Column: Obama’s not-stimulus stimulus
Sep. 16, 2011
The opinions expressed by The Maneater columnists do not represent the opinions of The Maneater editorial board.
President Barack Obama outlined to Congress last week what was ostensibly a plan to reduce unemployment through hundreds of billions of dollars in spending and tax increases. The plan, which he insisted would get Americans back to work, was bipartisan and would be paid for without adding to the deficit. However, this plan is similar to other measures taken by his administration in the past.
It’s also interesting to note that the administration has abandoned the word "stimulus," although this is the same general plan as other stimulus packages. Even House Minority Leader Nancy Pelosi has urged fellow Democrats to not use the word "stimulus" anymore. Apparently when the last couple years of stimulus didn’t turn the economy around like promised, it’s time to ditch the word. This manipulation of vocabulary is very common throughout every administration. You may remember the Obama Administration insisting its actions in Libya were not war, but "kinetic military action." But this next round of not-stimulus stimulus doesn’t seem like it will live up to all the fanfare of an address to a joint session of Congress.
When rumors about the plan first started coming out, it was estimated to cost $300 billion. But by the time Obama introduced it to Congress, it was estimated at $447 billion, according to the Washington Post.
So, what does the plan do, and how is it supposed to be paid for? Half of the $447 billion is an extension of the Social Security payroll tax cut for employers and employees, which was already put in place by a previous stimulus bill. Another $62 billion is for extending unemployment benefits. So, two-thirds of the bill is nothing new. The remaining $140 billion is mostly for rehiring teachers, school infrastructure and transportation infrastructure (formerly known as ‘shovel-ready’ jobs).
The plan also has $467 billion in revenue (tax) increases, they reported, which Republicans are sure to love. This includes $400 billion in revenue found from eliminating itemized deductions for individuals making $200,000 a year or more or families making $250,000 or more. Another $40 billion in revenue comes from closing tax loopholes on oil and gas companies. It’s popular to stick it to the big oil companies, but oil companies will recoup this loss by raising gas prices, effectively making it a tax increase on everyone. It’s disingenuous for the administration to pretend any company would absorb billions of dollars in tax increases without increasing prices — because companies actually have to balance their budgets.
Obama took a calculated risk, oddly waiting a week to introduce his very urgent plan in front of Congress and the American people, especially because Republicans will not go along with almost half a trillion in increased taxes. It seems likely Obama may just get half of his plan through Congress, which will increase the deficit significantly (although I have found nothing that specifies a time frame for this plan). Either Obama thought he could use the bully pulpit of the presidency to force this plan through, or he expected Republicans to ignore the tax increases so he could blame them for increasing the deficit or jobs hostage to political ideology, in which case, the Obama Administration may have outsmarted itself again.
The president always gets some blame or credit for the state of the economy. If the plan passes, it will take a while to see its effects, but since it is mostly an extension of past stimulus efforts, it doesn’t seem likely to have significant positive results.