Jobs Program Redux

Obama put forth some elements of a second jobs bill. With that, I strongly suggest all those who were disappointed, disgusted with the first Stimulus, start right now pushing for legislation we need.

Here are the main elements, laid out in the State of the Union Speech.

  • Take $30 billion of the [TARP] money Wall Street banks have repaid and use it to help community banks give small businesses the credit [Subsidized Small Business Loans].
  • Small Business tax credit - one that will go to over one million small businesses who hire new workers or raise wages
  • Eliminate all capital gains taxes on small business investment
  • Tax incentive for all businesses, large and small, to invest in new plants and equipment
  • We can put Americans to work today building the infrastructure of tomorrow [Direct Infrastructure spending]
  • Slash the tax breaks for companies that ship our jobs overseas and give those tax breaks to companies that create jobs in the United States of America
  • Keywords "jobs for Americans"

Note, we must get the hiring tax credit tied to only U.S. citizens, LPR workers. We cannot let this credit be used to import even more foreign workers, encourage even more illegal immigration or hire workers who happen to not be on U.S. shores. If one is going to use our taxpayer dollars for job creation for us, by God, would this Congress finally realize that they must put U.S. workers first and tie those government expenditures to the citizens who eventually will foot the bill.

The tax incentives for capital investments by businesses, again, needs to be tied to a Buy American requirement. While any tax incentive for investments will help overall GDP, by tying this tax credit for U.S. goods, that would give much more Stimulate effect to the Domestic economy, by hiring more U.S. workers and by consumption.

One fact, the business investment credit is the 50% bonus depreciation, which allows a 50% write off on business investments in the first year. This was part of the first stimulus bill. This tax credit did just expire, therefore, we should be able to get an accurate assessment from the CBO on just how effective this particular tax credit was for 2009.

On the direct infrastructure spending, I highly recommend Congress follow the AAM plans, which are the most thorough I've seen. Most importantly, Congress needs to change the contract award process and the overall management process. Consider those projects and hires as actual government managed projects instead of simply handing over no-bid Iraq style contracts.

On the elimination of capital gains, this concept must be tied to the hiring of U.S. citizen, LPR workers and that the business is 100% operated in the United States. While I am all for massive venture capital being invested in a host of start-ups at this moment, a key element is to make sure those small businesses actually are legimate businesses which have at least 10 employees but also that this business and those workers are American. (Remember an American engineer generating innovation and patents is classified as a worker). There are thousands of very innovative Americans who are capable of innovation, startups and patents, who right now....cannot even get a job at the home depot. This is an outrageous crime for the economic future of America (never mind leaving our most brilliant talented citizens high and dry and not supported).

Obama endorsed the restructuring of the corporate tax code to stop rewarding corporations to offshore outsource jobs. This is a change. Obama abandoned this agenda some 6 months ago, so it's good to see this in the State of the Union Speech. There is much more this administration and Congress needs to do to stop multinational corporations as well as unscrupulous countries (India) and businesses whose entire profit model is simply wage arbitrage as well as those corporations manipulating national tax codes around the globe.

From the State of the Union Speech Obama acknowledged (finally) that so called emerging economies are simply kicking our ass.

China's not waiting to revamp its economy. Germany's not waiting. India's not waiting. These nations aren't standing still. These nations aren't playing for second place. They're putting more emphasis on math and science. They're rebuilding their infrastructure. They are making serious investments in clean energy because they want those jobs.

I do not accept second place for America.

I sure as hell hope so because you're going to have to enact policy as well as legislation that isn't too popular with special interests but would assuredly put the United States back on the path to be #1.

We need to export more of our goods. Because the more products we make and sell to other countries, the more jobs we support right here in America. So tonight, we set a new goal: We will double our exports over the next five years, an increase that will support two million jobs in America. To help meet this goal, we're launching a National Export Initiative that will help farmers and small businesses increase their exports, and reform export controls consistent with national security.

Obama then went further to describe more free trade agreements. Now, firstly many of these trade agreements are highly doubtful to help the U.S. export numbers. Instead odds are they will make our trade deficits even worse with more cheap labor imports. The Obama administration simply needs to demand China float their currency as this is the largest factor currently to help the United States reduce it's trade deficit as well as spawn manufacturing jobs in the United States.

All please beware. We have seen many, many times goals stated and used to justify some absurd trade agenda that hurts U.S. workers and actually increases our trade deficit. In other words, the claims of a particular policy are actually upside down. One can recognize this one with the claim that offshore outsourcing helps American workers. A very obvious insulting lie, not only in statistical fact but also straight from economic theory this is a lie. Labor arbitrage assuredly does not help U.S. workers.

