President Obama’s speech tonight was a political act, and has generally been treated as such. Indeed, his political purpose was so transparent that he felt compelled to devote his opening paragraphs to denying it. Politics, nevertheless, suffused the speech. Once again, Obama offered the absurd pretense that it is politics that has delayed the government’s ability to help the economy recover:
The question is whether, in the face of an ongoing national crisis, we can stop the political circus and actually do something to help the economy….
What political circus is that? The circus that prevailed during the two years when the Democrats had Washington to themselves, and passed whatever they wanted, including a near-trillion-dollar “stimulus” plan that was a complete failure? Or did the circus start when Congressional Republicans forced the administration to agree to a minimal amount of spending discipline in exchange for increasing the debt ceiling, yet again?
Obama announced tonight legislation he calls the “American Jobs Act.” This is in lieu, apparently, of establishing a new cabinet department called the Department of Jobs, an idea that was recently mooted. The problem, of course, is that if the federal government could create jobs by the simple expedient of spending more money, we would be living in full-employment nirvana already. This chart, which I created from standard sources and have posted several times before, suggests that there may actually be an inverse relationship between government spending–careless, wasteful government spending, anyway–and jobs:
So, what does the American Jobs Act consist of? You couldn’t actually tell from Obama’s speech. He recited a laundry list that was generally number-free. Presumably the White House released some kind of a statement that had more specific information, but I haven’t yet seen it. (I spent the evening on an airplane.) We will have more to say about the details over the coming days. But Obama did at least tick off the elements of the bill. First comes extending the payroll tax reduction that was enacted a year ago. I tend to favor this on the ground that it undermines the logical, fiscal and political basis for Social Security and may help to expedite the entitlement reform process.
Next comes, of course, infrastructure spending. Obama sounded tonight like a man suffering from amnesia:
Pass this jobs bill, and we can put people to work rebuilding America. Everyone here knows that we have badly decaying roads and bridges all over this country. Our highways are clogged with traffic. Our skies are the most congested in the world.
This is inexcusable. Building a world-class transportation system is part of what made us an economic superpower. And now we’re going to sit back and watch China build newer airports and faster railroads? At a time when millions of unemployed construction workers could build them right here in America?
There are private construction companies all across America just waiting to get to work. There’s a bridge that needs repair between Ohio and Kentucky that’s on one of the busiest trucking routes in North America. A public transit project in Houston that will help clear up one of the worst areas of traffic in the country. And there are schools throughout this country that desperately need renovating.
Obama evidently has forgotten the stimulus bill and the many thousands of shovel-ready jobs that, as Obama later admitted–ha-ha–weren’t so shovel-ready after all. So, what has changed? Why will this year’s smaller “stimulus” create jobs when his previous, much larger bill was a complete failure? This was the closest Obama came to an answer:
We’re cutting the red tape that prevents some of these projects from getting started as quickly as possible.
Really? “Red tape” as in environmental regulations that block the construction of–for example–refineries and pipelines? So will Keystone be green-lighted tomorrow morning? That decision rests with the Secretary of State and requires no Congressional action.
And, by the way, where did all that “red tape” come from in the first place? Did President Obama mention that he has been the biggest promulgator of red tape in American history?
I’m just kidding, of course. Actually, I don’t think Obama even understands why his first stimulus program failed. There is no evidence that he has progressed beyond his mindless “spending equals stimulus” mantra. The man has not the most elementary grasp of economics. He is like a medieval doctor who continues to bleed a dying patient, convinced that he is applying the right remedy, and if he just draws a little more blood the patient will recover. Or, to transition to a different metaphor, he is like a dog who can whistle but only knows one tune; so, no matter what the occasion, the tune he knows is the one you will hear.
What else is in the American Jobs Act?
Pass this jobs bill, and thousands of teachers in every state will go back to work.
As usual with Obama it isn’t easy to tell, but I take this to mean that the act, like the original stimulus bill, will consist largely of payoffs to the Democrats’ public sector union supporters. I assume the chance of that getting through the House is zilch.
The rest of the act consists of incentives to business to hire new employees, especially veterans. Rather than writing checks to businesses, however, the government could much more effectively promote economic growth by getting out of the way–via less regulation and a more rational tax code, in particular.
Obama didn’t say how much his proposal will cost, or how it will be paid for. Rather, he punted that ball to Congress:
The agreement we passed in July … charges this Congress to come up with an additional $1.5 trillion in savings by Christmas. Tonight, I’m asking you to increase that amount so that it covers the full cost of the American Jobs Act.
Sure; so now Congress is supposed to come up with something like $2 trillion in spending cuts. Of course, those “cuts” will take place years from now, under a plan that doesn’t bind future Congresses; which is to say that if the Democrats have their way, they will never take place at all. So the American Jobs Act amounts to another $400 billion, or whatever the final price tag turns out to be, down the rat hole.
Given the president’s emphasis on new infrastructure spending, this seems like a good time to reprise one of the entries in the Power Line Prize contest, an original composition titled “Shovel Ready”: