The substance of Obama's speech on jobs really stood out last night - the President laid out a pretty comprehensive plan to stimulate the American economy with $447 billion worth of investments and tax cuts. Obama detailed the areas in which the government would invest, where they would cut and who they raise and lower taxes for. More importantly, he challenged Republicans over and over again to pass his bill, forcefully arguing that government has a serious role to play in America's prosperity and outlining government led initiatives like social security, community colleges, roads, schools and the internet that have defined the nation's ascendancy to super power status.
The package relies heavily on tax cuts - a calculated bargaining chip to force the Republican's hand in passing the bill, but it does contain spending measures that will help the unemployed back to work, get teachers back into schools and put American engineers and laborers to work on the country's infrastructure. Obama has pledged for the plan to pay for itself and outlined savings in Medicare and other government programs - another move aimed to force the Republican's hand.
If passed, will it work? It's hard to say, but again, the numbers involved probably aren't big enough to seriously tackle the nation's severe economic woes. Writes Paul Krugman:
That [$447 billion] may sound like a lot, but it actually isn’t. The lingering effects of the housing bust and the overhang of household debt from the bubble years are creating a roughly $1 trillion per year hole in the U.S. economy, and this plan — which wouldn’t deliver all its benefits in the first year — would fill only part of that hole. And it’s unclear, in particular, how effective the tax cuts would be at boosting spending.
But as Krugman also acknowledges it is something, and doing something is better than doing nothing (the only Republican proposal). He continues:
Some of its measures, which are specifically aimed at providing incentives for hiring, might produce relatively a large employment bang for the buck.
We have yet to hear the Republican's detailed response to the speech, but it doesn't require much imagination to predict what it will be: Yes on the tax cuts, no on the spending.
Obama has seriously upped the ante though, and rejecting his bill will make them look very bad indeed. Americans are seriously hurting right now, and Obama's proposals bring hope to millions in desperate need of jobs and security. Republicans reject the bill at their peril - times are too tough and there is simply too much at stake.
Full video below: