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AP Analysis: Obama's Job Plan is an IOU

By Jeralyn, Section Economy
Posted on Mon Sep 12, 2011 at 08:16:09 PM EST
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The Associated Press has this analysis of Obama's assertion that his job bill pays for himself:

The jobs plan is an IOU from a president and lawmakers who may not even be in office down the road when the bills come due. Today's Congress cannot bind a later one for future spending. A future Congress could simply reverse it.

Anyone else notice Obama is proposing taxes on those who make $200,000 rather than $250,000? Is that gross income before deductions? Or taxable income? Or what?

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    AP Analysis: Obama's Job Plan is an IOU | 32 comments (32 topical)

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    $200,000 rather than $250,000? (5.00 / 1) (#2)
    by Mr Natural on Mon Sep 12, 2011 at 09:07:53 PM EST
    Here's a question which will help you figure that out.

    Which brings in more tax revenues?

    Whats the diff? (none / 0) (#13)
    by Abdul Abulbul Amir on Tue Sep 13, 2011 at 07:45:36 AM EST
    .

    They are both in the same class with millionaires and billionaires that Obama says don't pay enough taxes.

    .

    Parent

    A proposed IOU on increased taxes (5.00 / 2) (#6)
    by MO Blue on Mon Sep 12, 2011 at 10:41:10 PM EST
    that will never get through Congress is IMO appropriate to pay for a job creation proposal that also will never get through Congress.

    The proposed tax cuts and creation of a free labor pool for corporations may happen. Actual job creation, don't think so.

    I think you are criticizing the wrong thing (5.00 / 3) (#7)
    by fuzzyone on Mon Sep 12, 2011 at 10:44:07 PM EST
    Paying for economic stimulus with either budget cuts or tax increases is stupid.  The thing to do is to borrow while interest rates are low so that you can stimulate the economy, which will increase tax revenues and enable you to pay down the debt.  The problem with the plan is that the stimulus it proposes is tepid at best.

    I'm confused. (5.00 / 2) (#8)
    by Addison on Mon Sep 12, 2011 at 11:25:26 PM EST
    Wait. If it may not be paid back (an "IOU") doesn't that mean it's deficit spending on a jobs creation plan? Isn't this what progressives wanted?
    Yes (none / 0) (#17)
    by andgarden on Tue Sep 13, 2011 at 08:34:06 AM EST
    I don't understand what Jeralyn is getting at either.

    Parent
    If it was just a jobs bill, it could actually (5.00 / 3) (#12)
    by Anne on Tue Sep 13, 2011 at 06:49:43 AM EST
    be exciting, but this is a jobs bill that's going to be paid for with (1) revenue increases that are never going to be acceptable to the GOP and (2) spending cuts that shouldn't be acceptable to anyone - AND - he's got a SuperCommittee raring to go on even more spending cuts that exceed the $1.5 billion mandate.

    I wish I could believe in fairies, I wish it were true that tax credits create jobs, I wish it made sense to take people on unemployment and give them what amount to unpaid internships ("unpaid" because the employers for whom these people will work are not the ones paying them - the employees are being allowed to continue to collect unemployment benefits, so they are, to the employer, free labor - and there is no guarantee that when the unemployment runs out, the employer will officially hire the person and put him or her on the payroll), and I wish I could stop thinking that if Obama was really serious about jobs, he wouldn't have waited until he could use the issue as a campaign strategy.

    As my grandmother used to say - "if wishes were horses, then beggars would ride."

    About the free labor pool (5.00 / 3) (#14)
    by MO Blue on Tue Sep 13, 2011 at 07:50:44 AM EST
    From what I'm reading this idea may not be a one time idea but an actual redesign of the unemployment progress. This is a really bad idea.

    The employers are under no obligation to hire anyone. They can just keep training a new pool of people and maintain a certain level of free labor indefinitely without ever hiring even one new employee. Reasons why this is such a bad idea.

    1. Has the potential to reduce jobs rather than create them. Why hire new paid employees if you can get them for free?

    2. Unemployed person will be spending hours preforming free labor that could be better spent looking for a real job.

    3. Unemployed person must spend money from their limited unemployment benefits to get to and from job, child care, lunch money and other job related expense while being trained (questionable) to perform a low paying job.  

     

    Parent
    Tommy Thompson did just this (5.00 / 0) (#15)
    by Towanda on Tue Sep 13, 2011 at 08:16:07 AM EST
    with his "Wisconsin Works" welfare program when he was governor (before he went to DC to head HEW).

    It didn't work.

    But then, this is an ahistorical White House administration.  

