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Jeff Harding: Obama Goes ‘Japanese’ — $447 Billion in New Infrastructure Spending
President Barack Obama just finished his jobs speech, and I can report with high confidence that it won’t move the needle. In my article last week, “Unemployment Will Remain High Because Obama Will Do All The Wrong Things”, I said:
“I suspect that President Obama in his speech this week will come up with the same remedies that his administration has been proposing before, but repackaged to make it sound like bold new remedies. More tax breaks for employers, more ‘focused’ spending on infrastructure, job training programs and green jobs.”
And that is exactly what he is proposing in his American Jobs bill that he announced Thursday night. He proposes to extend the payroll tax cut (50 percent) for another year, give more tax incentives to businesses hiring workers or raising workers’ wages, and spend massively on infrastructure. He didn’t exactly say “how much” spending, but reports are saying $447 billion. An outline of the bill can be found here. It is a piece of liberal trash, and I urge you to read it — but not on a full stomach.
He made it sound exciting, as if they were really doing something but not really. It all sounds very familiar. He proposes a lot of tax incentives or spending for specific classes of workers: companies hiring veterans, hiring workers jobless for more than six months, summer jobs next year for disadvantages kids, hiring more teachers, continue tax breaks for “average working families,” some kind of incentive or penalty for corporations hiring workers in America, not abroad, and mortgage refi incentives.
Obama certainly made all the new spending sound exciting. We’re going to have first-class airports (a snub at the Chinese), great bridges and roads, first-class schools. We’re going to be a powerhouse based on all this useless spending. Look, I know there are lots of potholes on the roads, but are trucks having a problem getting goods to us?
How to pay for it? He noted the new budget deal cuts $10 trillion in the next 10 years, plus another $1 trillion next year in cuts determined by the congressional “Super Committee.” He said we need to pass it right away but not let it add to the deficit. He proposed “cuts” in Medicare, Medicaid (“reform our health-care system to strengthen Medicare”), but he didn’t offer anything beyond that except that “we’ve got to work together.” He also proposed tax hikes for the wealthy and corporations. First of all, he said even Warren Buffett agrees he should pay more taxes. Then he said we need to reduce corporate taxes, and then he said we need to get rid of corporate tax loopholes. I don’t know how you can lower taxes by raising taxes.
This is the Japanese approach to economic recovery. They spent trillions of dollars and have a first-class, wasteful infrastructure and a stagnant economy. The idea that you can spend more and cut the budget is a fantasy. My guess is that they will have some CBO or OMB study saying it’s feasible, but the “cuts” will all be back-ended — if they are real at all.
He made a big pitch for the role of government in the economy and how, starting with Abraham Lincoln, the partnership of government and business made America great. “Where would we be without our colleges?” he asked. Ask Harvard or Stanford, maybe they know. To the Tea Partiers in the audience he asked, “Do we dismantle government and say you are on your own? That’s not what America is. Yes we are a country of rugged individualism but we are also all connected as a people.”
This is one of the things I really dislike about the guy. He trivializes the opposition. It’s one of those, “Well, everyone knows ...” kind of put downs, well, on you if you read this blog. It’s like “economist’s say ...” as an answer to you wack jobs who don’t buy Keynesian economics.
This speech is another liberal fantasy by Obama. He is clueless and apparently desperate because he can’t come up with anything that works. I wonder what he would say to the question, “Why hasn’t the $830 billion Recovery Act spending worked to create jobs as you said it would?”
You are witnessing firsthand the further destruction of our economy because this new spending will add debt upon debt to no economic gain. And to be clear, it is the failure of Keynesian economics on a grand scale.
— Jeff Harding is a principal of Montecito Realty Investors LLC. A student of economics, he has a strong affinity for free-market economics. This commentary originally appeared on his blog, The Daily Capitalist.
» wrote on 09.10.11 @ 07:18 AM
Wow, you predicted that? Did you realize most of the speech was pre-announced last week?
