Some Notes on Obama's Jobs Speech

You can watch the speech here. I just have some random early thoughts...

* The President mentioned early and often that the proposal would be paid for. Obviously this is a response to political heat he's feeling over the deficit. But when he finally got around to explaining how it actually would be paid for, it was completely disingenuous. There was no plan: that was left for a future speech. And what details we got were that he would get Congress to make additional cuts. So, in short, he wants to pass a jobs bill that would increase the deficit, but "pay for it" by future spending cuts. Anyone buying this?

* The proposal calls for more jobs for teachers, but essentially zero details on how to do this. Grants to states? He recognizes that state budgets are to blame for layoffs, but gives no details on how his bill would help.

* Kids can't learn in anything but a super-modern building, eh? I've seen the school my wife went to, in a small village in Bulgaria. Probably wouldn't pass inspection in rural West Virginia, but she got a fine education. It ain't the buildings, it's the teachers.

* The proposal calls for more spending on infrastructure. Sounds eerily familiar. Sort of like the stimulus plan from 2009, which funded all those shovel-ready construction projects. But it's going to work this time?

* Employer tax cuts to stimulate hiring: here the problem is numerical. The numbers given were that a small business employing 50 could potentially see $80,000 in tax cuts. But that's only $1,600 per employee. Say you're an entrepreneur whose business is stagnant. A new employee would cost you at least $30,000 per year. Would saving $1,600 cause you to hire one when you otherwise wouldn't? I'm sure there are cases where it would, but I can't imagine this is common. It's very hard to believe this measure would create enough jobs to even notice - it takes something like 150,000 jobs to register 0.1% in unemployment figures.

* One other numeric gripe: the case of Warren Buffett's taxes was brought up. He, Obama claimed, earns $46,000,000 a year and pays 17.7% in taxes. Buffett's secretary makes $60,000 a year and pays 30%. First, I simply do not believe that his secretary pays 30%. I make a lot more than she and I don't pay 30%, at least not in federal income taxes. Possibly if you add up all her marginal tax rates she's at 30%, but then let's do the same with Buffett. Her average federal tax rate is almost certainly under 10%.

Second, it's worth at least thinking about total taxes paid. Even taking the numbers uncritically, Buffett's secretary paid $18,000; Buffett paid $8,000,000.

Last, there's simply a difference between capital gains taxes and income taxes. Obama might not like it, but there are good reasons for the rates to differ. Is Obama in favor of a flat tax? I doubt it. Or does he want to raise the capital gains rate? That would be a job killer. So this part of the speech really had nothing to do with anything; pure political theater.

* The later part of the speech was a hodgepodge of talking points with no proposals: lower corporate taxes, free trade agreements, cut regulations (but not too much! as if we're in danger of under-regulation), cut wasteful spending. All pure theater. Nothing will be done about any of these, with the possible exception of free trade agreements.

* A late, oblique shot was taken across the Supreme Court's bow. Mention was made of various New Deal and Great Society programs, and Obama said how awful it would be if we'd let our dedication to a single document (the Constitution, unstated but obvious) had prevented the government from doing whatever it needed to do to help people. I took this as a defense of Obamacare from possible overturn on Constitutional grounds. Interesting to see that he's worried about this.