    Parent

    Here is recent reporting (5.00 / 1) (#16)
    by Towanda on Tue Sep 13, 2011 at 08:28:50 AM EST
    on the "W-2" debacle that continues.  (If anyone at the WH or in Congress is reading this and cares to research why to avoid this plan, "W-2" is the catchy term that may be the most useful search term.)

    Fewer than 20% of potential Wisconsin Works clients receive any cash aid.

    The W-2 trends have prompted critics to renew their call for reform or a radical restructuring of a program that costs the state about $600 million a year.

    "Where does all the money go?" said Pat DeLessio, a Legal Action of Wisconsin lawyer and member of a state W-2 review panel. "This is a stupid program. . . . We just process people in and out. We don't do very much for them."

    Program officials, however, defended W-2 as working better than ever and said the caseload drop reflects new efforts to assess client needs and to place them in better jobs. . . .

    Some applicants went into W-2 but received only job counseling or child care - not cash. Most were deemed ineligible for the program or failed to show up for subsequent appointments with W-2 workers, according to the agency figures.

    The figures have reignited complaints that W-2 agencies aggressively and unfairly cull would-be participants through various diversions.

    Most people applying for W-2 are broke and in desperate need of immediate help, DeLessio said. But nearly all are told they must adhere to a rigorous job search for 30 days before getting any aid, something that weeds out many who already have struck out after their own extensive job search, DeLessio said.

    "A lot of people just give up and go away," she said, noting that many have had prior experience with the program and found it didn't help much. . . .

    And just to be clear for those who may not recognize Tommy Thompson's name:  This is a Republican plan.  So, of course, it is now an Obama plan.

    Parent

    Obama has gone big on tax cuts (5.00 / 1) (#18)
    by MO Blue on Tue Sep 13, 2011 at 08:43:42 AM EST
    Obama has invested so much time demonizing the Bush-era tax cuts for the rich that he has obscured the true narrative of his presidency. Class-war rhetoric aside, Obama is one of the most prolific tax cutters in recent history, with a record that puts him squarely alongside that of George W. Bush.

    Crunching the numbers at the liberal think tank the Center for American Progress, analyst Michael Linden found that if one compares the cost of tax cuts in just the first four years of Bush's term (2001-04) to the first four years of Obama's (2009-12), Obama's tax cuts are bigger. The value of the Bush tax cuts were about $475 billion in those first four years, or about 1.1 percent of GDP. Obama's total about $1 trillion, or 1.6 percent of GDP.

    Obama has cut taxes to lower levels than Bush did, says Linden. This is because, of course, Obama thus far has extended all of the Bush tax cuts and then cut taxes on top of that. His original stimulus bill in 2009 had $290 billion in Making Work Pay tax cuts. His speech Thursday night before Congress advocated for another $175 billion in payroll tax cuts, which come on top of $110 billion from last December's budget deal. Speeded-up expensing for business adds another $10 billion or so. link
    And the "Irony" (5.00 / 2) (#19)
    by The Maven on Tue Sep 13, 2011 at 08:57:48 AM EST
    is that even confronted with these facts, there isn't a Republican in the country who would give Obama credit for serving their ideology.  Yet, Obama keeps trying tax cut after tax cut in the vain hope that they might finally prove effective.

    Parent
    Aside from the knee-jerk, required (5.00 / 1) (#28)
    by Anne on Tue Sep 13, 2011 at 10:11:36 AM EST
    opposition to anything proposed by even the most nominal of Democrats, it's not hard to see that, with this president, that opposition has worked well for Republicans, gaining them a lot they would never have been able to get on their own; the more hard-to-get they play it, the more Obama gives them.

    Here's the thing, though: at some level, Obama has to be comfortable with what he's giving them, doesn't he?  Anyone who is negotiating with the opposition knows how far he or she is willing to go, but if there is no line or point at which one stops conceding, there is also a point where one is no longer working in the best interests of the side one purports to be representing.  And once things reach that stage, the other side doesn't have to do anything, doesn't have to sign off, or even, in this case, vote for it, because it's been done for them.

    Which is where I think we've been with Obama on issue after issue - the GOP pushes back until they have what they want, then they let the Dems take responsibility for it.  It would be one thing if that wasn't okay with Obama, but apparently, it's fine - he brags about how maturity and reason won the day and he was able to triumph - which tells me that either he believes in nothing at all - except himself - or he shares and is comfortable with the underlying policy contained in the end result.

    Either way, it's bad.      


    Parent

    Very Much So (5.00 / 4) (#29)
    by The Maven on Tue Sep 13, 2011 at 11:04:27 AM EST
    Obama has time and again generated a "bi-partisan consensus" position out of what was formerly the province of extremist right-wingers:  tax cuts as the cure for every economic scenario; evisceration of the rule of law and of government accountability; unitary executive privileges; placing Social Security and Medicare into the maw of deficit-reduction hysteria; the list goes on and on.

