Obama’s jobs plan: timely, targeted, but incomplete

When the Obama administration designed its first economic stimulus measure in 2009, it tried to turn a double play of rescuing the country from recession while also advancing key liberal policy goals such as moving from fossil fuels to clean energy.

The stimulus proposals Obama announced on Thursday, in contrast, are tightly focused on one thing: job creation. They are, to borrow an Obamaland phrase, more targeted and more timely jolts for economic activity than the Recovery Act was in the depths of the Great Recession.

If you believe that the biggest reason America sits today on the brink of a double-dip recession is a nosedive in aggregate demand -- a vacuum of consumer spending that the federal government can and should fill in order to prop up recovery -- then the best news from Obama's speech was that the president appears to have learned from his past Keynesian mistakes.

For sheer stimulative purposes, the "American Jobs Act" Obama announced before a joint session of Congress appears much better designed than the Recovery Act.

It features creative attempts to encourage hiring through tax cuts, promote job-sharing through unemployment-insurance reform, prevent layoffs of teachers and police officers through aid to states, and provide direct assistance to groups of workers hurt most by the current economic situation -- such as young people and the long-term unemployed.

The largest boost from the proposals -- and probably the one most likely to garner Republican support and pass Congress -- figures to come from halving the employer-side payroll tax for the first $5 million in a company's payroll, and from a related plan to eliminate payroll taxes for added workers or increased wages. The Congressional Budget Office estimates every dollar of such cuts will spur up to $1.30 in economic activity.

But there are three glaring deficiencies in Obama's plan that should concern economists, lawmakers, and unemployed workers from across the political spectrum.

  • Obama told America on Thursday that the economic recovery "has stalled." But he didn't specify why it has stalled, or how the $447 billion, to-be-paid-for-later jobs plan he proposed would fix the country's core economic problems. The closest he came was saying that his proposed American Jobs Act would "put more people back to work and more money in the pockets of those who are working ... and give companies confidence that if they invest and hire, there will be customers for their products and services."
  • Obama chose a price tag for his proposals that is both large enough to antagonize Republicans and open himself to more "big spender" critiques, but not large enough to fill completely the yawning gap in global demand that Keynesian economists say is depressing the U.S. recovery.
  • Perhaps most importantly, the president offered next to nothing to help the still-sliding housing market, arguably the biggest drag on the recovery. The only mention of housing in the speech was a flick at pushing federal housing agencies to refinance more mortgages -- a drop in the bucket, at best.

Still, Republican leaders indicated Obama's plan would not be dead on arrival in Congress. "The proposals the president outlined tonight merit consideration," House Speaker John Boehner, R-Ohio, said in a statement. "We hope he gives serious consideration to our ideas as well."

Which brings up a final question: How flexible is Obama's plan? How willing is he to mash it up with Boehner's ideas, which go heavy on rolling back federal regulations?

Again, the president offered only clues in his speech, not a doctrine. "What we can't do -- what I won't do -- is let this economic crisis be used as an excuse to wipe out the basic protections that Americans have counted on for decades," he said.

Later, he added, "What's guided us from the start of this crisis hasn't been the search for a silver bullet. It's been a commitment to stay at it -- to be persistent -- to keep trying every new idea that works, and listen to every good proposal, no matter which party comes up with it."

"Listening" and "signing," of course, are very different things. The best designed jobs bill means nothing if the president doesn't get to sign it.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Sponsored by Brocade

    Best of 2016 Federal Forum eBook

    Earlier this summer, Federal and tech industry leaders convened to talk security, machine learning, network modernization, DevOps, and much more at the 2016 Federal Forum. This eBook includes a useful summary highlighting the best content shared at the 2016 Federal Forum to help agencies modernize their network infrastructure.

  • Sponsored by CDW-G

    GBC Flash Poll Series: Merger & Acquisitions

    Download this GBC Flash Poll to learn more about federal perspectives on the impact of industry consolidation.

  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

  • Sponsored by Aquilent

    A DevOps Roadmap for the Federal Government

    This GBC Report discusses how DevOps is steadily gaining traction among some of government's leading IT developers and agencies.

  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

  • Sponsored by CDW-G

    Joint Enterprise Licensing Agreements

    Read this eBook to learn how defense agencies can achieve savings and efficiencies with an Enterprise Software Agreement.

  • Sponsored by Cloudera

    Government Forum Content Library

    Get all the essential resources needed for effective technology strategies in the federal landscape.


When you download a report, your information may be shared with the underwriters of that document.