In his weekly radio address, president Obama laid out his economic plan to get the economy moving again. Since I have often criticized Obama for having no plan, I think it is only fair to set out his list of items. Here they are in Obama's own words:
First, Congress should stop giving tax breaks to companies that ship jobs overseas, and use that money to cover moving expenses for companies that bring jobs back to America.
Second, Congress should help the millions of Americans who have worked hard and made their mortgage payments on time refinance their mortgages at lower rates and save at least $3,000 a year.
Third, Congress should help small business owners by giving them a tax break for hiring more workers and paying them higher wages. Small businesses are the engine of economic growth in this country. We shouldn’t be holding them back – we should be making it easier for them to succeed.
Fourth, if Congress fails to act soon, clean energy companies will see their taxes go up and could be forced to lay off employees. These companies are putting Americans to work and helping break our dependence on foreign oil. Congress should extend these tax credits.
And finally, Congress should help our veterans returning from Iraq and Afghanistan by creating a Veterans Job Corps. Our men and women in uniform have served this country with honor. Now it’s our turn to serve them.
Now let's translate what Obama said into simple English so that everyone can understand what he means. His first item is for Congress to "stop giving tax breaks to companies that ship jobs overseas". This refers to a suggestion by Obama that Congress start taxing the profits of American companies even if they are earned by their activities outside the country. It is a tax increase on American corporations which are already taxed at the highest rate in the world. There are many American companies that make the majority of their profits outside the USA. These are global companies that happen to have their headquarters in the USA. Obama's new tax proposal would push these companies to relocate outside the USA. There already have been large companies that put their headquarters in the Bahamas or some other tax haven. The Netherlands Antilles is a particularly popular home for international corporations due to the tax treatment they receive there; the tax rate is something like 4% and there is a credit for some of the taxes paid elsewhere. Obama's proposal would push companies out of the US not bring jobs home.
The second suggestion is for Congress to help Americans refinance their mortgages. One would think that Obama would be ashamed to even mention this one. During the last four years, Obama has had three separate programs put into effect to help Americans in danger of losing their homes or who needed help to refinance. None have worked. They have used up billions of dollars, but they have helped only a very few homeowners. Indeed, many who were "helped" later lost their homes.
Number three on Obama's list is to give small businesses a tax break for hiring more workers and paying them more. Of course, one should not view this one in a vacuum. You have to keep in mind that Obama also has a proposal to increase the tax rates on individuals making more than $200,000 and couples above $250,000. Because of the structure of the tax code, this is a tax increase on the vast majority of profits of small businesses across the country. This increase is much larger than the "break" for hiring the Obama is now pushing. So Obama recognizes that "small businesses are the engine of economic growth in this country", but he wants to put a net tax increase on them. It will NOT lead to growth.
The fourth item on Obama's list is for Congress to extend the tax breaks for clean energy companies. Obama even acknowledges that without an extension of the federal subsidies for clean energy, that industry will fail. Obama wants more money shoveled to his campaign contributors like in the Solyndra and other cases. Forgetting the corruption for the moment, it is not a sound policy to push growth in an area that can only compete for so long as the government subsidizes it. Eventually, the money runs out.
Sadly, Obama says nothing about moving to clean energy sources that actually make economic sense. Obama wants to subsidize electric cars that do not work well, have short battery charges, are extremely expensive and have been rejected by the market. Obama says nothing about promoting natural gas powered vehicles which are already reaching the market, cost not much more than regular cars and trucks, run on fuel that is less than half the cost of gasoline or diesel, use purely domestic energy, and are 40% less polluting that the cars and trucks they would replace. Why is that? Could it be that too many Obama contributors have invested in the electric cars?
Obama's last item calls for creating a Veterans' Jobs Corps. I think most Americans agree that we owe a debt to those who fought in Iraq and Afghanistan. So the question then is whether or not that debt is best paid by starting yet another federal bureaucracy to "help" them. Wouldn't it be better to start an employment clearinghouse that listed job openings for veterans?
So there you have Obama's program for economic growth three and one-half years after taking office: two job-killing tax increases, a continuation of subsidies for his cronies, continuation of a program that has already failed miserably, and a new federal bureaucracy. In other words, it is a total loser of a program. Indeed, it is an insult to the word "program" to call Obama's "plan" a program.
Interestingly, in his radio address Obama dismissed the Republican plan as nothing but tax cuts for the wealthy and removal of regulations on banks an corporations. In other words, either Obama does not know what the GOP plan is, or, more likely, he is just lying about it again. The GOP, unlike Obama, has a plan to promote production of domestic energy. That has been estimated to raise the growth rate for GDP by 1% per year and to create about 1.5 million jobs in the next few years. The GOP, unlike Obama, has a plan to promote the inflow of about 1.5 trillion dollars of capital now held outside the country, funds which would lead to a spurt of growth that could take us out of the current malaise. Obama wants to raise taxes to drive more funds out of the USA, while the GOP wants to entice more money to invest here. There are many other differences, but this post is already getting too long. We can discuss them in the future.
The truth, however, is that when I said in the past that Obama has no plan to restore growth, I was correct. This mess that he discussed in yesterday's radio address is not a plan for growth; it is a recipe for continued disaster.
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