Obama and jobs, take two
A few thoughts on the Brookings speech:
1) Lots of big ideas from liberal thinks on how to boost jobs. Obama pretty much took a pass.
2) Obama proposals certainly aren’t game changers
3) To a great extent, Obama will still be relying on the unspent 70 percent of his $787 billion stimulus plan, passed earlier this year, to perk up the flaccid labor market.
4) It’s clear that the deficit is driving policy.The high government debt-to-GDP ratio of the U.S. risks crowding out private investment, reducing the future potential of the economy to grow. And rising deficits increase investors’ fears about the creditworthiness of the U.S. government.
5) Obama needs to keep interest rates as low as possible to boost growth and not worsen interest payments. So no mega-stimulus. This is his version of Clinton’s bond market strategy.
Here is Michael Feroli of JP Morgan:
For now, we’re not pencilling in any major change to our growth forecast for 2010. Many of the proposals — listed below — are business tax cuts which are infra-marginal and will probably have a muted impact on behavior. In addition, there are some one-time tax cuts or bonus payments which are less likely to affect household behavior than more permanent tax cuts. It is possible that accelerated infrastructure investment and some other secondary proposals will be significant enough to lead to a forecast revision.Proposals:* One year elimination of capital gains on small business stock* One year expensing of up to $250,000 of capital investment for small businesses* One year extension of bonus depreciation expensing* “A new tax cut for small businesses to encourage hiring in 2010″* Eliminating SBA fees and increasing guarantees* More infrastructure spending, including “merit-based” infrastructure* Incentives for energy efficient home retrofits, including expanding programs from the first stimulus* Extending unemployment insurance (presumably extending past December 31, not extending past 99 weeks).* Extending COBRA benefits* Another $250 one-time bonus payment to social security recipients* “Taking steps to ensure that state and local governments are not forced to layoff teachers”