Obama’s new proposals to boost employment

What happened

With unemployment stubbornly high and his party’s congressional majorities in peril in November, President Obama this week unveiled a package of tax breaks and spending initiatives aimed at spurring private-sector hiring. In a Labor Day speech in Milwaukee, Obama proposed spending $50 billion on infrastructure improvements to roads, railways, and airports. “This will not only create jobs immediately, it’s also going to make our economy hum over the long haul,” Obama said. The plan would include creation of a public-private “infrastructure bank” to fund construction projects. The construction sector has accounted for about one-quarter of the 8 million jobs lost since 2007.

Obama also proposed allowing companies to deduct 100 percent of the cost of purchasing new capital equipment—everything from turbines to computers—from taxable income for the next two years. Under current law, businesses must spread such deductions over seven years. The White House said the $200 billion deduction would encourage companies to invest and hire. Both proposals face uncertain prospects in Congress. “We don’t need more government stimulus spending,” said GOP House leader John Boehner, who denounced the “Democrats’ out-of-control spending spree.” Obama’s proposals followed August’s lackluster jobs report, which showed unemployment mired at 9.6 percent. Democrats and Republicans are also gearing up for a likely battle over Republican demands to extend Bush-era tax cuts for all income earners, including the wealthy, into 2011.

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What the editorials said

Just in time for the start of football season, President Obama is “lobbing a Hail Mary pass meant to save the economy—and his party in November,” said the New York Post. But his latest infrastructure spending plan is really a tacit admission that his previous stimulus merely saddled America with high unemployment and more debt. Obama’s proposed capital-equipment deduction, meanwhile, will “do little more than steal demand from the future,” said National Review Online. Businesses that were already planning capital investments will have an incentive to make the purchases in 2011 rather than 2012, but the tax credit won’t make them spend any more than they would have without it.

At least Obama, unlike his GOP critics, “recognizes that the federal government should do more to help struggling Americans stay afloat,” said the Las Vegas Sun. Both the infrastructure spending and the accelerated business-tax deduction are concrete efforts to create jobs, “the key to a sustainable recovery.” When is the last time you heard “selfish congressional Republicans” offer anything but “intransigence”?

What the columnists said

Obama’s proposals are good policy, said Marshall Auerback in TheDailyBeast.com. But they’re also a sign that he finally recognizes that low interest rates alone won’t bring this economy back to life. The infrastructure plan recalls President Eisenhower’s spending on the Interstate Highway System and similar efforts that fueled “some of the greatest private sector booms in our history.” There’s an argument to be made that this country is “starved” for public goods like improved roads, said Paul Krugman in NYTimes.com. But this plan is “much too small” to be all that successful at producing jobs, and it’s even more dubious politically. Instead of blasting Republicans for “standing in the way of much needed repairs,” the administration is once again lamely striking at its opponents’ “capillaries.”

I’m willing to admit the nation’s highways could stand to have some potholes filled, said David Harsanyi in RealClearPolitics.com. But if the original stimulus, “an $800 billion infusion of government and union bailouts, failed to spur any decent economic growth,” how will adding another $50 billion to the trough make a difference? This latest spending spree is willfully stupid.

Well it sure looks like a “losing strategy,” said Joshua Green in TheAtlantic.com. By offering the infrastructure plan and business tax deduction separately, Obama is allowing Republicans, whose support he’ll need, to choose their policies à la carte. Republicans are already busy trashing the infrastructure plan. But I’ll bet plenty of Republicans will be delighted to join Obama in handing out tax cuts for business.