President Obama recently praised the slowdown in the rising unemployment rate as a sign of economic improvement, not mentioning that the majority of the hiring in the past month has been to seasonal jobs that won’t be around by the middle of January. And now, on the tails of the job summit, where left-wing organizations, including liberal economists credited with shaping the $787 billion Recovery Act (Stimulus 1.0), some of the country’s largest unions, Change to Win and the United Steelworkers union leaders, environmental advocates and executives from Google and other blue-chip firms, gathered to address the continuing unemployment problem that a growing number of Americans face; a summit which did not include the U.S. Chamber of Commerce and the National Federation of Independent Business – both of which have been critical of Obama’s proposed health care overhaul, President Obama has now outlined the Stimulus 2.0, his plan for accelerating job growth.
This plan highlights 3 areas to help create jobs.
A major part of his package includes new incentives for small businesses, which account for two-thirds of the nation’s work force. This first area focusing on small businesses will eliminate the tax on capital gains from new investments in small business stock. The problem with this provision to start is that the Recovery Act already allowed a 75% exclusion on capital gains taxes on small business investments. The major problem is that most small businesses DO NOT pay capital gains taxes. Most owners of small businesses pay taxes on their personal taxes and do not have investments from stock. This provisions is a smokescreen and will do little to encourage anyone to expand their businesses and start hiring new employees. The rest of focus on small businesses includes minor tax breaks to the employment tax, eliminating fees for loans and extending the Recovery Act provisions of enhanced spending benifits and bonus depreciation tax incentive. Although this is very limited and is something that could possibly help out small business owners in the short term, the problem I see is that most of these business owners are looking at the larger picture. They are aware that the Bush tax cuts are expiring which were a 5% cut. They are staring at Nancy Pelosi’s 5.4% tax increase to pay for congress’s health care reform. And they are looking a probable war tax to pay for the War in Afganistan. So these miniscule tax break proposals by Obama look more like a slap in the face when these owners are considering their taxes going up by at least 10.4% in the next fiscal year alone.
The second area of Obama’s job creation plan, Stimilus 2.0, calls for investing in America’s roads, bridges, and infrastructure. These same types of programs were a huge portion of the Recover Act and the new projects will be handled exactly the same as was handled in Stimulus 1.0. Do we all remember that the Recovery Act was supposed hold the unemployment rate from topping 8%? Well, do we really think that more of the same is going to help out?
The third area is titled creating jobs through energy efficiency and clean energy investments. Again, more of the same from the Recovery Act, new incentives for consumers who invest in energy efficient retrofits in their homes and an expansion of Recovery Act programs to create clean energy manufacturing jobs. So instead just giving tax break for any home improvements, they are going to have to qualify under this clean energy provision in order to receive any kind of incentive. Lot of help that gave us the first time around, I’m rather weary it will do any good this time either.
Without giving a pricetag for Stimulus 2.0 in his outline, Obama proposes to use an unspent $200 billion of funds diverted from the TARP program, since only $7 billion has been provided in assistance to banks (compared to $114 billion in capital that banks subject to the “stress test” have raised from the private sector). Many of Obama’s critics are dismayed, since it was origionally planned that those unused funds would be used to help paydown the national deficit.
Once again, this administration amazes me at how careless they are with the taxpayers money and how they have shown that they refuse to back down from their “spend their way out of the recession” attitude. They don’t understand that they are scaring the hell America’s entrepruneurs and that there is no way they are going to invest in new equipment or employees in the face of this administration’s current direction. Unfortunatly for those 1 out of 8 American’s who are not working, I don’t see this plan helping out in any way, shape or form and I’m not sure how long, if ever, it will take this administration to pull it’s head out of their as….the sand!
-TF
