any of this ever sees the light of day. The Republican Party, and in particular their Tea Party splinter cell, have no vested interest in seeing anything get better for anyone. They’ve outright admitted their primary goal is winning the next election. The Senate Minority Leader actually said that the main legislative goal of the Party until after the 2012 election is to do everything possible to prevent Obama from getting re-elected. There’s no benefit for them in helping the country recover (you know, beyond the whole “America being successful and not a third-world banana republic” thing); in fact, they believe anything that would keep people out of soup kitchens might help the scary black man stay in charge. I’m disgusted by their lack of common decency. I’m appalled by their indifference to the suffering of 98% of America. I’m bewildered by their willing whoring of themselves to the Kochs, Goldman Sachs, and Grover Norquist. Most of all, I’m speechless as to how, despite the self-serving transparency of it all, the American people are more than happy to keep putting these people in office.
Remember that when this doesn’t get through Congress, America. You sold the soul of this country for Reagan’s bag of magic beans. You forsook the lives of your sons and daughters to line the coffers of Halliburton, Blackwater, Goldman Sachs, Chase, and Exxon. Even after you saw the damage being wrought by this hideous farce, you kept right on going, feeding the madness because the illusion of wealth allowed you to acquiesce to becoming a slave to the oligarchy.
In the end, you brought this on yourselves.
Until next time, do what you can to help this pass. I can’t imagine your “elected representatives” will give a damn what you have to say, but if enough people care, they’ll have to do something. They can’t ignore all of us forever.
Right?
In a somewhat shocking turn of events, I’ve actually received a request for a column regarding the American Jobs Act. Since I’ve never received a request to discuss a topic from anyone ever, I’m inclined to go along with it. So, once again, my column on our disastrous trade policy will have to wait for another day. I’m sure you’re all quite upset. In the meantime, though, I’ve decided to do something I rarely do, and even then it usually involves debunking the insipid talking points spouted by local yokels, Faux News “journalists,” or both. I’m going to go through the American Jobs Act, word for word as listed on their comprehensive fact sheet, and discuss the actual potential impact of every move, as well as the likelihood of each aspect surviving to the end without being bargained away or watered down. There’s going to be a report card and everything; I’ll be like Greg Easterbrook minus the pretentiousness and vendettas (well, at least the vendettas). You might want to sock this one away for when you’ve got a lot of down time; this might end up being my longest column yet. You can check out the comprehensive fact sheet, which I’m using for this Dr. Jack Ramsey-style breakdown, at http://www.whitehouse.gov/the-press-office/2011/09/08/fact-sheet-and-overview
Let’s start with the opening two paragraphs:
“The American people understand that the economic crisis and the deep recession weren’t created overnight and won’t be solved overnight. The economic security of the middle class has been under attack for decades. That’s why President Obama believes we need to do more than just recover from this economic crisis – we need to rebuild the economy the American way, based on balance, fairness, and the same set of rules for everyone from Wall Street to Main Street.
We can work together to create the jobs of the future by helping small business entrepreneurs, by investing in education, and by making things the world buys. The President understands that to restore an American economy that’s built to last we cannot afford to outsource American jobs and encourage reckless financial deals that put middle class security at risk.”
So far, so good. Most of this is stuff that I and many others have been saying for quite some time now (don’t believe me? Feel free to use the sidebar to check out the archive). Not quite enough blame here, but still, a good, forceful start. GRADE: A
“To create jobs, the President unveiled the American Jobs Act – nearly all of which is made up of ideas that have been supported by both Democrats and Republicans, and that Congress should pass right away to get the economy moving now. The purpose of the American Jobs Act is simple: put more people back to work and put more money in the pockets of working Americans. And it would do so without adding a dime to the deficit.”
Oh, boy. I was hoping that my good vibes would last past the third paragraph. Whenever I see the phrase “supported by both Democrats and Republicans,” my first thought is always “supported by the corporate establishment.” Also, the focus on the size of the deficit in the last sentence is alarming; it tells me that the President continues to allow the Republican think tanks to control the debate and also leaves me wary that this could be yet another half-measure where two whole measures are needed. Seems like squandering initial goodwill is becoming the hallmark of this Administration (see: US Plans To Veto Palestinian Application For Statehood At U.N.). The second sentence is solid, and the tone is a nice “my way or the highway” that’s nice to see even if it’s not likely to pervade the rest of the work, but I’m too leery of the rest to rate this any higher than average. GRADE: C
“The American Jobs Act has five key components:
Tax Cuts to Help America’s Small Businesses Hire and Grow
Putting Workers Back on the Job While Rebuilding and Modernizing America
Pathways Back to Work for Americans Looking for Jobs
More Money in the Pockets of Every American Worker and Family
Fully Paid for as Part of the President’s Long-Term Deficit Reduction Plan“
We’ll tackle each one in order, but initial impressions? 1 looks like bad news, 5 looks like really bad news, and 2-4 look pretty good.
1. Tax Cuts to Help America’s Small Businesses Hire and Grow.
The President’s plan includes new tax cuts to businesses that provide immediate incentives for firms to hire and invest. These tax cuts would be available to all businesses, regardless of size, but are designed to target their impact towards the smallest businesses:
A payroll tax cut to businesses, with a focus on small employers ($65 billion in combination with the payroll tax holiday for new wages).The President’s plan will extend the payroll tax cut to firms by cutting in half their payroll tax on the first $5 million in payroll. Next year, instead of paying 6.2 percent on their payroll expenses, firms would pay only 3.1 percent. The President’s plan would provide tax cuts for all firms, with focused relief on the 98 percent with less than $5 million in payroll.
If it weren’t for the word they themselves emphasized, this wouldn’t be a terrible idea. The whole issue with this comes from the choice of numbers: the 98% of companies that have payrolls under $5 million are mostly a long way under $5 million; while cutting the payroll tax in half for them will help some, it’s not going to be a majorly substantive amount of money. Consider a small local coffee shop that only carries 10 workers, not including the owners, who help out on a regular basis. We’ll assume 4 full-time employees at roughly $27,000 a year (probably a generous estimate) and 6 part-time employees at roughly half that (probably a very generous estimate). Total payroll is $189,000 per year. The amount that company saves in a year with this program? $5,859. Not bad, but not nearly enough be truly meaningful to a business walking the thin line between success and failure. By comparison, the 2% of companies at $5 million or more are, by definition, all above $5 million and will thus get the full benefit. The savings at $5 million is a cool $155,000; now THAT’S the kind of money that could really help a small business grow and develop. Had this been targeted only to companies with less than, say $3 million in payroll, this would have the effect the Administration is looking for with the notable benefit of costing substantially less. The majority of money for this program will end up going, yet again, to the corporate interests that don’t need it. GRADE: D+
A complete payroll tax holiday for new jobs or wage increases. In addition to the 3.1% payroll tax cut for all firms, the President’s plan provides a direct incentive to encourage firms to hire additional employees or raise wages for their current employees. The plan would completely refund payroll taxes paid on added workers or wage increases for current workers above the level of last year’s payroll. To focus the benefit of this tax cut on small businesses, payroll tax relief would be capped at applying to $50 million in new wages. This tax holiday would be augmented by targeted tax cuts for hiring the long-term unemployed as well as veterans who have been out of work six months or more.
