The Politics of the Jobs Speech Last Night

Back in early 2009 the President opened his administration by telling Congress if they did not act immediately to pass a stimulus that unemployment would skyrocket, possible as high as 9 percent. The Recovery Act zipped through Congress, hundreds of billions were spent on infrastructure projects, on rescue packages to states to pay teachers and firemen, on tax cuts for the middle class, and tax credits for small businesses.

Two and half years later the President went before Congress and, terrified of a double dip recession, demanded his American Jobs Act be passed immediately. Once again terrified of unemployment and recession, he proposes spending hundreds of billions on… infrastructure projects, on rescue packages to states to pay teachers and firemen, on tax cuts for the middle class, and credits for small businesses.

You can not make this stuff up.

To be fair to the president, the form and flourish of the speech last night was better written than my proposed speech idea (though not in substance), and it was delivered with force that we have not seen for a while in his presidency. He certainly rallied many to his cause. And for a brief moment one might have thought he really could bridge the partisan divide.

Then everyone realized there was a Tea Party and the hopes for bi-partisanship disappeared. Not that this is necessarily a bad thing. A bi-partisan agreement to invade Mexico wouldn’t be good. A bi-partisan constitutional definition of marriage between a man and woman would be terrible. And bi-partisan continuance of the Patriot Act is harmful.

The debate should be on substance. And if the goal of Jobs Act is to reverse the unemployment trend, then it is a bad plan and Tea Party principle should stop it in its tracks.

I don’t think the plan is really aimed at reversing unemployment though. As I outlined yesterday, this can’t be done in a short-time frame and we face not the remnants of a contraction and recession, but a shift in the fundamentals of the American economy.

I think the plan is about preventing a double dip recession. The White House probably thinks they can survive perpetual 9 percent unemployment when voting time rolls around next November. Double-digit unemployment might kill them. And a second recession (assuming the first one really ended given the weakness that is trying to measure GDP) would certainly be a huge hurdle to face. Looking at the details of this Jobs Act, it appears designed politically to try and give the economy a little jolt that can last 14 months or so before petering out like the few stimulating activities of the Recovery Act.

See the American Jobs Act here and then compare it to programs in our Taxpayer’s Guide to the Stimulus. A lot of similarities. We’ll be pointing out some of the differences on the blog later today.

Anthony Randazzo

Anthony Randazzo is director of economic research for Reason Foundation, a nonprofit think tank advancing free minds and free markets. His research portfolio is regularly evolving, and he maintains a wide interest in economic policy at both a domestic and international level.

Randazzo is also managing director of the Pension Integrity Project, which provides technical assistance to public sector retirement system stakeholders who are seeking to prevent pension plan insolvency. His research focus on the national public sector pension crisis has a dual focus of identifying the systemic factors that cause public officials to underfund pension obligations as well as studying the processes by which meaningful pension reform can be accomplished. Within the Project he leads the analytics team that develops independent, third party actuarial analysis to stakeholders considering changes to public sector retirement systems.

In addition, Randazzo writes about the moral foundations of economic theory, and is currently developing research on the ways that the moral intuitions of economists influence their substantive findings on topics like income inequality, immigration, or labor policy.

Randazzo's work has been featured in The Wall Street Journal, Forbes, Barron's, Bloomberg View, The Washington Times, The Detroit News, Chicago Sun-Times, Orange-County Register, RealClearMarkets, Reason magazine and various other online and print publications.

During his tenure at Reason he has published substantive research on housing finance, financial services regulation, and various other aspects of economic policy at the federal level. And he has written regularly on labor economics, tax policy, privatization, and Turkish-U.S. political and economic issues.

Randazzo has also testified before numerous state and local legislative bodies on pension policy matters, as well as before the House Financial Services Committee on topics related to housing policy and government-sponsored enterprises.

He holds a multidisciplinary M.A. in behavioral political economy from New York University.

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