The President's Weekly Address
by Charles Lemos, Sat Jan 30, 2010 at 04:26:06 PM EST
In his weekly address, the President pledges to rein in the deficit, citing three specific steps to this end. He praises the Senate for restoring the pay-as-you-go law, discusses his proposal for a freeze in discretionary spending, and calls for a bipartisan Fiscal Commission to hammer out further concrete deficit reduction proposals.
While the President notes that his number one priority is job creation, he seems to be putting more focus on controlling the deficit. I'm not sure these are goals that can be tackled concurrently. To give you a measure of the unemployment problem, I'll point to one statistic. Speaking on a panel on the topic of the global economic outlook at the annual meeting of the World Economic Forum in Davos, Larry Summers, the chief economic advisor in the Obama Administration, noted that one in five American men aged 25 to 54 are unemployed. He described the US economic situation as “statistical recovery and a human recession.”
Dr. Summers went on to say that given a “reasonable recovery,” that rate could improve to one in seven or one in eight. That still contrasts with a 95 percent employment rate for that group in the mid-1960s. One in eight is still 12.5 percent. Such a level is simply not acceptable nor do I believe achievable without direct government intervention in the economy. The reality is that our current economic model is broken for the overwhelming number of Americans. That the economic model, one that favors the aggrandizement of financial assets over the creation of productive assets, works for the financial elites is not in question but for the middle classes, the American dream is fast becoming a nightmare. There are simply no jobs to be had.
At any rate, the President is unveiling a new proposal involving a $33 billion tax credit aimed at small businesses in the hopes of stimulating job creation by reducing payroll taxes.
More on this from the New York Times:
In proposing a one-year, $33 billion tax credit for small businesses, the Obama administration is simultaneously seeking to stimulate hiring by reducing payroll taxes and to turn its attention to a constituency that has historically been associated with Republicans.
Hours after the Commerce Department announced that economic growth had picked up at the end of last year, President Obama visited a machine plant in Baltimore on Friday to promote the plan, which would give companies a tax credit of up to $5,000 for each new hire and reimburse them for Social Security taxes if they expand their payrolls. The credit is capped at $500,000 for each employer.
“Now is the perfect time for this kind of incentive because the economy is growing, but businesses are still hesitant to start hiring again,” Mr. Obama said at the Chesapeake Machine Company, which makes custom industrial equipment.
Earlier this month, the nonpartisan Congressional Budget Office concluded that reducing the payroll taxes of employers would be the most cost-effective approach — after extending unemployment benefits — to stimulating economic output and job growth.
Even though this latest proposal is out of the GOP playbook, Republicans have had a muted response. Representative Dave Camp of Michigan, the top Republican on the House Ways and Means Committee, which oversees tax matters, said, “A sprinkling here and there of a few poll-tested proposals won’t provide enough help or get small businesses hiring again.”
And so it goes.