The last time we were in a hole like this was the Great Depression, and guess what? Massive spending on the New Deal and WWII got us out, just as Keynesian Economics would predict. Yeah, why listen to economists, right?
Consumers drive this economy. If they keep getting laid off they stop spending. The best thing the government can do right now is to make real investments in this country that also put paychecks in consumer pockets. Yet some folks want more layoffs. Let the bridges, airports, rail lines, and highways crumble. Right? Then what? You’ll step out of the woods in your coonskin cap and start over?
If everything were so simple, then we could take advantage of the amazing number of simpletons we seem to have writing op-ed pieces.
There is a lot of cash sitting on the sidelines, accumulated through the temporary productivity gains of staff reductions. That cash will eventually evaporate as companies further downsize and keep cutting checks for the executive staff until the lights go off. Demand is needed, and people without jobs not only do not buy stuff, they scare the people with jobs into not buying. They scare investors away from funding new companies.
» wrote on 09.10.11 @ 04:49 PM
After all the hype, and extra vacation time, there STILL is no plan. The World’s Smartest Man is all talk and blather.
» wrote on 09.10.11 @ 11:49 PM
PGL we used to call it…All hat and no cattle. But you are right, our little narcissistic professor certainly never misses the opportunity to miss an opportunity. A rigid, and closed mind for sure. 2012 baby.
» wrote on 09.11.11 @ 07:04 AM
Speaking of opportunities, Dan, how was your meeting at Arlington West? Did you make it?
» wrote on 09.11.11 @ 08:19 AM
All the opiners, would be economic experts have at it. The only hope is the recovery of a stronger manufacturing based economy. That certainly will not happen in tourist and government based economy of SB. We will need to look elsewhere. Good news that Bank of America is laying off 40k. A step in the right direction shifting assets away from financial sector and the money manipulators who got us into the current mess. Buffet and his ilk are not saviors, they are the culprits. Nor are the green technology naysayers to be listened to. We need to advance carbon economy, nuclear power, greening world, and stop buying crap from China. Obama and Keynesian cohorts are a lost cause. But so are the Austrian School supply-siders. The answer my friends is Blowing in the Wind. We need to take back the country from the Ivy League numbskulls. Start a business, create jobs one at a time.
» wrote on 09.11.11 @ 08:25 AM
Nope. Wasn’t in town. Will be for the next tho. Wear a name tag and please take a bath before you head down. Maybe you can join in, show your support and place some markers. I’m happy you are concerned. Did we miss you?
» wrote on 09.11.11 @ 11:00 PM
Damn how good it would be to go back to the good old days of budget frugality under Reagan and the Bushes.
» wrote on 09.12.11 @ 02:23 PM
Thanks for echoing my rants Earl, you are one of the few who get it. Of all the industrial nations on earth, America is the only one that actually encourages its manufacturing to be done outside of its economy. This philosophy was put forth by those insipient Ivy leaguers, they saw our nation as an “administrative shell” orchestrating the rest of the world’s activity. So typical of academic narcissism. The rest of the world doesn’t need our stupid expertise and only sees us as a market to sell stuff they made for us. The plan was a complete failure now illustrated in our accumulated personal and public debt over $50trillion.
Of course we are now bankrupt, having hawked our ability to make new wealth to our competitors and then turning around and borrowing the wealth they are now making to fund our lavish lifestyles.
People we are still the largest manufacturer on earth, twice the size of the next five largest. But we need to be 10 times that in order to pay for what we consume. We need to be 20 times that size if we ever want to pay off the debt we have currently accumulated and we need to be 35 times greater in manufacturing if we want to do both and be able to pay for future entitlements. Get the picture dodo heads? That’s where we were 50 years ago, relatively speaking. So yes we could afford freeways, bridges, other infrastructure and lavish entitlements. When we started sucking more out of our wealth generators than they could supply in new wealth and actually punished them through over regulation and over payment of wages and salaries we began a 40 year decline in new wealth generation. Of course while this was happening the Keynesians and gamblers did a good job in hiding our decline by fiddling with the books and mastering the phony façade of our economy, propping up paper wealth as real wealth in an attempt to hide the rot underneath.
