RSSObama’s Jobs Speech
September 12, 2011
Martin Kelly - See all 164 of my articles
The President of the United States was involved in two major events over the last week. Most recently, he was the guest of honor at the 9/11 remembrance in New York City. The president along with all of the other dignitaries and special guests did a phenomenal job of participation without ostentation, but with dignity and reverence. The right wing fears of exclusion of first responders and prayer were just simply wrong. The memories of those who lost their lives on that September morning 10 years ago, and those who have lost their lives in the defense of our nation since then, were honored. The poems, letters and scriptures read, the musical performances, the reading of the names, and the personal testimonies, all added to the somber yet hopeful atmosphere of the entire day.
The second event, was a speech before a joint session of congress, advertised as the solution for the joblessness being experienced in the United States. This event was not nearly as mature, dignified, or effective as the 9/11 anniversary. This speech, which was supposed to be a new message, was in fact a restatement of some fifty previous speeches that he president has given. The immaturity of the event was exposed in the political squabbling that went on before the actual speech accrued. First, the president asked for the joint session on the same night that a previously scheduled debate of the Republican presidential candidates. The speaker of the house, a republican, refused. His refusal was not well taken by the White House, both sides acting like children. The President eventually asked for the joint session on the following night.
The content of this speech in no way required a joint session of congress. The speech promised a proposed piece of legislation that he insisted must be passed quickly. He had already promised to have legislation ready when they returned from their summer vacations. There was no legislation, that is the prevue of the congress anyway, there was just another promise to get it to them. Now there were some ideas presented that are good, but not new. Training for the long term unemployed is a great idea, a democratic congress with Ronald Reagan had a program for the same purpose back in the 1980’s. Preferential employment of veterans is another good idea, but it has been in place for federal employment, post office and contractors to the government since World War II.
The most frightening part of the speech was not the repetitiveness of the ideas for jobs, but the repetitiveness of the exorbitant cost and methods of payment. Yet again the suggestion is hundreds of billions of dollars spent. Once again there is a call for taxing the “more fortunate” members of society, as if earning is a gift that is not fair. And again, we here of a rich man who does not think it is fair that he pays less in income tax than his secretary (Mr. Buffet, you do not have to claim all of your deductions if you think you should pay more). Although there are plenty of things wrong with the tax code (the complexity alone is mind boggling), increasing taxes is not the solution.
The only way to get the economy going again is to have actual work for people to do. Not shifting of payment of projects from states to the federal government, not addressing an unreported surplus of unemployed teachers, and definitely not another hand out to some bankrupt entity be it an car company, a bank or a union. This country needs to spend within its budget and reduce the burden of taxes and regulation on everyone. It worked for Kennedy and Reagan. When we spend beyond our means and broaden the scope of government, the economy goes into the tank, as happened under Johnson and prolonged by the “price freezes” of Nixon and Carter and is now happening from the spending frenzy of Bush and Obama. In each case, we identify the president, but the blame is equally if not more the responsibility of the congress at the time.
The last issue with the speech was the return to blaming the previous president for the problems being faced today. There is always a lingering effect of the previous administration, but up until now, the president has remained above the blame game. It is one thing if a partisan group blames Clinton for 9/11, it would have been quite another if the Bush had gotten on front of congress and blamed him. Yet again, President Obama is blaming Bush. Since he took office, the deficit has gotten bigger, unemployment has gotten worse, and up until eight months ago, he had gotten everything he wanted. Eventually, the president and especially congress will have to start acting like adults. We cannot expect the partisans or the press to mature, but we should expect it from our elected officials. It will not be possible to create jobs until at least one thing happens – Congress must do its job and actually pass a budget. Nothing that the president suggests or sends to congress to consider will have any meaning until a budget is in place.
Sep 12, 2011 @ 09:22:18
“And again, we here of a rich man who does not think it is fair that he pays less in income tax than his secretary (Mr. Buffet, you do not have to claim all of your deductions if you think you should pay more). ”
I get what you’re saying, but from a literal perspective, I don’t think this would fix what Buffet sees as the imbalance. The vast majority of his income is capital gains, which are capped at 15%, whereas ordinary income is taxed at rates as high as 35%. I’m not sure that Buffet would move the needle very much by neglecting to list his clothing donations to the Omaha Goodwill. He’s still not likely to pay more than about 18%.
I also suspect that his “secretary” has a few skills beyond typing and taking phone messages for the boss – probably earning a fairly decent wage.
While I understand the reasoning behind having a lower tax rates for capital gains than ordinary income (to stimulate investing), it seems odd that the capital gains rate is flat, while the rate on ordinary income is graduated (technically, the capital gains rate for everyone is 15%, but those in the 5% and 10% tax bracket can elect to pay at their ordinary rate rather than the capital gains rate).
Would a rate of (ordinary_income_rate – 7%) maintain the effect of stimulating investing (since capital gains would still be taxed at a lower rate) while resulting in a top capital gains rate of 28%? Maybe, maybe not.
Sep 12, 2011 @ 10:50:22
Kos, I agree with you. I did not articulate the point very well. The question is still why are we discussing increasing taxes on the top 25% of wage earners? This would not affect the people who are mostly making money on capital gains. The truely rich are no longer wage earners, they are earning from the investments and money they have already earned, so any income tax increase is invisiblt to them. I would turn your suggestion around, rather than a graduated tax on capital gains, how about a flat tax? No deductions, no forms, just a set percent taken from your pay check and put the responsibility on corporations and businesses. Then we could have graduated government assistance based on what you earned. Just a thought.
Sep 12, 2011 @ 11:27:50
I agree. I think revenue would be increase much more with a modest boost in capital gains taxes – perhaps boosting it from 15% to 20% for gains in excess of $1 million? The realistic ceiling on ordinary income is lower than the ceiling on capital gains, so an extra 5% on cap gains would go a long ways. Imagine that Buffett or Steve Jobs divested their entire holdings tomorrow – an extra 5% of those gains would go a long way.
A flat tax would have to be a bit more complex than what you’re suggesting, due to the fact that a lot of people have income from small businesses. Millions of people (including me). For obvious reasons, these people who need to be able to deduct their business expenses (otherwise you’d be taxing their revenue rather than their income, which is entirely different). For example, let’s say I buy widgets for $4 and sell them for $5. For simplicity’s sake, let’s say that I have no other expenses. I sell 100,000 widgets, netting $500,000 in revenue. If there’s not a way to deduct the 400K in cost of good solds, I’m going to lose money after taxes – the logical thing to do is to have me pay taxes on the $100K profit, and to do this, I’d need the deductions on my schedule C.
The devil’s in the details, but it’s certainly possible to account for these sorts of wrinkles and still have a flat tax.
The real reason congress will never pass a flat tax? Because it would mean than around 90% of people would be paying at a higher rate. And by 90% of people, I mean “90% of voters”.
More details here: http://www.thesoapboxers.com/what-percent-of-taxes-are-paid-by-the-rich/
Sep 12, 2011 @ 13:57:49
I believe that as Obama’s term grows closer and closer to an end, we will see much more finger pointing at Congress and Bush. We will see his frustration grow as he becomes more desperate and we will see the promise of more jobs until his last day in office. Of course, those jobs will be the ones reserved for Obama’s diverse and inclusive constituents (like the teamsters).
The ideas are all the same. Increase taxes, build a few new bridges or roads and maybe a few other “shovel ready projects”. Again asking Congress to hurry up and get things passed without reading all the details, again promising that there are no ear marks.
We obviously need changes to our economy, but we need something different.