In the speech, President Obama was referring to the $155 billion dollar House Jobs Bill, passed last month and which the Senate is working on.

Of course many of our lovely Senators are whittling down the Senate version to more useless tax cuts. That said, the Senate bill is still being crafted. It has not passed. The good news is Senator Byron Dorgan is the one crafting this legislation, so one might have a chance to get some much needed Buy American and Hire America stipulations in the bill.

I have other job creation policy recommendations in this post.

We weren't planning on covering the State of the Union because we were not expecting any endorsement of a jobs bill.

Now, we all know that the criticism will be the beyond belief 10% official unemployment rate and a U6 of 17.2%, the spending of $787 billion dollars and the massive deficit.

The key here is to point out just how much Stimulus money do not go to direct job creation. That is the key. We must get Congress to tie job creation to Americans and to keep all funds within the domestic economy in order to get the most bang for the buck. Another element is to ensure infrastructure spending is on projects which are investments. Projects that are analyzed to give large financial and economic returns in the future. Examples of such past projects are the Hoover Damn, the entire highway system from the 1950's, transportation efficiency improvements and obviously projects which reduce foreign oil imports.

The point is it's clear there will be a Jobs Bill Redux passed, so now is the time to write your Congress representatives and especially your Senators and demand we really get strong Hire America and Buy American, along with invest in America jobs program as best we can.

Meta: 

Comments

His oratory skills were never in question

What is in question is his ability to lead and fight for working class families.

WHY HAS IT TAKEN HIS ECONOMIC TEAM THIS LONG TO FIGURE OUT THAT MAYBE THEY SHOULD SHIFT MONEY TO COMMUNITY BANKS?

This was a "No Brainer" months ago. WTF took them so long to figure that out.

Action, Mr. President. Action. Oh, and get rid of your economic team.

RebelCapitalist.com - Financial Information for the Rest of Us.

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yeah

Well, not that I have ever been an Obama fan, although Jesus is that a good lookin' family and I agree, the oratory skills are bar none....

I have to take issue with our lovely Congress in a large part for this.

Firstly Harry Reid, I've not tracked through his campaign contributions but he seems to always make sure somehow that anything in the national or public interest is blocked.

We just have too many "bought and paid fors" in Congress.

Add to that the insanity of some of the GOP, i.e. "tax cuts" mantra is inane, as is "free trade"...

and you've got incompetence and corruption being the dominant party.

But on the lobbyist/corruption speech it was truly hypocritical because there is Obama, claiming the bank bail outs were like root canal or whatever...

well, I am a data/stat/math person and frankly I have yet to be convinced, esp. on the AIG counterparty pay out, that the TARP/bail out was even necessary.

To me, those events toasted and wasted the U.S. middle class and the real economy and I don't buy that a financial meltdown would have destroyed the real economy.

I certainly think there was a host of other actions they could have done at the time that would have wound down the big banks, such as Sweden's model, but the point is I need true forensic analysis.

I mean even our Congress in hearings, they are simply not getting to the bottom in any way what really happened either.

Yesterday's hearing to me was yet another joke and I think what we really need is some serious forensic accounting and analysis with a public report when it's done.

I don't even so much care who did what on that score, more I want to see this proof that the Great Depression would have happened if we didn't make GS super rich and pay out foreign banks.

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Cynical me

I don't think we will ever get to the bottom of this fiasco because the truth would be too damaging to the financial oligarchy and both political parties.

It would have been more effective if we gave so much money per household to pay off debt instead of giving it to financial conglomerates. But policy makers including Obama still like "trickle down economics."

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well, I've certainly been following this since the site started

and it seems to me I have not seen any proof by this continual drum of averted the Great Depression/Economic Armageddon" mantra.

I mean there was no doubt that the money markets were in deep shit trouble, they went to negative returns but the Fed guaranteed all of those funds, absolute in response...

It's also clear, like a deadly virus, these derivatives, CDOs, CDSes needed to be isolated and destroyed, to not infect the real commercial banking activities...

but it's so nuts, they still have not tackled derivatives legislation and if anyone would look at the dominoes of AIG CDSes and CDOs....it is such fictional money, gambling, bets, hedges.

How could that entire ponzi scheme get complete wipe out and really effect the real economy, it's all between a few companies?

I mean separate out commercial banking from investment (where have we heard this one), isolate this derivatives scam and kill it dead.

