Obama @ Brookings - Continues To Dissemble About Jobs

After all, what does Obama know about creating a job ? Not too much ...


Unintentional Comedy [Stephen Spruiell]

Barack Obama might have chosen a better opener for his speech today:
Almost exactly one year ago, on a cold winter’s day, I met with my new economic team at the headquarters of my presidential transition offices in Chicago. Over the course of four hours, my advisors presented an analysis of where the economy stood, accompanied by a chilling set of charts and graphs, predicting where we might end up. It was an unforgettable series of presentations.

Was this one of those charts?


Blame Game [Tevi Troy]

Fox News has an instructive piece on President Obama’s finger-pointing jobs speech at Brookings today. According to the piece, Obama described Republicans as “an opposition party which, unfortunately, after having presided over the decision-making that had led to the crisis, decided to hand it over to others to solve.” This is wrong on many levels, but most obviously in the sense that the GOP somehow “decided” to hand the reins over to Obama. That decision came from the American people. However, the recent poll showing media darling Obama running only a scant point ahead of the mercilessly mocked Sarah Palin on the favorability scale suggests that the American people may be in the process of rethinking things.

Obama's economic team predicted in January that without the stimulus plan, unemployment would rise to 9 percent. It rose to 10.2 percent before leveling off last month. Yet, in his speech today, Obama said that thanks to the stimulus, we've avoided those terrible scenarios his economic team predicted in that series of "unforgettable" presentations. If that's what he thinks, those presentations must have been quite forgettable. The jobs picture is currently worse than his team predicted it would be.


Gregg, Cantor 'Unimpressed' With Obama's Jobs Speech [Robert Costa]

In a speech at the Brookings Institution today, President Obama outlined a wide-ranging new jobs program focused on infrastructure investment and small-business initiatives. “It was nothing but ‘Stimulus 2,’” says Rep. Eric Cantor (R., Va.) to NRO. “Clearly the White House has taken the position that deficits don’t matter.”

Sen. Judd Gregg (R., N.H.), the ranking member of the Senate Budget Committee, tells us that he was “not impressed” with Obama’s remarks. “This concept that ‘TARP money’ can be used is a total fraud,” says Gregg. “It’s nothing more than political cover. There is no TARP money to use. TARP was authorized to draw down debt by $700 billion. They’ve drawn down about $600 billion, so theoretically there is $100 billion more they could draw down, but then they would have to issue more debt.”

Gregg is adamant that adding debt to support a massive expansion in government would be a mistake. Besides, he says, the law is clear: “Using these funds for stimulus projects is not legally allowed. The law is precise — I wrote it. The funds are meant to address systemic risk and financial crises. Building roads and giving dollars to local projects is not that. The money they want to use doesn’t exist.”

Agreeing with Cantor, Gregg adds that Obama’s program is another major stimulus package. “The last one took a huge hit on the deficit and debt,” says Gregg. “It just became ‘walking around money’ for appropriators in the House and Senate. According to Chairman Bernanke, we’re moving out of recession. I doubt that this proposal will help to lower unemployment. We’ll be well out of the recession by the time Congress acts. Instead of this measure, fiscal balance and solvency have to be brought back into the equation — not more federal dollars for green jobs or whatever the cause du jour is at the White House.”

Cantor adds that Obama’s plan misses the core ingredient of job creation: a strong marketplace. “The government is trying to create jobs that they like, rather than encouraging the market. How does increased government spending create an environment where investors, families, and businesses can count on federal fiscal responsibility? In the past we’ve seen government spending miss the mark by an incredible amount.”


Walker: Obama Didn't Address Key Issues [Robert Costa]

In his speech today at the Brookings Institution, did President Obama outline an effective proposal for job creation? To find out, NRO asked David Walker, the former Comptroller General of the United States and current president of the Peter G. Peterson Foundation.
“It’s possible to make targeted investments to deal with job challenges and economic growth, but America has a large, known, and growing structural problem with deficits,” says Walker. “I didn’t hear anything concrete in this speech that addresses that long-term issue. Washington is continuing to kick the can down the road.”

The administration, says Walker, needs to be “more intelligent” about how they make infrastructure investments. “We need to make sure they promote economic growth and efficiency and are not just make-work projects,” says Walker. “The simple fact is that this country doesn’t do a good job at long-range planning for key infrastructure projects. When the country tries to put money in the pipeline, there often aren’t enough meritorious projects ready to be executed. We end up spending lots of money on make-work projects that may or may not increase growth and efficiency. Shovel-ready projects generate short-term employment opportunities but they don’t fix the problem.”


Congress Can't Resist the Sight of Money [Veronique de Rugy]

Yesterday, I mentioned that I was worried that Congress and the administration might start thinking about ways to use the $200 billion of the reduced estimate of the losses from TARP for new spending programs. Never mind that this $200 billion does not translate into $200 billion in new spending but, rather, has a value of roughly $50 billion.

Today the Washington Post has this story:

The official said the Treasury expects a total of $175 billion in repayments from banks by the end of next year.