Now THIS is a good idea. Wiping out the payroll tax for new hires or wage increases will put meaningful money into everyone’s pocket at a roughly equal rate. For comparison’s sake, let’s look at our coffee shop again. Business has been good, so they decide to add two more part-time employees and give everyone across the board a slight bump in pay to $28,000 and $14,000, respectively. That’s an increase in payroll of $35,000. The normal tax rate on that additional payroll would be $2,170; now, it’s $0. Coupling this with the previous tax cut now takes the total savings to $8,029, more than half a part-time employee’s salary. It’s still not a ton of money, but now it has the notable advantage of coming with a tangible benefit. Our fantasy corporation saves a good chunk of money here, too (adding $2 million in payroll would result in a tax cut of $124,000). While that again benefits the corporation more, it also means another $2 million going toward higher wages, new employees, or both; it means that the “job creators” actually start acting like it. What’s most important is that this is a legitimate incentive to bring on employees at a time where they can be at a lower cost to the company. If there’s one thing corporations and small businesses can agree on, it’s cheaper labor. GRADE: B
Extend 100 percent business expensing through 2012 ($5 billion).The President is proposing an extension of the 100 percent expensing provision that he signed into law in December 2010, which rewards firms for making investments by allowing them to deduct the full value of those investments from their tax obligations through 2012. Extending 100 percent expensing for an additional year would put an additional $85 billion in the hands of businesses in 2012. Most of this relief would be recouped by the Treasury as businesses regain their strength.
Liked this idea when they instituted it, still like it now. The ability to write off all major investments in infrastructure is a huge help to small businesses. I would have added a “buy American” provision (the investment can only be written off if the asset was made in the U.S.A.), but beggars can’t be choosers. GRADE: B+
Help entrepreneurs and small businesses access capital and grow. The President’s plan includes administrative, regulatory and legislative measures to help small firms start and expand. This includes:
Changing the Way the Government Does Business with Small Firms: The Administration will soon announce a plan to accelerate government payments to small contractors to help put money in their hands faster. The President is also directing his CIO and CTO to stand-up, within 90 days, BusinessUSA, a one-stop online platform that businesses could use to access the full range of government programs and services businesses they need to compete globally. These changes were called for by the President’s Jobs Council, the President’s Export Council and small businesses across the country. Finally, the Administration supports a delay of the Bush Administration-era rule requiring government entities withhold and send to the IRS 3% of payments made to contractors.
I don’t have a clue what any of this will accomplish, so I’ll withhold judgment. GRADE: INC
Reducing Regulatory Burdens on Small Business Capital Formation: As part of the President’s Startup America initiative, the Administration will pursue efforts to reduce the regulatory burdens on small business capital formation in ways that are consistent with investor protection. This includes working with the SEC to explore ways to address the costs that small and new firms face in complying with Sarbanes-Oxley disclosure and auditing requirements. The administration also supports establishing a “crowdfunding” exemption from SEC registration requirements for firms raising less than $1 million (with individual investments limited to $10,000 or 10% of investors’ annual income) and raising the cap on “mini-offerings” (Regulation A) from $5 million to $50 million. This will make it easier for entrepreneurs to raise capital and create jobs.
Yikes. Can anyone tell me the last time deregulation helped anything? Anyone? Still waiting…yeah, that’s right, it hasn’t helped. Ever. Every time regulations get relaxed or eliminated, there’s a boom for a short time, followed by massive corruption, a huge scandal, and colossal expense to the taxpayers. Between the savings and loan scandals of the ‘80s, the energy firm deregulation of the late ‘90s and early ‘00s, and the housing/derivative/Wall Street deregulation of the late ‘00s that CAUSED THE VERY PROBLEM WE’RE TRYING TO FIX WITH THIS BILL, there hasn’t been an example in the last 30+ years of reduced regulation resulting in anything but fraud and corporate malfeasance. I know this is smaller in scale, but it’s still asking for trouble. GRADE: F
Helping Small Businesses Compete for Infrastructure Projects: Small businesses are also a vital part of our efforts to invest in and re-build our nation’s infrastructure. In order to ensure that small firms have the tools they need to compete for and win bids on infrastructure projects, we are calling to temporarily increase the limit on SBA-guaranteed surety bonds from $2 million to $5 million.
Look, if you want to help small businesses get the venture capital together that they need, why not just make this program larger in scale and ignore the deregulation idea all together? GRADE: B
Passing Patent Reform: Small businesses are critical to developing innovative products and services. Reforming our outdated patent system will allow them to get their ideas to market faster and will help accelerate their potential to transform and grow our economy and create the jobs of the future.
The patent system in this country has heavily favored corporations since the days when Thomas Edison was blatantly stealing and patenting other peoples’ inventions every ten minutes. I have my doubts that this will do anything other than increase the stranglehold corporate interests have over the patent system. Still, if it does make it easier for small businesses to innovate and keep the rights to their innovations longer, this could ostensibly help. GRADE: C
2. Putting Workers Back on the Job While Rebuilding and Modernizing America.
Note: This section is really, really long on the fact sheet. I’ve taken the liberty of excising a few things to save space.
A Helping Hand for Veterans: The President believes we have an obligation to make sure our veterans are able to navigate this difficult labor market and succeed in the civilian workforce, and that is why he is proposing a plan to lower veteran unemployment and ensure that service members leave the military career-ready:
A new Returning Heroes Tax Credit of up to $5,600 for veterans who have been unemployed six months or longer, and a Wounded Warriors Tax Credit of up to $9,600 that will increase the existing tax credit for firms that hire veterans with service-connected disabilities who have been unemployed six months or longer.
Forming a Department of Defense-led task force to maximize the career-readiness of all service members, and enhancing job search services through the Department of Labor for recently transitioning veterans.
Despite my personal issues with the name of the first tax credit (sorry, Lynndie England Fan Club members), I’m pretty heavily in favor of this plan. I know, I know, I’ve put way too much support into tax cuts and their effects will be minimal at best. I’m not going to come out against any plan that will help take care of veterans, whose disproportionate hardship has been overlooked for too long. Veterans with legitimate qualifications to perform any number of jobs in civilian life can’t get those jobs because of arbitrary requirements (the Administration likes to reference a decorated Army medic and first-responder who couldn’t get hired as an EMT after being discharged because they didn’t have a college degree). Anything that can solve that while also helping to insure that people coming off the front lines are ready and capable of being civilian workers (for some of them, the military is the only career they’ve ever known, and the transition is not unlike what it’s like for professional athletes who suffer career-ending injuries without anything to fall back on) is OK in my book. GRADE: A-
Preventing Teacher Layoffs and Keeping Police Officers and Firefighters on the Job ($35 billion):The President’s plan will invest $35 billion to prevent up to 280,000 teacher layoffs and keep police officers and firefighters on the job.