Anyway, they still are not tackling the real causes of this crisis even, i.e. derivatives and that is where the inter-dependencies, contagion, systemic risk is coming from.

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Agree 100%

I agree 100% but giving money to the citizens was never part of the plan, no we can't have citizens with money in their pockets.

I don't even buy into the idea that if the institutions wouldn't have received the money, we would have had a world collapse.

I am going to go hide. Back when the S&L's were crashing and banks were taking part in regionalism, I cringed. I cringed because community banks were the heartbeat of America. I cringed because I didn't think it was good for America for such a consolidation of capital within just a few banks. It didn't go as far as I thought. Way back then I thought eventually we would have just four big banks controlling everything. It didn't get quite that bad.

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Small business tax credit?

If the demand is not there how does this help? A small business is NOT going to hire just to get a tax credit.

To me this speech is neo-liberal - lite.

If we are going the tax cut route - how about a payroll tax holiday.

RebelCapitalist.com - Financial Information for the Rest of Us.

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I think a payroll tax holiday

is in there, the hiring credit, aka a social security tax credit for a hire is what I thought it was.

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I am proposing - along with others

a FULL payroll tax holiday. Forget this business for 'new hires' - it won't happen because NO demand for product/services.

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you could write it up

but FICA is 50% employer paid and 50% employee paid. So, the last I heard it was just the employer portion and it was not only for new hires but also for those who increased wages on existing employees.

My thing is they must, absolutely must, tie all of this to U.S. citizens, LPR (legal permanent resident). There are already reports of Stimulus funds going offshore, offshore outsourced and even the use of H-1B, L-1 guest workers.

i.e. it's not being used to hire from the U.S. workforce....

Now this is one of those economic realities that the left drives me nuts on. It's just economic reality, you cannot use U.S. taxpayer money to create jobs for the entire globe...
esp. when those taxpayers don't have a job or are significantly underemployed, which is the current situation.

This is an element to make it true Keynes and I'll bet dollars to donuts the left will ignore this and then we'll have yet more spending with less results because the funds are leaking out like a pasta strainer around the globe and not going to the U.S. labor force pockets.

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In 5 words: No accountability for the banksters!

I'm in complete agreement with you, RebelC, the speech sounded the klaxon for the status quo, sounded like a continuation of globalization and free market balderdash, and that bit about a holiday on capital gains' taxes for small businesses just doesn't sound to liberating too this humble thinker.

And, that rapid rail thing --- I'm all for the USA finally designing and building a frigging bullet train (even if Japan has had them since the '60s, France since the '80s, and ditto Scandinavia), but that's the seventh time I've heard that in a State-of-the-Union speech.

And that item he mentioned about changing the tax breaks for corporations to move jobs and factories offshore -- he's said that at least twice before, then backed off it.

Let's hope this isn't the third time, because his talk is sounder cheaper and cheaper.

I'd be very surprised in any improvement, I think it could be summed up again by those five words:

No accountability for the banksters!

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we had a train guy post here for awhile

who shall remain nameless because he got called out on trying to miscategorize the nature of a VAT (regardless on whether you are for or again somethin', it's a no no to try to spin some tax or economic tool etc. to claim it doesn't operate the way it in fact does....i.e. trying to spin just raw facts ain't cool on EP...

anywho, this guy was obsessed on rail and the thing I noticed was not a lot of analysis via traffic congestion, i.e. where (no surprise!) was the best bang for the buck and also the time/cost constraints.

Highly political, kind of an "earmark" deal vs. objectively where it makes most sense to do one first.

I mean take NoVA, anyone familiar with that area knows a 1 way commute can take 3 entire hours it is such gridlock...

but we're getting a train to Disneyworld? Really? Is that really going to help the economy that much to go see Mickey?

I'm blasting off today, because I'm finding precisely what you are pointing out....we're getting more globalization, more upside down policy that does the opposite of what it does and it's very clear the U.S. middle class is not just at the end of their rope....their hands are bloodied and they are falling off the cliff in piles of dead bodies...

and this @&*)$@ SMUCKS are still selling the American people down the river, just trying to hide it with a lot of good sounding BS!

Honestly I think all should write their Senators as well as Bryon Dorgan's office (who is sheparding this jobs bill) and demand they put in "Hire America and Buy American" strong conditions into this bill.

If i hear of yet another job being created in India or yet another project being awarded to Germany that is funded with U.S. taxpayer money, if it's possible to show a head explode in blog text.....well, it will probably happen.

I think I should sue the government for ruining my health. I think my blood pressure went to stroke level I'm so frustrated.