Politics may ultimately play into the decision of how to use the unspent bailout funds, analysts said. The administration is aware that worries over high unemployment often trump voters' concerns about budget deficits, said analysts and economists in contact with Obama's aides. Democrats on Capitol Hill say the idea of using a Wall Street bailout to help small businesses has a lot of appeal among lawmakers and voters.
Keep reading this post . . .


Bailing Out the States' Bailout [Nicole Gelinas]

In his jobs speech today, President Obama proposed infrastructure investment “beyond what was included in the Recovery Act.”

Achieving this goal won’t be difficult, as only half a percent of the $787 billion stimulus bill went toward crumbling roads, bridges, dams, and subway systems.

But infrastructure spending will be effective only if the new funds address an old problem: states and cities are spending too much money on their workforces and not enough on physical assets. The spring stimulus made this problem worse instead of better, since it threw more money where the old money already goes.

The president should send new infrastructure money only to the states and cities that spend the next three months enacting plans to cut their labor costs. Otherwise, municipalities won’t have the money to maintain anything they build or expand.

The bailouts of Chrysler and GM were disasters whose costs to the economy are just beginning.

But at least the auto companies and unions had to acknowledge that their labor costs were outdated and unaffordable, and not just in the context of the recession.

States such as California and New York still haven’t acknowledged that fact.

— Nicole Gelinas, contributing editor to the Manhattan Institute’s City Journal, is author of After the Fall: Saving Capitalism from Wall Street — and Washington.


Obama Argues that Ramping Up Spending Can Shrink the Deficit [Stephen Spruiell]

Most liberals mock the supply-side idea that, in certain cases, tax cuts can actually increase revenue by spurring economic growth. So what to make of the Democrats' sudden embrace of the inverse of that argument?

At Brookings today, the president argued:

There are those who claim we have to choose between paying down our deficits on the one hand, and investing in job creation and economic growth on the other. But this is a false choice. Ensuring that economic growth and job creation are strong and sustained is critical to ensuring that we are increasing revenues and decreasing spending on things like unemployment so that our deficits will start coming down.

The economic literature supporting the link between tax cuts and growth is fairly solid. The link between government spending and growth is not nearly as well-established, relying more on Keynesian theories than actual evidence. In fact, there is quite a bit of evidence that the opposite is true: Reducing the size of the government's footprint in the economy would be conducive to growth.


Shlaes: Obama's Content Problem [Robert Costa]

Amity Shlaes, a senior fellow in economic history at the Council on Foreign Relations and author of The Forgotten Man: A New History of the Great Depression, tells NRO that President Obama’s jobs speech “sounded good but fell short on the content.”

“You see Obama’s impulse to be fiscally responsible — the Romer-Summers impulse — and you see the impulse for social equity — his Bob Reich impulse,” says Shlaes. “This kind of tension was also very typical of Franklin Roosevelt: you’d hear two conflicting things in the same speech. That’s because he saw the world politically and not economically. The same is true for Obama.”

“The language of the president’s speech is encouraging because it references small business and growth. It’s also initially encouraging to see him talk about his education program, Race to the Top, which sounds like the opposite of No Child Left Behind,” says Shlaes. “But here is an example of how the content doesn’t live up to its billing. Race to the Top sounds like we’re rewarding competition and helping students with scholarships — a sort of October Sky scenario where boys compete in missile-building contests. Instead the money really flows to institutions via the state to pay teachers or low performers, i.e. it’s aimed to move the weak forward rather than incent the strong. That’s nice, but it’s a Bush repeat.”

Obama is not addressing the core problem of what creates growth, adds Shlaes. “He’s throwing money in the general direction of economic activity. With the same level of commitment, however, he could have instituted permanent tax cuts instead of temporary gimmicks.” Doing that, she says, could permit more small business growth, since many of them often find “federal stimuli uncertain.”
Keep reading this post . . .


More Politics as Usual? [Burton Folsom Jr. ]

"This is not politics as usual," President Obama promised during the 2008 campaign, but his TARP speech on Tuesday displayed even more duplicitous politics than usual. It was pure bait and switch. Congress passed TARP as emergency loans available to some banks—with the money to be repaid as soon as possible. Now President Obama, contrary to the written law in the bill, wants to use the repayments to finance new (or old) programs of his choice.

Even FDR was not that audacious. His "TARP of the 1930s" was the Reconstruction Finance Corporation (RFC), which made federal loans to troubled banks and industries. When those loans were repaid, the cash did not go directly into other programs (in particular FDR's WPA campaign slush fund). Instead, as promised the RFC repayments became government receipts—used to offset the costs of other programs passed by Congress.

Character and trust are precious commodities and reneging on promises is one way to erode that precious trust—forever.

One final point—the president's efforts to spark economic growth through tax cuts and huge capital gains cuts are to be commended. But here is an important caveat. Make these cuts permanent not temporary—and always make them across the board, not to targeted groups. Our Constitution promise "equal protection of the laws to all citizens," and tax cuts need to be made with that in mind. Also, a capital gains cut limited to only one year will not help create the stable long-term investment climate that is needed to induce businessmen to take the risks that will ultimately create jobs and expand the economy.

— Burton Folsom Jr. is a professor of history at Hillsdale College in Michigan and author of New Deal or Raw Deal? He blogs at BurtFolsom.com.