The Same Old Water

Crossposted from The Stars Hollow Gazette

So unpredictable, and by that I mean totally…

Dictable I guess.

A Campaign Challenge: Defining Obama

By JEFF ZELENY, The New York Times

Published: September 6, 2011

Mr. Obama stands at a precarious moment of his term. Public pessimism is at its highest point in nearly three years, and his approval rating has fallen to its lowest, according to the latest Washington Post-ABC News Poll, which also found that more than 60 percent of those surveyed disapprove of how he is handling the economy and jobs.

The White House can no longer take comfort in comparing the approval ratings for Mr. Obama with Ronald Reagan’s or Bill Clinton’s in the months after their stinging midterm election defeats. By the time their re-election efforts were intensifying after Labor Day, their respective repositioning had helped elevate their approval above 50 percent.

“If this is just a referendum on economic conditions, then any incumbent is going to struggle with that, but it’s not just that. It’s a contest about what to do about it,” said David Axelrod, the chief strategist to the president’s re-election campaign. “I’d be more worried if I saw some compelling new argument for how to lead the country, but these guys are carrying the same old water.”

Speaking of carrying the same old water-

The president intends to offer at least some progressive proposals to help regain a fighting posture that he has not had since the health care debate, but a provision is also being discussed to place a new moratorium on some regulations that affect the economy, excluding health care and financial rules. The proposals are likely to infuriate an already unhappy Democratic base.

So he is going to be Endorsing The Rick Perry Jobs Program.

What else?  The same old, same old tax cuts that are 1) not new and will therefore not improve the economy OR create jobs and 2) are tax cuts which have been consistently proven over the last thirty years do not improve the economy OR create jobs.

Obama Jobs Plan: $300 Billion, Half to Tax Cuts

By: David Dayen, Firedog Lake

Wednesday September 7, 2011 6:10 am

We can divvy it up into five separate components:

  1. tax-side stimulus. There you have the extension of the payroll tax cut, with a new employer-side cut, perhaps targeted only to firms that hire more workers on aggregate, as has been discussed.
  2. infrastructure. Included in this is some amalgam of the surface transportation bill and the national infrastructure bank, along with Jared Bernstein’s FAST proposal for fixing and upgrading American public schools.
  3. direct state aid. This is slightly new for this round, but still desperately needed. Jobs statistics for the past two years routinely show cuts in the public sector offsetting whatever gains exist in the private sector. Teachers and firefighters and cops and nurses are being laid off across the country. Stopping this corrosion is one of the best things the federal government can do right now.
  4. help for the unemployed. Re-upping extended unemployment insurance benefits would be part of this, but also you can expect a program for long-term unemployed modeled after Georgia WORKS, which allows long-term jobless to collect benefits (as well as a small stipend) and essentially intern at local companies for a short-term assignment. This is controversial, as the benefits of Georgia WORKS are mixed at best, and labor leaders have questioned whether it violates federal laws to allow free labor for corporations. If you pushed this envelope further and made it a wage-subsidy policy, you might have something, but this appears tailored to catch the eye of Republicans.
  5. mortgage relief. It’s possible some kind of mass-refinancing scheme gets announced, although there are hurdles, mainly FHFA Acting Director Ed DeMarco, who is reluctant to refi many borrowers who wouldn’t normally qualify as well as negate any representations and warrants liability on the part of the banks. There’s also the fact that banks don’t appear to be able to keep up with the refinancing applications at present, and there should be no faith that they would be able to support a surge in such work.

Let’s briefly look at the numbers. A $300 billion scheme would amount to around 2% of total GDP, and that’s being charitable by saying that this would all be used up in one year. That would have an impact, but half of this would be supply-side solutions that haven’t inspired much confidence during the recession. The question of whether temporary tax cuts are spent is a good one to ask. Especially on the employer side; if minimum wage increases have no effect on jobs, then surely tax subsidies to make hiring cheaper wouldn’t either.

What’s more, $112 billion of this $300 billion would come just from that extension of the payroll tax cut, which is already in place. That’s not stimulative, it’s just an extension of current law. So would be the $55 billion or so for unemployment benefits. Letting them expire might be undesirable, but just keeping them in place would just maintain the status quo, which last month created something on the order of zero jobs. The rest of the items amount to $130-$140 billion, not nearly enough to fill the demand gap hole. Actual direct public works spending is scant, and the supply-side faerie dust irrelevant to the actual problem.

If this is a policy document, it’s both inadequate and dangerous. If it’s a political one, it stays within well-drawn lines, rather than screaming what even the bond markets say the world needs – a complete reordering of fiscal policy to deal with a raging crisis. Yet we still have a Democratic Administration playing mostly on Republican turf.

(h/t lambert @ Corrente)

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