In the Democrats’ weekly radio address, President elect Obama said he would direct his economic team to craft a two year stimulus plan with the goal of creating 2.5 million jobs. It’s a mixed bag with some good stuff, some not so good stuff and some truly awful stuff. First the good news (via NYT):
In light of the downturn, Mr. Obama is also said to be reconsidering a key campaign pledge: his proposal to repeal the Bush tax cuts for the wealthiest Americans. According to several people familiar with the discussions, he might instead let those tax cuts expire as scheduled in 2011, effectively delaying any tax increase while he gives his stimulus plan a chance to work.
This isn’t really good but rather less bad than the alternative. I would trade the high income tax hikes for a cut in corporate taxes which I think would be much more effective in creating jobs, but at least he’s considering the negative impact of higher taxes. Here’s a little more that falls into the not so bad stuff:
Advisers to Mr. Obama say they want to use the economic crisis as an opportunity to act on many of the issues he emphasized in his campaign, including cutting taxes for lower- and middle-class workers, addressing neglected public infrastructure projects like roads and schools…
I would much prefer that he cut middle and low income taxes by reducing their marginal rates but his tax credit scheme is not terrible. Public infrastructure projects are notorious sinkholes of public funds but could do some good if the projects are started quickly. I have my doubts.
Now for the bad stuff:
For example, Mr. Obama’s proposals to invest in energy alternatives and advanced “green” technologies will most likely be part of the package, rather than proposed later in his administration.
Every taxpayer should be worried when politicians start talking about “investing” our tax dollars in anything. They don’t have a very good track record in that regard. Mr. Obama’s plan to “invest” in green technology will not produce any jobs. The money will have to come from somewhere and that means something more worthy or jobs in another industry will be lost. If he enacts a cap and trade system to pay for the green investments he will just be killing coal and power industry jobs and shifting them to less efficient forms of power production such as wind and solar. How will shifting jobs from one industry to another and raising the cost of energy create any jobs? The answer is it won’t. In fact, I will bet anyone that it reduces jobs although that will be hard to prove either way.
Finally, there’s this about schools:
We’ll put people back to work…modernizing schools that are failing our children….
If the schools are failing our children, how will modernizing their facilities change that? A nice new building staffed with the same principals and teachers won’t change a thing.
I am trying my best to give Mr. Obama the benefit of the doubt on economic policy, but so far all I’ve seen are the same old tired government spending programs. Increased government spending funded by running up the deficit even further will not help an economy already burdened with too much debt.