Wednesday, January 7, 2009

Obama Stimulus Plan

"I'm from the government and I'm here to help."

Obama's Plan includes: $1 Trillion, 600,000 Government Jobs and Few Media Questions--(excerpts from the Business and Media Institute) (Photo from the Patriot Post)

"Obama has repeatedly said he sees the stimulus as a means of “saving or creating 3 million jobs.” Even on Jan. 7, at a press conference naming Nancy Killefer the Treasury Department’s first “chief performance officer,” a position created to track government spending, he told reporters the stimulus, or “economic recovery and reinvestment plan,” would require “dramatic investments to revive our flagging economy – save or create 3 million new jobs, mostly in the private sector.”

However, only a report by ABC’s Jake Tapper on the Jan. 5 “Good Morning America” pointed out the magnitude of “saving or creating 3 million jobs,” as Obama has explained on repeated occasions.

Obama’s team is pitching a plan that will cost between $675 billion and $775 billion, one that creates three million jobs, 80 percent of them in the private sector,” Tapper said. “But they will face skeptics.”

Tapper illustrated this same point on his blog and included Republican Senate Minority Leader Mitch McConnell (Ky.) appearance on ABC's "This Week" in his “GMA” segment.

“Well, do we really want to create 20 percent of the jobs in the public sector?” McConnell said. “That would be 600,000 new government jobs. That’s about the size of the post office workforce.”

It’s difficult for some to imagine how 600,000 jobs could be created out of thin air. Conservative talk show host Rush Limbaugh theorized that one possibility could be the reinstitution of the draft on his Jan. 5 radio program.

Barack Obama says he’s going to create three million new jobs, 80 percent in the private sector, which means 20 percent will be government jobs. That’s 600,000 government jobs. Where is he going to be able to do that real quick? Where could you do this in a matter of months? I said you could reinstitute the draft.” ...

...But Peter Schiff, president of Euro Pacific Capital, explained that in theory government can’t create jobs in a Dec. 27, 2008 Wall Street Journal op-ed.

“Governments cannot create but merely redirect,” Schiff wrote. “When the government spends, the money has to come from somewhere. If the government doesn't have a surplus, then it must come from taxes. If taxes don't go up, then it must come from increased borrowing. If lenders won't lend, then it must come from the printing press, which is where all these bailouts are headed. But each additional dollar printed diminishes the value those already in circulation. Something cannot be effortlessly created from nothing.”

And the same is true for job “creation” by the government – as Schiff noted. Government’s interference in the labor pool by competing with private-sector jobs or by propping up inefficient jobs through acts like the auto bailout would disrupt the marketplace and further damage the economy.

“Similarly, any jobs or other economic activity created by public-sector expansion merely comes at the expense of jobs lost in the private sector,” Schiff continued. “And if the government chooses to save inefficient jobs in select private industries, more efficient jobs will be lost in others. As more factors of production come under government control, the more inefficient our entire economy becomes. Inefficiency lowers productivity, stifles competitiveness and lowers living standards.” ...

...“Later this week, he [Obama] will be delivering what aides are calling a major address on the economy and what to do about it,” Tapper said in his Jan. 5 “GMA” report. “But first, he's coming here to Capitol Hill to talk to Democratic and Republican leaders about the stimulus package, which could include up to $300 billion in tax cuts.”

But are they really tax cuts? Depending on who benefits, they’re not, according to economist Thomas Sowell, They’re really “welfare” if given to those who don’t pay taxes, the senior fellow at the Hoover Institute at Stanford University told Fox News Channel’s “Hannity & Colmes” co-host Alan Colmes on the Jan. 5 broadcast. ...

...Although they have not gotten a lot of broadcast network media coverage, there have been some alternative options for economic stimulus.

Laffer has proposed an across-the-board income tax holiday, which he claimed would stimulate economic growth.

“If you wanted to do a temporary targeted stimulus package, why don’t you do this – the national income tax, federal income tax is about $1.4 trillion projected for next year, a little less than that,” Laffer said. “Just imagine if we said for the next six months – Jan. 15 through July 15 – there will be no income taxes on anybody who earns income during that six month period – could you imagine the boom that we’d have during that six month period? That’s what you really want to do, is make tax rate reductions, so people want to work more, produce more hire more and buy more during that period.”

Some critics argue that wouldn’t be an effective stimulus, just as those that oppose the Obama tax cuts, because not everyone pays income taxes. Rep. Louie Gohmert, R-Texas, proposed a two-month tax holiday, which would include not just personal income taxes, but also FICA (Federal Insurance Contributions Act) taxes – Social Security, Medicare, etc."...

Newt Gingrich states in his column: -The Four Things to Look for in the Stimulus Package
As Congress and the President move forward to pass an economic stimulus package later this month, here are four things to watch for:

1. How does it affect small businesses and the self-employed? Small businesses are the job creation engines of our economy. Any stimulus package should focus first and foremost on them.
2. How are entrepreneurial start-ups supported and encouraged? We should have our economic eye on the General Motors of the next thirty years, not the last thirty years.
3. Does the plan maximize the rate of investment in U.S. companies? By making the United States the best place to invest, we will make it the best place to create new jobs.
4. Does the package encourage growth in productivity? Making American workers more productive not only increases our ability to compete with foreign competitors, it also increases incomes.

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