The 8% thing has been explained to you before, hasn’t it?
Also, he hasn’t given the speech yet, so no one really knows the details. In any case, I would expect that this would be paid for via deficit spending. Which only makes sense, since it’s an emergency. And can be paid off easily in the future. Especially as it would ramp up the economy, (by increasing demand), which would increase tax revenue.
What doesn’t make sense to pay for with deficit spending is continuous programs that keep raising the deficit year after year. Like the Bush Tax Cuts, Medicare Part D, long term wars, or other nonsense that Republicans think is the bee’s knees.
For anyone who doesn’t know, the speech is scheduled for Thursday.
The article in the SJ Merc today confirmed my guess-- the “centerpiece” of his proposal will be an extension of the payroll tax cut. That’s nice, but I don’t know how many jobs it will create.
Nobody knows. It will increase demand because the money will be spent. But it is impossible for the pundits to point to a specific number, so they will say it creates none.
I don’t know that it’s really supposed to create jobs (although, obviously, that’s how it will be pitched, and any reduction in unemployment would be welcomed).
What it does do, quite nicely, is illustrate just how full of shit the GOP is about tax cuts. Tax breaks for oil companies must be fought for, tax increases back to Clinton levels for the upper two brackets is worth going to the mattresses over, tax increases on payroll taxes that hit poor people hardest… /crickets.
Despite that sensationalist article a few weeks ago, I can’t see Congress ending the payroll tax cuts, speech or no speech. It’s just a matter of putting it up for a vote. The GOP will probably ask for some spending cuts to offset the cost, but that’s their SOP response to everything these days.
You don’t pay for something with deficit spending. That’s why it’s called a deficit.
That goes to the other part of what I said - jacking the deficit up by $787B didn’t ramp up the economy, but more of the same will do the trick. Suuuure it will.
While I realize it is a waste of electrons to try to explain things to you, but I will point out for the record that this is the sort of thinking that leads politicians into thinking that tax cuts are “free”.
The debt ceiling was raised on Obama’s and the Dems commitment to cut the deficit from its current obscene levels. Gee, the shelf life on that promise wasn’t very long.
What percentage of federal payroll taxes do poor people pay?
You may well be right - we will almost certainly see.
It still makes clear that they didn’t require spending cuts to offset any of the other tax cuts they passed.
As to the speech itself, I’d like to see proposals dealing with the housing market - something addressing the fact that the efforts so far to encourage banks to modify mortgages have failed. I think uncertainty regarding the ability to pay for housing is one of the drivers of falling demand - people just don’t feel as well off when they know that they are underwater on their mortgage.
But in case you didn’t, by “hit poor people the hardest”, I meant that payroll taxes are a proportionally larger share of the tax burden for people with low incomes than they are for people with high income. This is due to their flat rate, the cap on taxable income, and the fact that wealthier people earn a greater share of their income through investment income than poorer people do (and investment income is obviously not subject to payroll taxes).
Now that we are clear on what I meant - do you support an extension of the payroll tax cut? If not, do you support an extension of the current income tax rates on the upper two brackets? If you support one and not the other, could you please explain why one is good policy, and one is bad?
ETA: To put my cards on the table, I think both are bad policies. I think we currently need more and broader revenue, not less, and would encourage ending of both the payroll tax cuts and the entirety of the Bush tax cuts.
Yeah, but that was different. At least, that’s what they tell us!
You could be right about that. Do you have anything particular in mind? I’m very leery of anything that artificially props up housing prices, though. That’s what got us into that particular mess in the first place.
The GOP House and many GOP Senators aren’t interested in any ideas that aren’t (more) tax cuts for the rich or scrapping regulations that have already passed cost-benefit review.
Since there’s no evidence that our 9% unemployment is caused by over-taxation or over-regulation, there might not be much to talk about with the GOP. So I expect Obama to focus the speech on all the reasonable, centrist things we could be doing that the GOP opposes. Since the GOP isn’t going to pass any useful policy, it doesn’t really matter if these things would really change the course of the economy over the short-term or not.
Sheila Bair was on NPR this morning with a proposal that, at first glance, made some sense to me. The gist of it was a one-time offer of mortgage re-work for those delinquent in payment but not in foreclosure. It would re-finance the house at the latest assessed value and current interest rates in exchange for a waiving of the usual foreclosure process if they fall in arrears again. The cost would be shared between the banks and the government, IIRC.
She also mentioned a proposal that would address 2nd lien-holders, which are often a reason why these re-works don’t happen (the 2nd lien-holder is making payments and still views the asset as profitable so they don’t want the terms changed, as I understood it, and so block the re-work).
Totally agreed on propping up housing prices - that’s why I didn’t really like the first-time home-buyer credit that was put in place a few years ago.
I think something that addresses the reality of the situation (huge numbers of home owners underwater on properties whose value will never return to their bubble highs) as well as the cost of doing nothing (foreclosures that drive down property values even further, both on the house in foreclosure and those around it) would be helpful.
I hope he pushes for a stimulus. I note that the rate on the 10 year T-note was 1.98% yesterday. Let me say that again: 1.98%! I do think that interest rates have been this low in history on US Government bonds; people worldwide are desperate to loan the US government money. At that kind of rate, we would be stupid not to make some investments in infrastructure as we could sure get more of an ROI than that. It’s win-win, much better than the 1.9 Trillion President Bush borrowed at 4.5% to fight in Iraq.
And anyway, as Cheney so famously quipped, deficits don’t matter, right Shodan?
You can make a case for deficits that grow slower than GDP. And a deficit of $158B per year is rather different than one ten times larger.
If Cheney actually said that.
No.
No.
They are both bad policy, unless they are coupled with spending cuts at a roughly two-to-one ratio.
We should never have wasted the money on Obama’s stimulus, which didn’t work. This new stimulus won’t work either, obviously. So let’s not throw good money after bad.
Obama seems to have run out of ideas on what to do about the economy, which is not surprising, given the paucity of his experience in legislating, management, leadership, economics and finance, or actually holding a real job in the real world. His thinking appears to be something like this -
“Tax cuts worked in the 1980s, as well as when the last recession hit. Keynesian spending is supposed to work. And I managed to get a huge stimulus thru back when I was first President. And nobody seems to care (apart from the GOP) that I am not going to cut the deficit in half, or anywhere close to it. So what the hell - let’s throw some money at the economy. Maybe it will distract the dummies until I get re-elected.”
The stimulus worked fine. It was too small to solve the whole Republican economic disaster, but it helped a lot. Many Republican governors took advantage of it and got stuff done and supplied jobs. The stimulus also saved a lot of jobs. That does not show in the unemployment stats as a positive, but certainly is. The tax part of the stimulus was another giveaway to the rich that did not work.
The economy was falling off a cliff when the stimulus came. There is plenty of evidence it was helpful.
Where would we be if the stimulus was not passed?
It is time for Obama to pound the bully pulpit to death. He is being polite to people who see that as a weakness. He should call them out every time they do something that only benefits the wealthy. Of course that will take a lot of his time away.
I think my phrasing would be more like “Obama seems to have run out of ideas on what to do about the economy based on how thoroughly the last administration torpedoed it and how intent the current Congress is on circling back around and machine gunning the survivors.” But that’s just me.
But I’m curious. What is a 2/1 ratio of government spending cuts to stimulus going to do for jobs when the any sort of government spending cut is inevitably going to lead to job cuts either in government employees or government contractors?
