Been there. Heard that.
Back in 2009, President Obama addressed a joint session of Congress, and of the upcoming $800 billion stimulus plan he said “Over the next two years, this plan will save or create 3.5 million jobs”. And in that speech he also said that “more than 90% of these jobs will be in the private sector – jobs rebuilding our roads and bridges; constructing wind turbines and solar panels; laying broadband and expanding mass transit”.
There are almost 2 million fewer jobs since then.
And last week the president again addressed a joint session of Congress, and dished up more of the same, peppered with a few new ideas. The $447 billion plan would extend and expand payroll tax cuts ($240 billion), extend jobless benefits ($49 billion) and spend on infrastructure ($105 billion).
But the dollar amount isn’t what matters here. What matters is that it is not the solution to our unemployment problem. Tax cuts are great, but not likely to spur hiring. Businesses aren’t going to hire when there is not enough demand to warrant it. So while the plan would reduce payroll taxes for businesses as well as workers…it will be more of a windfall of cash than a reason to create jobs. And that windfall of cash will just be added to the pile. Corporations are already sitting on plenty of money. But without the consumer demand to justify hiring, we won’t see any tidal wave of jobs.
This plan hasn’t worked before. And even if Congress passes it in it’s entirety (not likely), it’s not going to work now.
And besides that, last week’s speech was a 2012 re-election campaign kick-off made up of recycled ideas more than it was a presidential address.