This one depends entirely on how the money gets used. $5 billion is set aside for first-responders and emergency personnel, which leaves $30 billion for teachers and police officers. There need to be extremely strict guidelines on how this money gets used, or states (read: red states) will find ways to roll it into related-but-not-the-same projects (vouchers for private schools, helicopters that ostensibly belong to the police department but can be used to take the governor to his kid’s soccer game, etc). On top of that, whenever money is given in this way to states, there’s always a chance that someone trying to score political points (Bobby Jindal, please pick up the white courtesy phone) will just send the money back or refuse to use it. Teacher shortages have become an epidemic and overcrowding is just as out of control in schools as it is in prisons (Chicago’s average class size this year is now over 30). This has to be fixed properly, right now, or America will continue to fall behind intellectual powerhouses like Turkey and Belgium. GRADE: INC
Modernizing At Least 35,000 Public Schools – From Science Labs and Internet-Ready Classrooms to Renovated Facilities($30 billion): The President’s plan calls for substantial investments in our school infrastructure, modernizing and upgrading America’s public schools to meet 21st century needs. The cost of maintaining more than 100,000 public schools is substantial for already overstretched districts. The accumulated backlog of deferred maintenance and repair amounts to at least $270 billion. Schools spend over $6 billion annually on their energy bills, more than they spend on computers and textbooks combined. For children in the nation’s poorest districts, these deferred projects too often mean overcrowded schools with crumbling ceilings and a lack of the basic wiring infrastructure needed for computers, projectors, and other technology. The President’s plan will invest $30 billion in enhancing the condition ofour nation’s public schools – with $25 billion going to K-12 schools, including a priority for rural schools and dedicated funding for Bureau of Indian Education funded schools, and $5 billion to community colleges (including tribal colleges). The range of critical repairs and needed construction projects would put hundreds of thousands of Americans – construction workers, engineers, maintenance staff, boiler repairman, and electrical workers – back to work.
Notable details: 40% of the money will go to the 100 largest high-need school districts (which hasn’t worked out very well for plans like this in the past); the remaining 60% will be given to the states to allocate as they see fit (uh oh); investments can also target ways to make schools better community centers, including additions to potential adult education and job training centers (not really related). As the above paragraph itself mentions, the backlog is over $270 billion. This is less than 1/9th of that. Summed up in six words: good idea, but not nearly enough. GRADE: B
Immediate Investments in Infrastructure ($50 billion): In order to jumpstart critical infrastructure projects and create hundreds of thousands of jobs, the President’s plan includes $50 billion in immediate investments for highway, highway safety, transit, passenger rail, and aviation activities – with one fifth of the funding advancing a transformation of how we finance transportation infrastructure and what we finance.
Details: $27 billion to improving the highway system (big thumbs up); $9 billion to improve mass transit and an additional $2 billion to modernize passenger rail (both long, long overdue); $2 billion to modernize and upgrade airports (also overdue); $50 million for improving employment and job training opportunities for women and minorities (not really related, but still probably necessary); $10 billion for innovations in infrastructure, including $4 billion toward development of high-speed rail corridors and $5 billion for the TIGER and TIFIA programs (hell yeah!). Cannot stress enough how important this section is. If it were up to me, this would be at least double the size it is here, probably by virtue of eliminating the whole payroll tax cut. This really isn’t enough for this area, either, but I assume the President aimed low because the Republicans fought him tooth and nail on it for the stimulus package (then bitched about how there wasn’t enough money for infrastructure spending to maintain their hypocrisy levels at the required “ludicrous” state). However, because this won’t just save jobs but create many, many more (it should be noted that the 7% of stimulus money that went to infrastructure spending created over 40% of the jobs), it’s still greatly important. GRADE: A+
National Infrastructure Bank ($10 billion).To direct Federal resources for infrastructure to projects that demonstrate the most merit and may be difficult to fund under the current patchwork of Federal programs, the President is also calling for the creation of a National Infrastructure Bank (NIB), based on the model that Senators Kerry and Hutchison have championed with bi-partisan supportin the Senate. It also builds on legislation by Senators Rockefeller and Lautenberg, the work of long-time infrastructure bank champions like Rep. Rosa DeLauro and input from the President’s Jobs Council.
There are details on the fact sheet, but quite frankly, they aren’t entirely clear, and what they do explain leads me to believe that it’ll end up being an even more corporate-defined version of the Federal Reserve (the NIB right now looks like what Andrew “Crazy Old Slave Owning Indian Murderer” Jackson thought the Bank of the United States was when he destroyed it and most of the country’s economy). I’m withholding judgment for now. GRADE: INC
Project Rebuild: Putting People Back to Work Rehabilitating Homes, Businesses and Communities($15 billion):The bursting of the housing bubble and the Great Recession that followed has left communities across the country with large numbers of foreclosed homes and businesses, which is weighing down property values, increasing blight and crime, and standing in the way of economic recovery. In these same communities there are also large numbers of people looking for work, especially in the construction industry, where more than 1.9 million jobs have been lost since the beginning of the recession in December 2007. The President is proposing Project Rebuild to help address both of these problems by connecting Americans looking for work in distressed communities with the work needed to repair and repurpose residential and commercial properties. Building on successful models piloted through the Neighborhood Stabilization Program (NSP), Project Rebuild will invest $15 billion in proven strategies that leverage private capital and expertise to rehabilitate hundreds of thousands of properties in communities across the country.
The basic idea is to put construction workers back to work rebuilding and repurposing foreclosed homes and failed businesses to attract either new companies, new homeowners, or property developers who want to cut down on overhead. It’s an interesting idea and a clever solution to the problem. I’m not sure how well it will work, but it’s certainly worth a shot. This idea screams “will be killed by the Republicans at first chance,” though. GRADE: B+
Expanding Nationwide Wireless Internet Services For the Public and the First Responders, in a Fiscally Responsible Way: The plan follows the model in the bipartisan legislation from Senators Rockefeller and Hutchison in including an investment to develop and deploy a nationwide, interoperable wireless network for public safety. The plan includes reallocating the D Block for public safety (costing $3 billion) and $7 billion to support the deployment of this network and technological development to tailor the network to meet public safety requirements. This is part of a broader deficit-reducing wireless initiative that would free up public and private spectrum to enable the private sector to deploy high-speed wireless services to at least 98 percent of Americans, even those living in remote rural and farming communities. In addition, freeing up spectrum from the private sector through voluntary incentive auctions that were included in both the Rockefeller-Hutchison bill and the House-passed Budget would raise money to pay for these investments in public safety and also reduce the deficit.
Meh. I’m pretty sure the recent decisions regarding net neutrality mean that this paragraph reads “We’re going to increase the availability of high-speed broadband access so companies can gouge you even more than they already do.” GRADE: C
3. Pathways Back to Work for Americans Looking for Jobs
The President’s plan would help out-of-work Americans and their families by extending unemployment insurance to prevent 6 million Americans looking for work from losing their benefits, while at the same time reforming the system to help support programs that build real skills, connect to real jobs, and help the long-term unemployed. The President’s plan is targeted to address long-term unemployment in an aggressive, multi-pronged way, drawing from ideas about what is working from around the country and from both parties.
Here we go. Let’s see where this leads, because if the President is serious about reforming unemployment coverage and addressing long-term unemployment, this could be the biggest economic stabilizer of all.
Reform Our Unemployment Insurance System to Provide Greater Flexibility, While Ensuring 6 Million People Do Not Lose Benefits ($49 billion): Drawing on the best ideas of both parties and the most innovative States, the President’s plan will equip the unemployment insurance (UI) system to better address our current long-term unemployment challenge. In these times, the federal emergency unemployment system must offer not just a weekly check, but also an aggressive strategy to connect the unemployed to work – through reforms ranging from rigorous assessment and job-search assistance to flexible work-based uses of federal UI to smart strategies to prevent layoffs in the first place.
