President Obama gave a speech Tuesday in the Brookings Institution on the state of the economy and how he plans to hasten job creation. Obama mentioned how the signs seemed to be pointing up for the economy and commended himself and his administration on a job well done He claims that by using some of the money to boost the economy, the economy will get back on its feet faster and the government will earn more tax revenues as well as decreasing costs on agencies such as unemployment insurance, effectively helping to decrease the deficit. Obama also noted the poor employment situation in the nation (10% unemployment in November). Obama outlined some proposals of his to spur job creation. However, the plans listed by Obama worked indirectly to create jobs, and did not have the complete focus on job creation that some might want. Obama said that he wanted to “generate the greatest number of jobs while generating the greatest value for our economy.” He does not want to create jobs for the sake of creating jobs itself; no one is going to be paid to dig holes in the ground and then fill them up again. Instead Obama will only create jobs that he feels would have a beneficial effect on the long-term economy.
Obama split his plan up into three parts: “small business, infrastructure, clean energy.” He stated that small businesses create 65% of the jobs in America, and thus his most direct efforts would be focused on these businesses. He proposed extending tax credits for businesses, having Geithner and the Treasury increase lending to small businesses through the TARP, and creating a tax incentive for small businesses to hire more employees. Amongst his jabs at the opposition party, he addressed the concerns over using TARP money that was intended to help pay back some of the public debt. Geithner has already extended TARP so that it will not end until October 3, 2010; the program was originally set to end this year.
Obama wanted to focus a great deal on improving the United States’ infrastructure. He mentioned how the American Recovery and Reinvestment Act had provided funding for many projects to create bridges and roads and rail lines, increase broadband availability, and repair water systems. While the funding from that act and those projects start ramping down, he wants another boost to these areas. He also wants to improve areas like the computers of public utility systems, saying that ‘modernizing the physical and virtual networks that connect us” will allow companies to be more efficient and save money, thus allowing the industries to be in better shape once the recession ends.
On clean energy, Obama believes that “the nation that leads in clean energy will be the nation that leads the world.” In order to help this industry, Obama is proposing a tax rebate to homeowners that retrofit their houses to be more energy-efficient. He also wants to expand sections of the ARRA that provide a boost for clean energy businesses in the form of increased lending, funding for R&D initiatives, and tax incentives to clean energy companies. He claims that these measures not only help create jobs in the industry, but it will also save families money as they will pay less money as things become more energy efficient. Obama also mentioned how the Recovery Act created a fund to raise overall student math and science literacy.
Obama's proposed methods have angered members of Congress on both sides of the aisle. Republicans are angry over the devotion of TARP funds to tasks other than what was originally intended, namely that of paying back some of the public debt. Some Democrats are also not going to like Obama's plan. In addition to concerns that it does not do enough to curb unemployment, Democratshad been working on a bill for job creation that would take its money from TARP. Obama's plan uses TARP funds for only activities such as loaning to small businesses; the deficit might not increase, but the money for some of Obama's other proposals will not come from leftover TARP funds. Some people are even wondering if Obama's plans will even be effective in creating jobs. A CEO of a company that produce wheelchairs states "You have to have a customer for that employee to serve -- so I'm confused how a tax credit would stimulate anything." His reasoning being that tax credits and more loans are all well and good, but if aggregate demand simply isn't high enough, there would be no reason to hire a new employee as that employee would have nothing to do and, tax credit or no tax credit, would only exist as an unnecessary cost that negatively affects the company's bottom line.
A video of the speech and a transcript.