    As we've pointed out countless times before, the result is that Obama (and, by association, Democrats generally) come away both with ownership of bad policies and no ability to effectively attack Republicans any longer on these issues.

    After almost three years, it should be impossible for anyone still to give Obama the benefit of the doubt; the only reasonable conclusion must be that this was indeed his plan all along.

    Parent

    Yup. They will still call him a socialist. (none / 0) (#25)
    by ruffian on Tue Sep 13, 2011 at 09:37:27 AM EST
    For some reason he thought they would look at his actual actions instead of their caricature.

    Parent
    Average rank and file Republicans (5.00 / 1) (#26)
    by MO Blue on Tue Sep 13, 2011 at 09:45:56 AM EST
    are not IMO the audience that Obama is drafting legislation to please with his agenda.

    Parent
    Nobody fueled by party loyalty (none / 0) (#27)
    by sj on Tue Sep 13, 2011 at 10:02:54 AM EST
    (either party) looks at his actions honestly.  His critics will call him a socialist (I wish).  His apologists call him pragmatic or powerless.  Oh, or say that we must wait and see.

    Parent
    Linden has faulty logic (none / 0) (#33)
    by jbindc on Tue Sep 13, 2011 at 04:14:08 PM EST
    How does Obama pushing the extension of the Bush tax cuts equal him "cutting more".  He pushed for what was already in place, ergo, Linden cannot count that in Obama's column.

    Parent
    Obama could have ... (none / 0) (#34)
    by cymro on Tue Sep 13, 2011 at 10:11:06 PM EST
    ... let the Bush tax cuts expire, but chose to extend them. Therefore he IS responsible for those cuts now.

    Parent
    The devil, as they say, is always in (5.00 / 3) (#20)
    by Anne on Tue Sep 13, 2011 at 09:17:12 AM EST
    the details, and the American Jobs Act is no exception.

    Case in point, from the bill - at the very end of the bill, actually:

    SEC. 451. INCREASED TARGET AND TRIGGER FOR JOINT SELECT COMMITTEE ON DEFICIT REDUCTION.

    (a) INCREASED TARGET FOR JOINT SELECT COMMITTEE.-- Section 401(b)(2) of the Budget Control Act of 2011 is amended by striking "$1,500,000,000,000" and inserting "$1,950,000,000,000".

    (b) TRIGGER FOR JOINT SELECT COMMITTEE . - Section 302 of the Budget Control Act of 2011 is amended by redesignating subsection (b) as subsection (c) and by inserting after subsection (a) the following new subsection:

    "(b) TRIGGER.-- If a joint committee bill achieving an amount greater than "$1,650,000,000,000" in deficit reduction as provided in section 401(b)(3)(B)(i)(II) of this Act is enacted by January 15, 2012, then the amendments to the Internal Revenue Code of 1986 made by subtitles A through E of title IV of the American Jobs Act of 2011, shall not be in effect for any taxable year.".

    Hmmm...what does this mean?  David Dayen's take (my bold):

    Right now, the Super Committee must come up with $1.2 trillion in deficit reduction, and get that bill passed, or the trigger kicks in. The trigger would make cuts to discretionary programs as well as defense and Medicare providers. The target for the Super Committee is $1.5 trillion, because at that target level, the debt limit gets increased by a similar amount.

    This amendment to the debt limit deal adds $450 billion, the approximate cost of the American Jobs Act, on top of that. So the target for the Super Committee to shoot for now becomes $1.95 trillion (I don't think the debt limit will increase by $1.95 trillion as a result). Similarly, this basically adds to the trigger, with the provisions on the tax side. If the American Jobs Act passes, those tax-side provisions, raising $467 billion or so, would come into play. But they would be canceled if the Super Committee found $1.65 trillion in deficit solutions. It just creates a new trigger.

    Given all this, it's hard to say that the bill has a bunch of tax increasing offsets to it. It just punts the final decision back into the Super Committee. If the Super Committee found $1.65 trillion in all-cuts solutions, the tax stuff would go away. So these tax offsets create a nice talking point. But they wouldn't go into effect automatically if the bill passed, as the Super Committee could still find a way around them.

    This kind of reinforces my feeling that while revenue increases are in the bill - as it currently stands - and this allows Obama to appear to be - finally - giving the Democratic base the red meat it has been hungry for, the reality is that, given the slim chances the AJA would pass - intact, or at all - this "red meat" is going to turn out to be more like tofurkey, or mystery meat.  

