In the past week since President Barack Obama presented his "American Jobs Act," almost every political pundit, economist and politician has weighed in on the massive $400 billion plan. Obama's American Jobs Act (AJA) is not only a controversial piece of legislation, but also a prime example of political theatre put on for the American public. Everyone in Washington, D.C. is in the spotlight right now. A Washington Post poll published in August showed 78 percent of Americans are dissatisfied with the way America's political system is working. Politicians are painfully aware of this. Obama is trying to save his job, members of Congress are trying to save their jobs and the American people want ANY job.
For all of Obama's pomp and circumstance regarding the AJA, it is confusingly similar to his 2009 American Recovery and Reinvestment Act (ARRA). Both acts provided tax incentives for individuals (albeit in different categories), tax incentives for companies, infrastructure investment, aid to schools to prevent teacher layoffs and unemployment benefits. If you put the two acts next to each other, AJA appears to be ARRA part two. The main difference is that ARRA also focused on renewable energy initiatives, scientific research and housing benefits for lower-income individuals while AJA is going to focus more on tax breaks and infrastructure improvements. The ARRA has cost $840 billion to date, according to SF Gate.
When it comes down to it, Obama's plan is composed of temporary tax breaks which Obama claims will create permanent jobs. I'm not an economist, but I don't believe it's possible to sustain long-term, permanent jobs with temporary tax breaks. Why would employers hire new employees to get a tax break if they knew those tax breaks will likely disappear in the future? All of these gimmicks have been tried in Obama's 2009 ARRA plan and they have yielded little results. So why should we keep trying if we know it will only add to our deficit?
Obama's ARRA plan met major opposition during its passage and that was during a time in which Democrats still controlled Congress. Passing a similar act through the current Republican-dominated Congress will be near impossible. In my opinion, this act is dead on arrival, but it will undoubtedly make for some entertaining political theatre for the next few months.
Obama's job approval rating is very low; a CBS poll showed it at 43 percent as of last week. Obama needs some serious PR help to improve his chances at reelection.
AJA will serve an important purpose in Obama's reelection campaign. If Obama's plan passes, he will surely tout its potential success as a reason for his reelection. If Obama's plan fails to pass, he will tout it as a reason to remove obstructionist Republicans from office. Obama also repeatedly stated in his AJA speech that the plan included past proposals from both Republicans and Democrats, which can be read as Obama's desperate attempt to appear more moderate to conservatives who he will need the support of to win reelection.
President Obama stated multiple times during his speech that "everything in this plan is paid for," obviously a response to Conservatives who feel Obama is spending the country into an even greater deficit. However, I dislike that Obama has placed responsibility for finding major tax cuts with yet another "Super Committee," essentially removing his own accountability and responsibility for funding the Act. In 2009, Obama also claimed the $830 billion ARRA plan would be fully paid for, but so far the plan has been completely paid for by deficit spending. Why should we expect this time to be any different? Especially with a Republican-controlled Congress who will further complicate agreeing on a funding source for the plan. Claiming the act is paid for will definitely be coming back to haunt Obama when his Republican opponents point out the increase in deficit spending as a result of both the ARRA and AJA.
Some aspects of President Obama's plan are good ideas individually. However, presented all together, they create a jumble of temporary tax cuts and gimmicks. Whether the plan will hurt or help Obama's reelection remains to be seen, but we definitely haven't seen the last of the AJA yet.
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