Details: drastically increased support for finding work for the long-term unemployed, ranging from job search assistance to referrals to training programs (good stuff); work sharing (i.e. using unemployment funds to cover lost hours, allowing companies to keep staff while still reducing payroll costs, a really excellent idea that has worked in multiple countries); “Bridge to Work” programs (programs by which the unemployed take very low-paying jobs to obtain skills and training and unemployment insurance helps cover the shortfall in their wages; not exceptional because they’re opening the door to the elimination of minimum wage, and anytime Eric Cantor is in support of an idea I have to wonder what the catch is); wage insurance (using unemployment funds to make up the difference when unemployed workers have to take much lower wages just to have a job; this idea is unbelievably important for communities where outsourcing and corporate greed have wiped out most of the good-paying manufacturing jobs); and new business incentives (allowing unemployed entrepreneurs who start their own businesses to continue to collect unemployment benefits for a time). Plenty of good ideas here. In particular, I’m a big fan of wage insurance; the majority of people who’ve gotten new jobs in the last three years have had to take far lower wages than they had at their previous position (in some cases less than half of their previous salary), which makes it even harder for those people to save for retirement. Work sharing is also a stellar idea; instead of a company with 800 workers laying off 400 of them, that company instead keeps them all, but cuts their hours in half. With work sharing, the employees not only keep their jobs, but keep most of their pay as well. The whole section screams “this will lower unemployment AND grow the economy,” but because unemployment benefits are socialism, none of this will ever pass. GRADE: A
Tax credits for businesses that hire the long-term unemployed ($8 billion):The President’s plan includes a special bonus credit of up to $4,000 for firms that hire the long-term unemployed.
A meaningless waste of money. This is the Adam Dunn of the bill. GRADE: F
Investing in Low-Income Youth and Adults ($5 billion):The President’s plan for jobs and growth offers a particularly aggressive strategy to expand employment opportunities for communities that have been particularly hard hit by the recession, and that may take longer to get back on their feet due to greater income losses and smaller savings than higher-income workers. In August 2011, African Americans had an unemployment rate of 16.7 percent and Hispanics had an unemployment rate of 11.3 percent. The numbers were even worse for youth: 45 percent of youth between the ages of 16 to 24 were employed last month, including only 33.8 percent of African American youth. In fact, only 21 out of every 100 teens in low-income families had a job this past summer. Building on highly successful Recovery Act programs that provided job opportunities for low-income adults and youths, the President’s Pathways Back to Work Fund will make it easier for workers to remain connected to the workforce and gain new skills for long-term employment.
This is an absolutely crucial aspect targeting one of the most underserved groups hit hardest by the recession. The unemployment rate amongst the recently-graduated is astronomical. Most high school students are having major difficulty finding part-time work, and summer work in many communities has completely dried up, swallowed by older workers willing to take anything just to have a paycheck. Part of the problem is that many young people aren’t learning the skills necessary to fill the positions that ARE available. If this helps address the problem, then a number of birds (high unemployment, low tax revenue, issues with alleged juvenile delinquency, etc.) could be killed with one stone. Thumbs up. GRADE: A-
Ending Discrimination Against the Unemployed: Recent reports have highlighted companies that are increasingly expressing preferences for applicants who already have a job. Specifically, some companies are posting job listings that include language such as “unemployed candidates will not be considered” or “must be currently employed” or “must be employed within the last 6 months.” The exclusion of unemployed applicants is a troubling and arbitrary screen that is bad for the economy, bad for the unemployed, and ultimately bad for firms trying to find the best candidates. This is particularly true at a time when so many Americans have found themselves out of work through no fault of their own. New Jersey has passed legislation to address this practice, and members of Congress have also introduced legislation. The President’s plan calls for legislation that would make it unlawful to refuse to hire applicants solely because they are unemployed or to include in a job posting a provision that unemployed persons will not be considered.
Story time! When I left my job at Walgreens after three months (long story, not going to explain here), I went full-bore after jobs that would allow me to use my degree and the considerable skills related to it. Mind you, you’re not reading the words of a slacker; I graduated in the top 1% of my class in one of the most challenging undergraduate fields in the country with a double minor and relevant work experience in the industry. It took NINE MONTHS for me to find a job, any job, that would take me, and that job ended up being in food microbiology, an area where my abilities were completely useless. Even they were leery of hiring me because I had been out of work so long (no joke, they told me this). It took another eight months of working for that company before I finally landed my current job in biopharmaceuticals. If you include the two months after graduation before I ended up at Walgreens, that’s nearly TWO YEARS AFTER GRADUATION before I ended up in my chosen field. And this is coming from someone who was well qualified for a position right out of college! What kind of chance do people looking for work in fields completely unrelated to their original specialty have? How can we expect to end the problem of unemployment when companies refuse to hire the unemployed? How many people who are well qualified for work get turned away because of circumstances beyond their control? This needs to stop NOW. I consider this law as important as the one in the health insurance reform bill eliminating discrimination due to pre-existing conditions. GRADE: A+
4. More Money in the Pockets of Every Worker and Family
The President’s plan would put more money in the pockets of working and middle-class Americans by providing tax relief to 160 million workers – extending the payroll tax cut passed last December:
Cutting Payroll Taxes in Half for 160 Million Workers Next Year($175 billion):The President’s plan will expand on the tax cut enacted in December by cutting employees payroll taxes in half next year. Rather than having 6.2 percent of their wages deducted in Social Security taxes, workers will pay only 3.1 percent next year. This extension will provide a payroll tax cut worth $175 billion to American workers in 2012.
Oooh boy. You know that tax cut you got for this year, the one you barely noticed because it’s barely covering the cost of inflation? You get to keep that for next year, and all it costs is $175 billion that could go to something productive like further infrastructure spending or trade assistance for when the awful free trade agreements with Colombia and Panama go through. Yeah, because it’s worked so well thus far. This is the most likely aspect of the whole thing to pass; it’s also one of the five least likely to have any noticeable effect on the economy. It’s still money in the average person’s pocket, so I can’t complain too much, but come on, you can do better than this. GRADE: D
Helping More Americans Refinance Mortgages at Today’s Historically Low Interest Rates: 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. This has the potential to not only help these borrowers, but their communities and the American taxpayer, by keeping borrowers in their homes and reducing risk to Fannie Mae and Freddie Mac.
Won’t work. Fannie and Freddie have no incentive to help anyone pay lower interest rates because they’re on the ropes as is. Major lenders and industry leaders have no incentive to help homeowners and other borrowers refinance because it could reduce their profits to “sizable” from their current “astronomical.” Half the stuff in the last economic regulation bill hasn’t been enforced; what makes the administration think any of this will be? GRADE: D-
5. Fully Paid for as Part of the President’s Long-Term Deficit Reduction Plan.
To ensure that the American Jobs Act is fully paid for, the President will call on the Joint Committee to come up with additional deficit reduction necessary to pay for the Act and still meet its deficit target. The President will, in the coming days, release a detailed plan that will show how we can do that while achieving the additional deficit reduction necessary to meet the President’s broader goal of stabilizing our debt as a share of the economy.
