Obama’s “Economic Rescue Plan For The Middle Class”
By Justin Gardner | Related entries in 2008 Election, Barack, Economy, Jobs, VideoI blogged about it earlier, but I think this is pretty much the full video of the speech…
The line everybody will be remembering? “It’s a plan that begins with one word that’s on everybody’s mind. And it’s easy to spell. J-O-B-S. Jobs.”
Compare that with McCain’s new strategy, which seems to be “Fight”.
No contest.
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October 13th, 2008 at 2:21 pm
Ok, tax breaks for companies hiring “new” workers, or, really, for each “net” job created. Now, who’s going to guarantee that these companies will create jobs?
October 13th, 2008 at 2:56 pm
leapsecond, i would assume they’d get a credit AFTER the worker is hired and on the books, not just upon “creating a new position.” it’s just an incentive, a carrot dangling on a stick down a rabbit hole, but there are bound to be SOME hungry rabbits (businesses) out there. it may not make an overwhelming difference, but that’s why this crisis needs to be addressed on multiple fronts.
i for one am beyond thrilled that someone is finally stepping up with some real ways to address the issues.
October 13th, 2008 at 3:34 pm
I’m just not sure it would work — if there is no need to conjure a new position (and, obviously, hire a worker), then why bother making it to get some tax credit?
I guess it comes down to whether the “tax credit” will be equal to or more than the hired workers’ wages. If the tax credit does, indeed, actually save the companies money, then perhaps it’ll help job creation. But everyone should remember that businesses, as wholes, must make money, then give it to their employees; it’s not like there’s always money in the bank to pay new workers.
October 13th, 2008 at 3:44 pm
leapsecond,
I think it’s not necessarily meant to spur the creation of jobs that wouldn’t otherwise exist, but maybe instead to make it more feasible for a company to create jobs in the USA, rather than overseas.
One of the realities of a global market is that for many lines of work, even unskilled american workers are way more expensive than overseas labor. Hopefully a tax credit can help bring the equation more in favor of keeping jobs here.
October 13th, 2008 at 3:56 pm
the thing i wonder about is when faced with decisions on how to grow your business, are the existing tax incentives (write-offs) to reinvest in your business in a non-people manner better than something like the incentives obama is talking about?
October 13th, 2008 at 4:06 pm
Shawn,
I must concede that I had not thought about the implications for lower-middle class labor — perhaps it’ll work as desired to keep jobs here in the states rather than ship them overseas. It’ll have to be a massive tax break though, seeing as the difference between the wage of an unskilled worker here and an unskilled worker in China or Thailand is staggering.
October 13th, 2008 at 4:15 pm
[...] a discourse about this very subject over at Donklephant, commenter Shawn noted: I think it’s not necessarily meant to spur the creation of jobs that [...]
October 13th, 2008 at 6:34 pm
Leapsecond,
The kinds of jobs Obama wants to keep here are not the same jobs that employ extremely low wage workers in China and Thailand. The average American worker is very skilled relative to the rest of the world, and so the job he/she performs can only be outsourced to other countries with comparable levels of labor capital (education/skill level). So we are not facing as big a wage difference as it might appear.
October 13th, 2008 at 7:12 pm
L,
So are we talking tech jobs? Customer service reps? There’s still a massive gap in wages, hence these jobs moving overseas in the first place. And where does the new tax money come from? Or is this deficit spending?
October 13th, 2008 at 7:58 pm
ExiledIndependent:
Exactly — it was my impression that Obama was talking about relatively low-skilled factory jobs, considering he was talking about the car factories closing in Ohio today. It still remains that the vast majority of the jobs that are being lost to overseas workers are these low-skill, low-wage jobs, and the wage gap for those jobs is large (and that’s an understatement).
Oh, and by the way: the dollar’s weakness isn’t helping any.
October 13th, 2008 at 10:08 pm
Exiled -
You won’t need real tax money to fund this initiative, given the fact that it is lost tax revenue it won’t show up in government outlays, so we don’t need any new tax money or deficit spending. (ie ok pay the US 30k less or something)
I’d argue that tech manufacturing jobs will have a smaller wage difference, and even if it is still large, it isn’t a bad thing to provide an incentive for companies to stay in the US. This doesn’t amount to true protectionism, but it could provide companies that are on the line (such as IBM) from shifting jobs. No amount of tax incentives will help customer service reps I am afraid.
leapsecond -
It seems like car factories in Ohio are closing, not moving overseas. If you look at where cars are made it looks to me like these are not low-skilled jobs. Japan, US, Germany (Europe in general). All of those countries have a base of high-skilled labor. Also, cheer up about the weak dollar, it means it is relatively cheaper to pay US labor and easier to export our goods.
At some point though, I agree, we will have to get over protectionism and invest in new industries, which is fortunately part of Obama’s plan, and that will require real tax money/deficit spending. Is it worth spending tax money on research and development in new technologies to create new, high skilled jobs? I think so, but this is a valid point of difference.
October 14th, 2008 at 1:04 pm
You can’t create jobs without creating demand for the products or services that the company produces. You really think that a tax cut is going to open up factories that were going to close because no one is buying their products?
Also, more investment in infrastructure? Where is that money going to come from? Sounds very New Dealish to me, and as every is now finally acknowledging, FDR’s policies actually extended the Great Depression.
Also, this BS around 95% getting a tax cut? It’s a complete lie.
October 14th, 2008 at 3:14 pm
If a factory was going to move overseas there is the potential, what Obama is doing is altering the marginal costs to producers of expanding production by another worker. It is probably lip service but could work in some industries.
The money will come from tax raises on the wealthy and deficit spending. New Dealish? Well kind of, but not at all. The federal government has been working in infrastructure heavily since the 1950s in the form of highways and bridges (yep the interstate highway system, sound very Eisenhowerish?) And not everyone, err, not anyone accept some phony hacks are acknowledging that FDRs policies extended the Great Depression. Being most generous to you, the Great Depression would have gone the same length with or without FDRs policies.
About the tax cut, eh, this is another of those pushed lies and lies by the McCain camp that Obama won’t cut 95% of people’s taxes. Here you go, tax policy center:
http://www.taxpolicycenter.org/UploadedPDF/411750_updated_candidates_summary.pdf
and if you want a shorter summary:
http://1.bp.blogspot.com/_vt1LPZed0LU/SO7kIUJnZwI/AAAAAAAAAP4/eO2lVGpkpTc/s1600-h/image002.gif
via Economists for Obama.
October 14th, 2008 at 3:45 pm
Previous commenters are addressing this plan with more details than are available – and the devil is always in the details. California in the early ‘80s, while I was trying to get a new electrical contracting operation going, had a state incentive plan to spur hiring. While it did get some people into better paying jobs it had some severe consequences on business. A number of companies formed specifically to take advantage of the program, hired very low skilled people to perform electrical work, allowing them to bid much lower than other contractors and still make a good profit. This caused businesses with skilled employees to lose bids (and employees) or forced their bids down to a level where it threatened the solvency of the company.
The details of the problem aren’t as important as the example of how incentive programs, whether through sharing payroll obligation or providing tax credits introduce unanticipated problems. Since that time I haven’t seen any government program work any better. The best place for government is establishing the framework for lawful operation: don’t harm the workers, don’t harm the community with shoddy work, etc. and letting the Darwin factor sort out the winners.
October 14th, 2008 at 5:27 pm
http://online.wsj.com/article/SB122385651698727257.html
It’s not a tax policy. It’s a return to the Great Society Welfare policy. Depends on what you think government’s role is. Heck, if you’re open to having some monolithic entity take your money away and give it to someone else without your approval, vote for Obama.