Real Job Creation Policy vs. Bizarro World

I just can’t step back from the crap being pushed by politicians as “jobs” policy these days.   I can’t believe any one is actually falling for the line that basic corporate welfare programs and subsidies are actually going to create jobs because there’s never been any evidence of that being correlated in the past and there is certainly no evidence of that happening today.  Lest we forget, we have about 11 years of experience with corporate tax largess, deregulation of financial markets, and low taxes on capital gains. Yet this century has seen nothing but miserable job creation.  We’ve got nothing to show for it but the biggest recession since the Great Depression.

Here’s Robert Reich calling Romney’s job creation approach “bizarre”.  However, it doesn’t really sound any different from that offered up by any of the other candidates either and that includes the President.  This bothers me to no end and hence, I keep blogging on about it.

“Mitt Romney kind of has the odd idea, and it is a bizarre idea, that at a time when corporations are scoring record profits. At a time when you’ve got them sitting on $2 trillion of cash they don’t even know what to do with, that somehow if you give them more tax cuts and deregulate so you reduce their costs even further, they will then create jobs.

“They don’t create jobs now, he assumes, because their costs are too high or they’re not making enough money. Well, the reality of course is just the opposite,” former Secretary of Labor Robert Reich said on MSNBC’s “The Last Word.”

“They don’t need more money, companies are doing very well,” Reich said later on in the segment.

Corporations are flush with cash at the moment.  They just aren’t doing anything with it because they won’t expand unless there’s demand for their products and services.  As I demonstrated yesterday, the bottom has fallen out of consumer demand and that’s stymied economic expansion.  We do not need to appease some imaginary confidence fairy.  Businesses need paying customers. One of the primary drivers of economic activity in this country since World War 2 has been construction.  The housing market is still in big trouble and we have excess supply of both commercial and consumer real estate.  What business person is going to hire more people and produce stuff that no one buys?

We’re going to be live blogging both the Republican debate tonight as well as the President’s job speech.  Neither promise anything more than distinctly unproven economic policy.  Even the President is thought to not believe what he’s going to be saying if you believe this. What kind of leader pushes policy he knows to be wrong?

The centerpiece of the job creation package that President Obama plans to announce on Thursday — payroll tax relief for workers and perhaps their employers — is neither his first policy choice nor that of many economists. But it is the one that they figure has the best chance of getting Republicans’ support.

Mr. Obama has signaled that he will propose to extend for another year a reduction of two percentage points in the 6.2 percent Social Security payroll tax that employees pay, which means about $1,000 more for the average household. And he is considering a proposal to expand the tax relief to employers’ share.

In his prime-time address to a joint session of Congress, Mr. Obama is expected to call for a package totaling several hundred billion dollars that would also extend other business tax cuts, put federal dollars into building and repairing roads, rails, airports, schools and other infrastructure projects, and provide aid to states to avert more layoffs of teachers.

But the single biggest stimulus measure he will propose is likely to be temporary payroll tax relief. If the current tax cut, due to expire at the end of the year, is expanded next year to employers as well as employees, it would pump roughly $200 billion into the economy, with the aim of stimulating much-needed demand for goods and services from consumers and businesses and, additionally, of giving companies an incentive to hire.

For the White House, its appeal is that it may be the only large stimulus measure that can pass Congress this year given Republicans’ preference for tax cuts.

And if Republicans oppose him, the White House figures Mr. Obama has the better of the political argument because he will be trying to block a tax increase that otherwise would apply to virtually all households on Jan. 1.

Republican leaders have said they might support the payroll tax cut’s extension if its cost is offset by equal spending cuts, a condition they did not apply for extending the Bush-era tax cuts on high incomes. Mr. Obama has said he will propose long-term deficit savings to offset the short-term costs of his stimulus proposals, though that is not likely to satisfy Republicans.

Look, what in his 2 1/2 years in office should leave him with the impression that he’s going to get anything past the Republicans in Congress?  Half of them are indicating they probably won’t show up for the speech.  Ever since the man’s taken office he’s offered one Republican plan after another.  I still can’t believe after years of fighting Dolecare in the 1990s, the Democrats were forced to pass that stupid thing and it now wears the Obamacare label.  What kind of leader pushes policy that his own party fought for decades?

I have no idea what trade agreements or patent reform or reducing regulations have to do with job creation either.  None of that has ever been shown through research to be germane.  But again,  all you have to do is look at the amount of cheap money and the excess cash sitting on corporate balance sheets right now to know that businesses don’t need any more incentives to do something they aren’t doing any way.

The other thing that is most confusing is that the President’s plan will rob Peter to pay Paul because he’s going to make this ‘revenue neutral’ to appease Republicans.  Again, with this appeasing pipsqueak Cantor and the rest of the whackos in the Republican caucus.  Supposedly, some direct infrastructure spending and some direct aid to states to keep teachers in place is going to some how magically turn around a 9.1% unemployment rate.  I don’t see how that’s going to do anything on the level that he’s talking about –$300 billion–is a token amount of money in a $15 trillion economy and the offsets will likely take away jobs from wherever they’re pulled. The other simply confusing proposal has to do with tax breaks for equipment which is really strange given that it’s likely to increase current worker productivity making hiring additional workers questionable.

In his speech on Thursday night to a joint session of Congress, Obama will also consider a tax benefit to those businesses that hire the unemployed, with a price tag of around $30 billion. Public works projects will be included, but the AP reports that this will be less than $50 billion of the package.

The president also will continue for one year a tax break for business that allows them to deduct the full value of equipment.

The local aid that Obama intends to propose it aimed at preventing teacher layoffs, officials said.

The New York Times said the cost of the package would be “several hundred billion,” while the Washington Post estimated it to be “at least $200 billion.”

This is clearly a set of tax giveaways that the government can’t afford that won’t achieve much of anything other than further the Republican agenda of starving the beast.  What on earth does this president have in his head?  I can’t figure out any logical, reasonable strategy for doing these things.  Every time he furthers the Republican agenda it basically makes things worse for his reelection outlook.  His actions are completely unpopular when measured by polls. He’s numbers are approaching those of Bush by basically repeating the Bush-Cheney policy on steroids.  Unless he’s trying to become the President of the Chamber of Commerce, I’m not seeing any strategy here.  It’s like he so desires bi-partisan approval that he’s willing to throw anything up against the wall to see what possibly sticks.  Meanwhile, the Republicans are getting Republican policy without even putting any skin in the game. I just don’t get it.

Anyway, Minx and BB have promised to watch and liveblog the Republican debates tonight.  I don’t think I can do that because it will just be a contest to see who can be the meanest in a contest to beat up modernity, science, and people that aren’t rich.  I frankly see no purpose in continually watching people talk about issues that the civil war settled. I will watch the President’s speech because at this point, I’m looking for any sign of lucid economics and a strategy that doesn’t just infer faulty marketing.  Who knows, maybe the sky will open up, a choir of celestial beings will start singing, ray of sunshine will start streaming out of gold-rimmed clouds, and all my questions will be answered.  OR NOT.