And…that’s it. Really. There’s no explanation of what “fully paid for” entails. Since this was released the President has discussed raising taxes on the wealthy so that millionaires aren’t paying a lower effective tax rate than the average American (the so-called “Buffet Rule”), as well as eliminating loopholes in the tax code, ending oil subsidies, and changing capital gains rules. All well and good, but none of these got passed when it was plausible that they could be. There’s no chance that any of these, even if they somehow avoid the filibuster (a word which now brings to mind a different f-word) in the Senate, will get through Boehner The Blotto and The Norquists in the House. I’ll put any judgment on this on the waiting list, but I’m not holding my breath. GRADE: INC
One last category: Intangibles: Since he gave the speech, the President has taken exactly the right tone with it. No more “I look forward to working with Republicans to find something we can all agree on.” No more “We have to work together so everyone’s views are represented.” Now it’s “Pass this. Now.” The wishy-washy, compromise-heavy, Great Conciliator Obama appears to be gone for the time being, replaced by the forceful, take-no-prisoners leader we thought we were getting in November 2008. THIS is the President who saved the crew of the Maersk-Alabama by wiping out a whole ship’s worth of pirates. THIS is the President who made what might be the ballsiest call since Truman fired MacArthur. Finally, he sounds like he’s ready to kick ass and take names. As someone’s who’s been critical of his willingness to bargain away pretty much everything in negotiations, all I can say is that it’s about damn time. GRADE: A+
So, using a scale from 11 for an A+ to a -1 for an F, with INC being worth 4 (same as a C, since I’m assuming neither the best nor the worst), and taking an average over every category (24 in all), the overall score for the plan is a 5.7, which I’ll be generous and round up to a 6. That’s a B-, which is probably a little harsh, but those idiotic tax cuts and deregulation initiatives really hurt the score, much like they’ll hurt the economy. All told, though, the plan is mostly solid, with enough measures for actually tackling the root causes of long-term unemployment that we might finally see some progress. Also, any bill that includes major infrastructure spending will always get my approval. If I ignore my numbers I’d probably on first glance give this a B+: good, but not great.
With all that said, I don’t think there’s a chance that any of this ever sees the light of day. The Republican Party, and in particular their Tea Party splinter cell, have no vested interest in seeing anything get better for anyone. They’ve outright admitted their primary goal is winning the next election. The Senate Minority Leader actually said that the main legislative goal of the Party until after the 2012 election is to do everything possible to prevent Obama from getting re-elected. There’s no benefit for them in helping the country recover (you know, beyond the whole “America being successful and not a third-world banana republic” thing); in fact, they believe anything that would keep people out of soup kitchens might help the scary black man stay in charge. I’m disgusted by their lack of common decency. I’m appalled by their indifference to the suffering of 98% of America. I’m bewildered by their willing whoring of themselves to the Kochs, Goldman Sachs, and Grover Norquist. Most of all, I’m speechless as to how, despite the self-serving transparency of it all, the American people are more than happy to keep putting these people in office.
Remember that when this doesn’t get through Congress, America. You sold the soul of this country for Reagan’s bag of magic beans. You forsook the lives of your sons and daughters to line the coffers of Halliburton, Blackwater, Goldman Sachs, Chase, and Exxon. Even after you saw the damage being wrought by this hideous farce, you kept right on going, feeding the madness because the illusion of wealth allowed you to acquiesce to becoming a slave to the oligarchy.
In the end, you brought this on yourselves.
Until next time, do what you can to help this pass. I can’t imagine your “elected representatives” will give a damn what you have to say, but if enough people care, they’ll have to do something. They can’t ignore all of us forever.
Right?
Sunday, July 31, 2011
Last-Ditch Effort
Note: This was written before the abysmal deal to avert default was struck. Consider the following a moment of brief respite before cynicism swallowed me whole.
I apologize to you, my readers, for this not being the next part of my six-part series on rebuilding America. Work has been hectic, and trying to find time to research both trade policy AND graduate schools has not been the easiest of tasks. Still, I’m making progress and that should be up sometime later this month. In the meantime, I thought I should let you in on a little secret.
For the last couple months I’ve watched with apathy, then disgust, then indignation, then overwhelming rage, as the Republicans have used their control of the House to take the country hostage and attempt to force-feed the middle class a sizable portion of serfdom. I’ve watched as petty criminals have politicized the mechanism by which the country stays fiscally solvent. I’ve watched as an ignorant rider of coattails charged the public for going to his child’s after-school activities while simultaneously gutting the education system that gives that child those opportunities. I’ve watched as an unscrupulous cheesehead unveiled his plan for eliminating the national debt, a plan that ADDS $8 trillion to the debt and gives millionaires and billionaires a trillion dollars in tax cuts while eviscerating Medicare, Medicaid, and Social Security. I’ve watched as politicians steer the political discourse further and further right even as poll after poll show the American public, as a whole, want their elected turkeys to use their left wings more often. I’ve watched these last two weeks as the House continues to ignore logic, reason, and common sense while making the threat of a second Great Depression more and more of a reality by the day. I’ve grown tired of watching. So today, I did something that under normal circumstances I would never do.
I sent an e-mail to the President of the United States.
Now, let me start by saying that I like Mr. Obama. I think he’s above all else a good man, a man who means what he says when he talks about living up to our ideals. I think he’s a shrewder politician than most people realize, and I think he’s one of the smartest men to ever hold the office (particularly in comparison to his predecessor). I wonder, though, if he isn’t too good a man for the office. You see, Jimmy Carter was a good man as well, with just as much of an intellectual bent (despite Billy seeming to imply otherwise). However, he had very little fighting spirit, and when coupled with his awful choice in advisors, he tended to get steamrolled in most negotiations. Sound familiar? Obama has a good heart, but he also has a seeming obsession with being a conciliator, a person who tries to unite under all circumstances. The fact that he’s surrounded himself with people who seem to directly oppose most intelligent policies, particularly economically (Larry Summers, Ben Bernanke, Tim Geithner, Ken Salazar, Rahm Emanuel…it’s a longer list than you think) doesn’t help matters. That said, I still believe that he has our (and by our, I mean the average American middle class worker) best interests at heart; he just doesn’t know how to fight for them. His pathological need to broker compromise has led to so many give-backs and cave-ins that I once joked “If this Administration was a dog, the only trick it’d know would be ‘roll over.’” I think there’s a part of him that wants to fight (off-the-record quotes seem to indicate he’s been more than willing to drop the hammer on Boehner and co.), but because of the political pressures on him (unprecedented Republican opposition to everything, coupled with an unrelenting barrage from all corporate media and continuous fire-breathing from seemingly all liberals) he’s felt the need to move to the center-right in the hopes of grabbing undecided independent (read: stupid) voters. It hasn’t worked, and it’s not going to work, because as I’ve said before, the American public is the dumbest and laziest electorate on Earth. Unless he’s willing to fight for his principles NOW, his base will erode, he won’t capture those moron independents who’ll jump at the next trendy story (“Hey, that Bachmann sure is interesting” is the sentence haunting my nightmares right now), some impossibly-disastrous right-wing lunatic will win in 2012, and the current economic sinkhole will turn into a bottomless pit. That can’t happen.
So, in an attempt to try an spur the President to action, I sent him an e-mail challenging him to do just that: fight for us now, while there’s still time to salvage things. It’s kind of pathetic that this is even necessary given the whole “in two years he managed what G-Dub and Clin-Ton couldn’t manage in 16,” but that’s America for you. Much like your average WWE mark, if it didn’t happen within the last three weeks, it never happened at all. Therefore, I felt I needed to remind him of what needs to be done. The text of my e-mail follows; it wasn’t as long as I would have liked because the White House places a strict 2500 character limit on all messages (which I’m sure most of you wish applied to all of my writing). I just hope it was enough.
Mr. President,
I recall the early days of your campaign as having enormous promise. Hope and change...I believed in those ideals. I believed that you could be a transformative president, one who could turn the country back from the abyss that Reagan's brainless supply-side economics put us on a path towards and lead us toward the shining potential Jack Kennedy saw. Yet over the last two years I've watched as you've led us further down that doomed path. I understand that you're facing unprecedented political opposition, and I sympathize. That said, I can't help but be disappointed in the sheer number of times you've caved to pressure from the opposing side in spite of public support for your ideas. Allowing the stimulus bill to be watered down to half of what it should have been, caving on opposition to a public option for Republican votes you had no chance of getting, renewing the Bush tax cuts for the wealthy despite overwhelming public opposition, continuing Bush-era restraints on civil liberties (and in some cases, reinforcing them), your current willingness to barter Social Security and Medicare rather than demand increased revenue from the wealthy...I could keep going, but there is a character limit. Suffice to say, there are plenty of areas where you could have fought and chose not to.
I know full well that you can't win every fight, but quite frankly, Mr. President, I expected you to at least try ONCE. You CANNOT keep letting the Republicans take the country hostage like this, or those of us without the money to have a voice in Congress are going to get economically slaughtered. It's already started, and I have no belief that things will get better any time soon. Hope died with the public option. Change died when the Bush tax cuts stayed in place. I'm holding on to a sliver of faith that the future still holds some promise, but knowing that the majority of Americans are politically ignorant and will reward the Republicans for this unconscionable shell game, that sliver erodes ever more by the day.
I'm short on space, so I'll end by saying this: it's not too late. Please, sir, do something to show my generation that you haven't abandoned us to the whims of corporate power. We need you to be great. We need you to do for us what FDR did for our grandparents. We need you, sir, to fight.
Thank you for your time.
That’s it. I requested a reply, but knowing politicians like I do, I’ll be lucky to even get a form letter. Whatever response I get, I’ll post here for the rest of you to see. I’m not expecting much; hell, I know that I’ll be lucky if it even gets to his desk. Still, if there’s even a 0.0001% chance that this spurs him to finally become the transformative president of our generation as I’d hoped he’d be, it was worth it. Keep your fingers crossed. I know I am.
Next time: on America’s trade policy and how outsourcing (both the NBC show and the actual practice) are destroying the American way of life. Seriously. I promise.
I apologize to you, my readers, for this not being the next part of my six-part series on rebuilding America. Work has been hectic, and trying to find time to research both trade policy AND graduate schools has not been the easiest of tasks. Still, I’m making progress and that should be up sometime later this month. In the meantime, I thought I should let you in on a little secret.
For the last couple months I’ve watched with apathy, then disgust, then indignation, then overwhelming rage, as the Republicans have used their control of the House to take the country hostage and attempt to force-feed the middle class a sizable portion of serfdom. I’ve watched as petty criminals have politicized the mechanism by which the country stays fiscally solvent. I’ve watched as an ignorant rider of coattails charged the public for going to his child’s after-school activities while simultaneously gutting the education system that gives that child those opportunities. I’ve watched as an unscrupulous cheesehead unveiled his plan for eliminating the national debt, a plan that ADDS $8 trillion to the debt and gives millionaires and billionaires a trillion dollars in tax cuts while eviscerating Medicare, Medicaid, and Social Security. I’ve watched as politicians steer the political discourse further and further right even as poll after poll show the American public, as a whole, want their elected turkeys to use their left wings more often. I’ve watched these last two weeks as the House continues to ignore logic, reason, and common sense while making the threat of a second Great Depression more and more of a reality by the day. I’ve grown tired of watching. So today, I did something that under normal circumstances I would never do.
I sent an e-mail to the President of the United States.
Now, let me start by saying that I like Mr. Obama. I think he’s above all else a good man, a man who means what he says when he talks about living up to our ideals. I think he’s a shrewder politician than most people realize, and I think he’s one of the smartest men to ever hold the office (particularly in comparison to his predecessor). I wonder, though, if he isn’t too good a man for the office. You see, Jimmy Carter was a good man as well, with just as much of an intellectual bent (despite Billy seeming to imply otherwise). However, he had very little fighting spirit, and when coupled with his awful choice in advisors, he tended to get steamrolled in most negotiations. Sound familiar? Obama has a good heart, but he also has a seeming obsession with being a conciliator, a person who tries to unite under all circumstances. The fact that he’s surrounded himself with people who seem to directly oppose most intelligent policies, particularly economically (Larry Summers, Ben Bernanke, Tim Geithner, Ken Salazar, Rahm Emanuel…it’s a longer list than you think) doesn’t help matters. That said, I still believe that he has our (and by our, I mean the average American middle class worker) best interests at heart; he just doesn’t know how to fight for them. His pathological need to broker compromise has led to so many give-backs and cave-ins that I once joked “If this Administration was a dog, the only trick it’d know would be ‘roll over.’” I think there’s a part of him that wants to fight (off-the-record quotes seem to indicate he’s been more than willing to drop the hammer on Boehner and co.), but because of the political pressures on him (unprecedented Republican opposition to everything, coupled with an unrelenting barrage from all corporate media and continuous fire-breathing from seemingly all liberals) he’s felt the need to move to the center-right in the hopes of grabbing undecided independent (read: stupid) voters. It hasn’t worked, and it’s not going to work, because as I’ve said before, the American public is the dumbest and laziest electorate on Earth. Unless he’s willing to fight for his principles NOW, his base will erode, he won’t capture those moron independents who’ll jump at the next trendy story (“Hey, that Bachmann sure is interesting” is the sentence haunting my nightmares right now), some impossibly-disastrous right-wing lunatic will win in 2012, and the current economic sinkhole will turn into a bottomless pit. That can’t happen.
So, in an attempt to try an spur the President to action, I sent him an e-mail challenging him to do just that: fight for us now, while there’s still time to salvage things. It’s kind of pathetic that this is even necessary given the whole “in two years he managed what G-Dub and Clin-Ton couldn’t manage in 16,” but that’s America for you. Much like your average WWE mark, if it didn’t happen within the last three weeks, it never happened at all. Therefore, I felt I needed to remind him of what needs to be done. The text of my e-mail follows; it wasn’t as long as I would have liked because the White House places a strict 2500 character limit on all messages (which I’m sure most of you wish applied to all of my writing). I just hope it was enough.