The bubble popped on one segment of our economy and now the entire scam is exposed. We are not rich, we are not productive and we are not great. We are a bunch of sorry lazy, selfish scum who lie cheat and steal our way through life in everything we do.
We cannot pay for shit out of the accumulator’s pockets. All Warren’s money and all of Soros’ money doesn’t make a dent. We can punish our accumulators and regulate the middlemen out of existence in a vein attempt to rein in personal greed but it won’t do a damned thing as long as we continue to borrow what we consume.
We have to make every thing we consume AND then some. I don’t begrudge Buffet his wealth, just his lunatic position that his accumulation of it somehow makes him smart, smart like a fox that is. He produced absolutely no new wealth and only accumulates wealth at the expense of the economy, so go ahead Warren and write the government a big fat check for all the guilt you feel for ripping us all off. Just leave the producers alone. For those of you still following the Keynesian\Harvard school of economics philosophy of gambling and speculating your way to wealth the producers are those who actually produce more wealth than they consume, and there ain’t to many left anymore. They run factories, foundries’ and assembly plants. They turn material into goods and make more than we consume to sell to foreign economies. They should be protected by not screwed by our trade laws so some Wall Street fat cat can make a killing. Junk bond pirates should be arrested, tarred and feathered and marched down main street for the criminals they are. , right along with the finance industry, lawyers and union heads. Get rid of these toxic parasites and watch how fast the economy takes off.
» wrote on 09.12.11 @ 04:08 PM
Once again the charlatan, insipid commenter Petry has pronounced his arrogance and utter ineptitude to the fine readers of NoozHawk - nice comment Dan. You’re doin a heck of a job Petry!
The irony is that Obama takes charge, puts forth an actual tenable plan. A plan that encompasses many past successes by the GOP and the Democratic party - and yet still, the sheep of the right yell and scream that the man is nothing more than a orator. And to further the irony – Its not the Presidents job to write legislation its his job to be looking down the road 5, 10, 15 years and to point us and inspire us to move in the correct direction.
You people are seriously ill. Not only do you lack the foresight you lack the ability to recognize the opportunity. Instead you plead immovable pain and inspire hate and rash action. Nice legacy you leave…
The balls in your court Republican gang. Its time you stopped parroting your corporate warlords and started acting. Its time you put your mothers inheritance where your mouth is… Come on people, where is your plan to turn the ship around? The ship you sailed into the oblivion, the very same ship you claim to honor is the very same one you disparage and destroy.
» wrote on 09.12.11 @ 04:52 PM
Some nit wit, what in the hell are you babbling about? What tenable plan are you referring too, the first one that didn’t work or the second one which is a smaller differently named plan but same as the first that won’t work?
Better yet forget Obama, genius, tell us what you think might work. I laid mine out for all to see, argue with and criticize, so let’s see what you wonderful genius liberal ding bats have to offer.
And please, don’t try the “well will just call it something else but use the same plan as last time” approach now being plied by the pied piper of bankruptcy, Barrack Obama. You tell us what you think is the problem, why and what you would propose to do about it.
For those of you watching, reading and listening intently don’t expect much from the liberal hoard. They haven’t got a friggen clue and all their pet solutions have burned to the ground here and abroad and everywhere they have been tried. To think you can solve insolvency, starvation, poverty and a crumbling infrastructure by redistributing a shrinking pie is about the stupidest thing on earth, but that is the jist of the liberal answer to all economic woes. Just steal form those that have and give to those who won’t and all is good. Except when you take enough from the winners, the successful and the doers they eventually give up and join the loser, taker, slackers and nothing gets made anymore. Need proof, look at the old Soviet Union for the answer and look at China for the solution (and they didn’t even have to give up their tyrannical nanny state!)
» wrote on 09.12.11 @ 05:15 PM
Thanks. But in the future be original and try not to cut and paste from others.