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Robert calm down because this stuff is so

messed up IT CAN make a person's head explode.
The NoVA commute will also make your head explode.
Too many things these days can do it.

A train from SF to LA. Why? Eight $billion to build it and that is an estimate. I guess they want you to see the nice scenery like Carmel and Oxnard. Are there really that many people that will be traveling between SF and LA on a daily basis to make financial sense of it? I-5 is not exactly a parking lot of cars doing the 600 mile commute. I'm not sure how many flights are going SF to LA these days. Been a long long time since I lived out there.

Now if you want to talk congestion, the mid-Atlantic and north east has it and some good train service would help. Instead Mickey is getting a free train ride.

What freaks me out is hearing the total amount of money spent on a per job basis to create the new jobs. You could almost just give the money to the new hire and they would be half way to being a millionaire.

Well, this entire game will be over when the day comes for China to call in their chips. Yep, game over and done. That is when ya don't want to be an elected official in Washington DC.

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Rebel you are playing my tune

and if there are no revenues, who cares about a tax credit. If my company doesn't have enough accounts receivable coming in, what the heck am I going to are about a tax credit. Take on more liability of a new hire. The problem is government wonks just don't get it because most have never worked in the trenches. Most government high end wonks think money just happens, falls from the trees I guess. Hm? Maybe they are just accustomed to the government printing press.

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"by the people"?

“I strongly suggest all those who were disappointed, disgusted with the first Stimulus, start right now pushing for legislation we need”

You still believe in government “of the people, by the people, for the people” - how nice!
I guess the economic mess we are in is just the mistake “the people” made and now that they see the mess they will(can) fix it

Great econoic statistics on this blog but I think weak on political economy.

In the spirit of Socrates - Respectfully

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What?

Not sure what you meant "weak on political economy".

Are you trying to tell us that government is the producer of capital?

I'm confused and not sure what you are trying to say?

And yes, this mess was made by people and will end by people. Government and their penchant at regulation seems to always have the regulations for the little engines (businesses) but the big engines (mega corps) get a pass.

I went crazy when during the Clinton admin. the bankers finally had their way and Glass-Staegall was ended. The SEC and NASD (now FINRA) watches over every letter a client receives but Madoff walks with $billions. Government elites are at the beck and call of the big engines and make laws that are favorable for the big engine. Unless you have never worked under all the government regulations you can never see the ineptitude of many regulations. How else could the derivative market have thrived? The entire affair was international in scope and the governments of the world were involved in it. They were a willing participant.

It is not we the people but the dangers of global business practices. They are so big and powerful that they can create hoaxes and swindle at will. I think the entire global clique is the greatest danger to financial and personal freedom that exists today. And they, the Washington crowd want to make global a bigger beast?!

So yes, we the people, will start taking back the reigns and we the people will re-set this train on the right track.

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by the people who raise hell

LOL, well, ya know EP is a community blog, why I'm the main writer is all you guys fault!

Yeah, I hear ya but one needs to try and raise hell. Only when the entire nation is about to revolt....AND various politicians believe they might lose their seats.....do they do much but that usually involves stopping some outrageous bill, not actually enact legislation that is good for the nation.

But even though this is an exercise in the myth of Sisyphus, it is our fate to push that rock up the hill....

even though eventually our liver will be plucked out by nasty lobbyist birds.

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Credit is a huge issue in Michigan.

MI companies can have five million in contracts and still not get the credit they need to retool. Yes, the autos were restructuring and downsizing, but with a controlled burn until the melt down poured gasoline all over us. We'd also be recovering a hell of a lot faster if they weren't redlining our state. First Clinton and NAFTA and then the banks. Looking forward on war profiteering, torture, and the greatest heist in history.

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We're In Holding Pattern Until 2012..

Plain and simple, Obama has not yet let it sink in his thick head that very few Americans believe a single word he says, nor most of our corrupt Congress for that matter. Obama has been in the White House over a year now, it is time he started doing his job as President and stopped working the campaign trail.

I believe that the citizens will begin taking back our country this year (and I believe Obama knows that also), but it will be a very painful journey to 2012, when the clearing of Washington will finally be done.

Our next leader needs to be experienced, tough and honest; al the things Obama is not. Ron Paul or Elizabeth Warren being prime candidates in my opinion. To this end, while I respect what the Tea Party Movement stands for, Sarah Palin is not the person for this role, not in 2012. She has the same lack of experience Obama does and we cannot afford the next president in 2012 to give us more of the same; this country won't survive it.

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