Mr. President,
I recall the early days of your campaign as having enormous promise. Hope and change...I believed in those ideals. I believed that you could be a transformative president, one who could turn the country back from the abyss that Reagan's brainless supply-side economics put us on a path towards and lead us toward the shining potential Jack Kennedy saw. Yet over the last two years I've watched as you've led us further down that doomed path. I understand that you're facing unprecedented political opposition, and I sympathize. That said, I can't help but be disappointed in the sheer number of times you've caved to pressure from the opposing side in spite of public support for your ideas. Allowing the stimulus bill to be watered down to half of what it should have been, caving on opposition to a public option for Republican votes you had no chance of getting, renewing the Bush tax cuts for the wealthy despite overwhelming public opposition, continuing Bush-era restraints on civil liberties (and in some cases, reinforcing them), your current willingness to barter Social Security and Medicare rather than demand increased revenue from the wealthy...I could keep going, but there is a character limit. Suffice to say, there are plenty of areas where you could have fought and chose not to.
I know full well that you can't win every fight, but quite frankly, Mr. President, I expected you to at least try ONCE. You CANNOT keep letting the Republicans take the country hostage like this, or those of us without the money to have a voice in Congress are going to get economically slaughtered. It's already started, and I have no belief that things will get better any time soon. Hope died with the public option. Change died when the Bush tax cuts stayed in place. I'm holding on to a sliver of faith that the future still holds some promise, but knowing that the majority of Americans are politically ignorant and will reward the Republicans for this unconscionable shell game, that sliver erodes ever more by the day.
I'm short on space, so I'll end by saying this: it's not too late. Please, sir, do something to show my generation that you haven't abandoned us to the whims of corporate power. We need you to be great. We need you to do for us what FDR did for our grandparents. We need you, sir, to fight.
Thank you for your time.
That’s it. I requested a reply, but knowing politicians like I do, I’ll be lucky to even get a form letter. Whatever response I get, I’ll post here for the rest of you to see. I’m not expecting much; hell, I know that I’ll be lucky if it even gets to his desk. Still, if there’s even a 0.0001% chance that this spurs him to finally become the transformative president of our generation as I’d hoped he’d be, it was worth it. Keep your fingers crossed. I know I am.
Next time: on America’s trade policy and how outsourcing (both the NBC show and the actual practice) are destroying the American way of life. Seriously. I promise.
Saturday, April 2, 2011
R.O.A: Rebuilding of America, Part 1
Those of you that have been following the progress of our emergence (or lack thereof) from the Bush Great Recession may have noticed that, for all intents and purposes, our economy remains stagnant. Well, stagnant for anyone who isn’t making the majority of their income through capital gains. Unemployment remains disturbingly high, and while many of the “leading economic experts” at the Fed will claim that unemployment is a lagging indicator and that as long as inflation remains under control there isn’t a major problem, the sizable lines at food pantries and in unemployment offices tend to disprove that theory. A recent study indicates that this is going to be the trend for the foreseeable future, as companies are making colossal profits without needing to add jobs. On top of this, Republicans in Congress, believing (or so I suppose; they might just be protecting their corporate overlords) that the Bush Great Recession is over, are pushing for massive cuts in the budget to bring the deficit down. The facts that the cuts they have proposed represent a mere drop in the bucket compared to the monstrous deficit and almost exclusively target programs and spending that help the people hurt most by the economic downturn AND most experts believe such drastic cuts would push the Bush Great Recession to untold lows are all irrelevant. What matters most is looking tough on “the profligate waste of Washington” while protecting corporate interests. Between the unfounded belief that the economy is already healthy again and the Republicans being seemingly hellbent on driving the economy off a cliff, things aren’t looking good for the American economy. It cannot be sustained as it is now without it becoming more battered than your average Lifetime Movie of the Week protagonist.
I’m certain that by this point, my readers, you’re saying to yourselves “So if the economy’s so bad, then what should be done to fix it? Where are your ideas, Mr. Big Shot?” My first response, my readers, is “I’m getting there. Hold up a second.” It’s taken several months, but I’ve assembled a six-part plan for a complete overhaul of the American economy. This is the first of what I intend to be a six-part series (because trying to put all of this into one post would likely result in reader petrification). So, without further explication, let’s get started with the first, and arguably the most important, part:
1. Completely revamp the income tax system
I say “income” because I think at this point everyone knows that our system for corporate taxes is broken beyond repair and will likely never be fixed. If you didn’t already know that, I’d hope that seeing Exxon-Mobil, the most profitable company in history, receive A REFUND of over $100 million would be enough to convince you of that fact. So, since the corporate system stands roughly the same chance of being fixed as Colonel Qaddafi winning the Nobel Peace Prize, it is imperative that the income tax system be totally overhauled. This is usually around the time that the gnashing of teeth, stamping of feet, and shouting of poorly written slogans referencing an event the average American doesn’t fully comprehend begins. Any time the mention of changes to the tax system comes about, people freak out because they think they already pay too much in taxes. They’re wrong, for two reasons: 1, the average American pays fewer taxes than any other major mostly developed nation except Chile and Mexico (and America’s still in much better shape than either of those countries), and 2, marginal tax rates are at their lowest level since the Truman Administration. Furthermore, my tax plan would (much like the President’s plan, prior to the disgusting “compromise” in the lame duck session) result in either no change or a substantial DECREASE in taxes for most Americans, so unless a person is capable of swimming Scrooge McDuck-style through his or her wealth, this plan would be to that person’s benefit.
Here’s my idea, complete with comparisons to the current tax schedule (which you can see for yourself at irs.gov). For simplicity’s sake, I’ve determined everything based on an individual filing as Single:
From $0 to $8,375: 10% (Currently: 10%)
From $8,375 to $50,000: 15% (Currently: 15% to $34,000, 25% above)
From $50,000 to $150,000: 20% (Currently: 25% to $82,400, 28% above)
From $150,000 to $250,000: 25% (Currently: 28% to $171,850, 33% above)
From $250,000 to $500,000: 35% (Currently: 33% to $373,650, 35% above)
From $500,000 to $1,000,000: 40% (Currently: 35%)
From $1,000,000 to $3,000,000: 50% (Currently: 35%)
From $3,000,000 to $5,000,000: 60% (Currently: 35%)
From $5,000,000 to $10,000,000: 70% (Currently: 35%)
From $10,000,000 up: 75% (Currently: 35%)
As you can see, for the vast majority of people, there won’t be any real changes. Just in case you can’t see that, here’s a quick example. Your intrepid neighborhood blog writer earned roughly $32,500 last year in taxable income. Based on the current system, I owed the feds $4,456.25 (worry not for me, my readers; payroll deductions resulted in a refund this year). Based on my system, I would owe $4,456.25. That’s right: no change at all. I can live with that.
Let’s look at the young ingénue doctor just getting her feet wet after finishing her residency. We’ll make a conservative estimate of her earnings at about $120,000. Based on the current system, she’d have to pay $27,309.25 in taxes. My system? $21,081.25. That’s nearly $6,000 that can either go directly into the economy or towards getting out from under the avalanche of debt the average professional student must contend with following graduation. Doesn’t seem too shabby if you want to talk putting money back into people’s pockets, but I’ve presented my system as a means of both repairing the economy for the average American AND eradicating the deficit to generate the funds needed to propel the other changes I’ve got in store for parts 2 through 6 of this plan. At some point I’m going to need to generate a good deal more money, and cutting taxes, despite what Republicans have been saying for the last 30 years, does the exact opposite. Well, that’s where the major changes come into play.