    As usual.

    Red meat equals (5.00 / 3) (#22)
    by MO Blue on Tue Sep 13, 2011 at 09:22:55 AM EST
    Cat Food. Or is Cat Food getting more expensive than what seniors pushed into poverty will be able to afford?

    Parent
    Wow, good find by DDay and Anne. (5.00 / 1) (#24)
    by ruffian on Tue Sep 13, 2011 at 09:35:58 AM EST
    Well now I hope this bill does not get passed. Giving any more power to the cat food commission is a horrible idea.

    Let's hear it for gridlock.

    Parent

    Obama's Jobs plan is an insult to every (5.00 / 2) (#31)
    by samsguy18 on Tue Sep 13, 2011 at 12:53:54 PM EST
    Unemployed individual struggling to survive. This was nothing but selfserving  political theater. I question not only his competency but his level of understanding of the seriousness of the economic conditions in the country.

    You forgot the paper clip (none / 0) (#32)
    by Farmboy on Tue Sep 13, 2011 at 03:57:04 PM EST
    There's the real insult. link

    Parent
    Krugmans Argued Increased Govt Spending lowers def (none / 0) (#1)
    by Dan the Man on Mon Sep 12, 2011 at 08:59:52 PM EST
    icit due to the increase in revenue generated by the spending increase.  So a "jobs plan" would not be an IOU on the deficit because the increase in government spending due to the jobs plan would reduce the deficit.

    Link

    "In short, there's a very good case to be made that austerity now isn't just a bad idea because of its impact on the economy and the unemployed; it may well fail even at the task of helping the budget balance.

    Its important to realize that I'm not saying that government spending always pays for itself, and that saving money is always counterproductive. These kinds of effects are specific to a liquidity trap situation. But that's the situation we're in."

    He finally figured out... (none / 0) (#3)
    by diogenes on Mon Sep 12, 2011 at 09:13:28 PM EST
    Obama finally figured out that if you want to talk politics, you talk about a "millionaire's tax", but if you need to raise real money, you need to tax people well into the upper middle classes.

    how about (none / 0) (#4)
    by The Addams Family on Mon Sep 12, 2011 at 09:52:55 PM EST
    a 1 percent tax on all stock sales?

    a ban on derivatives?

    cpinva's comment was (none / 0) (#9)
    by Jeralyn on Tue Sep 13, 2011 at 02:44:54 AM EST
    deleted for personal insults. He can repost the remainder if he chooses.

    pretty thin skinned for a lawyer, aren't you? (2.00 / 1) (#23)
    by cpinva on Tue Sep 13, 2011 at 09:31:50 AM EST
    i called no names, i made no ad hominum attacks. exactly how did i "personally insult" you? if pointing out the fallacies inherent in your post is now considered a "personal insult", you might just as well close this blog, you've reached the end of the road.

    and no, i won't bother reposting, i can see it would be a waste of scarce, allocable resources. have a lovely day.

    better yet, a challenge: repost it yourself, and see if anyone else feels i "personally insulted" you. if they do, then i will apologize.

    Parent

    Well, actually (none / 0) (#30)
    by NYShooter on Tue Sep 13, 2011 at 12:07:09 PM EST
     I did read that post earlier today, and, frankly, my first thought was, what a jerk! My second thought was, why did Jeralyn leave it up there?

    This is got nothing to do with who's right, or who's wrong. And its got nothing to do with thick skinned or thin skinned.

    What it is about is who displays some class and who behaves like a jerk. I'll leave it to you to figure out who is who.

    Now, Jeralyn has written some things I haven't agreed with, and I know I've written things she hasn't agreed with (being deleted a few times sorta gave me a hint)  but, one thing I've never been confused about is that this is Jeralyn's house, and I'm a guest in that house. And, I don't know how you were raised but I was raised with the idea that when someone is kind enough to invite you into their home I don't feel the need to take advantage of that kindness to take pot shots at them, or to otherwise disrespect them.

    You could be Einstein but when you behave like a jerk people walk away thinking, "boy, what a jerk! Not, boy, he discovered E=mc squared."

    Grow up.


    Parent

    Spammer (none / 0) (#11)
    by Edger on Tue Sep 13, 2011 at 06:16:39 AM EST


    All spending and taxing is subject to (none / 0) (#21)
    by ruffian on Tue Sep 13, 2011 at 09:19:09 AM EST
    reversal by future Congresses. Seems like they are really reaching to me.

    From what I read, the tax increases are int he form of reducing the deductions available. So the 200 or 250k, whatever, seems to be gross income, before deductions are taken.

    AP Analysis: Obama's Job Plan is an IOU | 32 comments (32 topical)

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