President Obama has again put forward a reasonable plan to create jobs with short-term stimulus and targeted tax cuts while paying for it though long-term changing of tax rates and closing loopholes that benefit the wealthy. This is econ 101, it's not voodoo economics or, as Paul Krugman and others call it, zombie economics.
How does Obama plan to pay for it? Days after he sent the jobs bill to Congress, he mapped out his plan for paying for it, sending a message straight to the Super Committee charged with finding the rest of the savings needed to complete the deficit reduction package. The plan was not designed to please Republicans:
(ABC News) The White House outlined $467 billion in savings to pay for the American Jobs Act through a series of tax policy changes, Office of Management and Budget Chair Jack Lew announced Monday at the White House daily briefing. While the president’s bill has a $447 billion price tag, Lew explained that the extra $20 billion is designed as a cushion to ensure the bill is “fully paid for” as the president has repeatedly promised.
Among the offsets suggested by Lew:
– New limits on deductions for income over $250,000. This would raise $400b over ten years.
– New formulas for taxing the income of hedge fund managers’ could raise $18 billion.
– Oil and gas measures, Lew said, would raise $40 billion.
– Limiting tax deductions for corporate jets would raise $3 billion.
The president hopes the special congressional supercommittee already searching for $1.5 trillion in deficit reduction will “overachieve” and consider these proposals or find different means of offsetting the nearly half a trillion he needs to pay for a job creation bill.John Boehner wasted little time shooting down both the jobs plan and Obama's way of paying for it:
Republicans have already said they do not support many elements of Obama's $447 billion jobs package and will not back the tax increases he has proposed to pay for it.
Boehner's comments indicated that the bill is unlikely to emerge from Congress in anything like its current form.
Even as Boehner said there were some opportunities for common ground, he indirectly criticized the temporary tax breaks that other senior Republicans had said they might support.
Boehner attacked "short-term gimmicks" and said a proposed tax credit for businesses that hire new workers would have little impact if employers were worried about other government policies. Washington's energies would be better channeled toward reducing regulations on business, he said.
"Let's be honest with ourselves. The president's proposals are a poor substitute for the pro-growth policies that are needed to remove barriers to job creation in America," he told the Economic Club of Washington.
Boehner said a newly created committee of Democrats and Republicans should try to simplify the tax code as it works to trim at least $1.2 trillion from annual budget deficits over 10 years.
But that overhaul should not bring more revenue to the government and the committee should focus only on spending cuts and benefit reforms to trim deficits, Boehner said.
In short, Obama wants to create jobs. Boehner wants to reform the tax code, which largely means lowering taxes on the rich, permanently. Raising taxes is off the table. Therefore, Obama's bill is off the table.
I'm reminded of the great line from Cool Hand Luke: "What we have here is failure to communicate."
In the end, my only hope is that Obama draws a line in the sand, one that Democrats can stand behind for the 2012 election. If he caves or "negotiates" with Republicans, then this whole exercise in laying out a jobs plan, for which Obama dramatically threw down the gauntlet before Congress in a televised joint-session, will have been theater and nothing else. And theater with a denouement that fizzles, like so many other boring, disappointing prior performances.
I say once more to Obama, with low expectations, "Hang tough!" What have you got to lose?