For my final example, let’s have a look at the “busy” hedge fund manager who makes a killing in the market to the tune of $150,000,000 in annual salary (for the sake of this argument, let’s assume that he counts this as normal income and not capital gains…don’t worry, I’m getting to that soon). Under the current system, that fellow pays the federal government $52,477,643.75 in taxes. Seems like a decent amount, right? It’s nothing compared to what that fellow would pay under my system. Under my new tax brackets, this fellow would be looking at a bill of $111,039,581.30. That’s right; this fellow’s tax bill would more than double under my system. Our poor hedge fund manager would somehow have to survive on a meager thirty-nine million dollars a year. How will he manage? At these rates, just 100 people making exactly $150 million would generate nearly six billion dollars in one year in additional tax revenue. That’s just people making exactly that amount; given that in 2007 the top 400 earners in this country made an average of $345 million each and income disparity has only gotten worse since then, we could be talking upwards of $55 billion in one year in additional revenue from just 400 people.
“But wait! If the tax rate on millionaires is going to be so high, what’s the incentive in being a millionaire?” First off, let me remind all of you that, in our hedge fund manager example, $39 million is still an awful lot of money. It’s nearly three seasons under the contract LeBron James signed for taking his talents to South Beach. So clearly, our hedge fund manager is not going to be applying for food stamps any time soon. Secondly, part of the point of this plan is to deincentivize taking huge amounts of compensation and hoarding it. Once that money comes off a company’s books and goes into the employee’s hands, it’s gone for good and does nothing to further aid in the growth of the company. As long as that money stays in the company, however, it can go toward furthering the company’s goals, be they expansion to new markets, development of new products, investment in infrastructure, etc. Consider the following: A company’s CEO is currently taking home $250 million in compensation when this new tax system comes into effect. Knowing that most of that money will be lost to the government, will the members of the executive board of that company continue to be inclined to pay the CEO that much? Or will they instead try to funnel a larger portion of that money back into the company in the hopes of further growing profit margins? If that CEO’s pay drops just 40%, that puts him at the same level as our hedge fund manager with a final take-home number of $39 million, more than enough to buy another Bentley and continue lording his conspicuous consumption over his neighbors. By dropping his pay 40%, though, the company now has another $100 million to pour into other areas of the business. Maybe the company looks at replacing some of their equipment that’s begun to show its age (buying new equipment = work for the makers of said equipment = jobs = economic growth). Maybe the company looks into expanding production in the hopes of gaining a larger share of the Chinese market (higher production levels = more workers = jobs = economic growth). Before you jump to the conclusion that this proposal is comically idealistic, consider that this is how the business world used to work. The only reason things stopped working this way is because a washed-up movie star decided he wanted his corporate buddies to be richer than astronauts. It CAN be done this way, in many countries (I’m looking at you, Scandinavia) it IS done this way, and if we want to stop our slide into the gutter, it NEEDS to be done this way.
The second major target in my overhaul of our tax system is the estate tax. Currently, thanks to the “compromise” brokered between the President and the Slashonomists, the rate for any money passed on to heirs is 35%, following an exception of $5 million. That last part is the part Republicans don’t want the average American to know about. Under the current system, if a person’s net worth at the time of their death does not exceed $5 million, that person’s family pays no estate tax. As you might expect, most people aren’t worth $5 million dollars at the time of their death; in fact, less than half of 1% of estates currently qualify for having to pay any tax at all. If one listens to most Republicans, however, one would assume that everyone pays an exorbitant amount of “death tax” (as they are often want to call it). Multiple Republican senators have proposed eliminating the estate tax altogether, which would be beyond catastrophic for the Treasury. Consider the case of Dan Duncan, the richest man in Houston, who picked an exceedingly lucky year to die. When Mr. Duncan, with an estate worth roughly $9 billion, passed away, he did so during the one-year estate tax holiday introduced in the original Bush tax cuts. Because he died that year, his family paid no estate tax. Let me repeat that just so it sinks in a little more: Mr. Duncan’s heirs, who had done nothing to earn a cent of their inheritance, collected $9 billion tax-free. Had even the rudimentary current estate tax been in play, the feds would have collected $3,148,250,000. Had the 2001 estate tax been in play (55% with an exception to $675,000), the amount would have been $4,949,628,750. This family, clearly already worth an amount incomprehensible to the average American, received a tax cut of OVER THREE BILLION DOLLARS because an old man died at the right time. For perspective, the major sticking point in the NFL lockout is due to the owners’ insistence on one billion additional dollars. One family could have solved the labor issues in the NFL with just their estate tax break. That’s disgusting, and it should never happen again. That’s why my plan would require a sizable estate tax in the vein of the Clinton tax rate. I’m willing to cut a little more slack with exceptions, and I’d have no issue with maintaining a $5 million threshold. If you’re making enough money to have to pay the Paris Hilton Tax (which I’m advocating everyone use when discussing this tax from now on…people tend to react more favorably when they realize she’s going to be rich for being a member of the Lucky Sperm Club (in more ways than one)), though, you’re going to face a rate of 55%. To quote Theodore Roosevelt (a progressive Republican, which would be about as welcome in the Republican party today as Rush Limbaugh at a pharmaceutical trade fair), “Every dollar received should represent a dollar's worth of service rendered, not gambling in stocks but service rendered.” With this, I think America can more closely approach that goal.
Finally, the most hideous perversion (minus the entire corporate tax system, of course) of the tax code: the capital gains tax and its use by stockbrokers and hedge fund managers. Thanks to loopholes written into the tax code, people who generate most of their income through stock market transactions are now permitted to classify their entire income as capital gains, and thanks to the Bush tax cuts (noticing a theme?), the maximum rate for capital gains is 15%. Think about that for a second; if you make more than $34,000 under the current tax system, you pay a higher tax rate than a stockbroker who makes $3 million. If our sample hedge fund manager counts all $150 million of his earnings as capital gains, he’d only pay $22.5 million in taxes. That’s absurd. Now realize that this also counts for everyone who lives off the interest of sizable investments. A 60-something retired executive with no job can make millions in stock dividends, accumulated interest from any number of other investments, cash from property transactions, and real estate speculation and pay no more than 15%. What a farce. To correct this, I would raise the capital gains tax by 200%, to a maximum rate of 45%. I’m aware that this isn’t perfect and could catch some people it isn’t intended to catch (seniors cashing in bonds, for example). There are ways to work around that, and by definition the maximum rate is just that: the most that could be levied. What matters most in the short-term is finally demanding a fair amount of tax be paid for these transactions.
I won’t even get into a few of the other ideas I’ve seen (a surtax on all income above $1 million, a miniscule transaction tax on all stock market trades and transactions) because most of you are probably already asleep. Suffice it to say, though, that while further changes still may well be necessary to get our economy going again, restore our budget to workable levels of debt, and curtail the rampancy of corporate greed, I think this is a good start. Something needs to be done soon, and I see no reason that this couldn’t be that something (well, besides the unrelenting opposition by the Republican drones at the behest of their corporate overlords). When an individual considers a budget, there are always two aspects to discuss: expenses and revenues. The Republicans have placed all kinds of focus on the expense side of the equation. Why can’t the revenue side be part of the discussion as well?
Next time: trade policies and American businesses, Or, Why Protectionism Isn’t a Bad Word
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