» wrote on 09.13.11 @ 09:33 AM
Cut n paste? Really? Wow.
Dan, I have officially concluded that you are indeed a few tools shy of a full shed. Which actually explains everything about your sociopathic rants and your clear inability to fathom beyond your myopic view.
AN50 = you need to stop pretending and start learning. There are millions of books and words for you to engage. Perhaps you’ll discover that millions of people have taken the time to study life, history and the sciences in pursuit of knowledge before they make asinine points and absurd assertions.
» wrote on 09.13.11 @ 10:10 AM
Uh huh, and what was your brilliant contribution, somedope? Oh, attack the messenger but avoid the message. You are an idiot, a self absorbed, intellectual narcissist and quite stupid. There, is that what you wanted, personal attacks? I have lots more you big stupid moron. Oh but wait, there is a subject here. You were asked a direct question, which, if you had a brain, you might have attempted an answer. But nooooooooooo, you chose the new liberal tactic, can’t argue a point, so attack the messenger. Nice try, but it doesn’t work in the real world only in your little dopy liberal circles.
I wrote a considerable piece at the top and no comments from you losers. If you want to say I am an ignorant twit, you have the opportunity to make your case based on what I wrote, but you don’t, instead its “oh ya, well you’re just stupid, baaawaaa!”
Ok, last chance, what is your solution genius? What is the problem and how would you solve it?
» wrote on 09.13.11 @ 11:54 AM
Obama and the rest of you lefties seem incapable of learning anything. This government driven spending to spur the economy has never worked. The great depression was caused and prolonged by government policy.
Rambler, I suggest you read “The Forgotten Man” by Amity Schlaes before you use that example. As usual you are clueless. These articles talk about your assertion regarding WWII:
http://www.weeklystandard.com/articles/ultimate-stimulus_592145.html?nopager=1
http://www.nationalreview.com/articles/275361/false-wwii-analogy-victor-davis-hanson
http://spectator.org/archives/2011/08/03/the-disgrace-of-obamanomics
Government spending money creates no new aggregate demand because the money they spend is taken from the private economy in the form of taxes or borrowing in the first place. That money is no longer in the private economy. Taking money from one pocket and putting it into the other is not going to create any economic growth. It can’t work. It never has and it never will.
It didn’t work in the depression, during Japan’s lost decade and it hasn’t now. We have racked up $4T+ in new debt in the last three years due to government borrowing and spending. How’s our economy? We all can see with our own eyes this isn’t working and we have racked up huge debts to boot.
The fact that Obama is a proposing a new stimulus is a defacto admission the first one(s) failed now isn’t it?
There have been at least 5 efforts at various stimulus since 2008. Bush had a $150B tax rebate, we had the disastrous waste of money ARRA (the “stimulus”), cash for clunkers, first time home-buyer’s credit, and cash for caulkers. We have no growth 16%+ underemployment and are quite possibly headed for a new recession.
And now our idiot President, supported by economic illiterates like you fools, want to do more of the same that has so far been a colossal failure.
Pass the Advil, I’m getting a headache. Nov 2012 can’t come soon enough.
» wrote on 09.13.11 @ 11:55 AM
Are you for real? HA HA, you’re delusional.
To be succinct:
I do not argue with idiots in public.
PS:
You should look up the word “projection”. Specifically its use in Psychology.
» wrote on 09.13.11 @ 02:55 PM
you, folks, are missing one of the main points: the Democratic distaste for philanthropy, based on it being unfair. Also, cherry-picking a few charities and foundations whose donors use the tax shelter to promote their for profit business. For example, the Kuhns.
The disastrous effect of stripping the charitable gift deduction from the super rich must not go unnoticed. There is plenty of evidence that private philanthropy has been a positive alternative to government spending on the tired and troubled masses, not to mention funding for scientific research and cultural projects. Sure there has been some questionable spending, but compared to government waste it is miniscule. Watch this matter closely. While the middle class gives a higher percentage of its worth to charity than the super rich, these ricos still give in the billions. We should be encouraging them to give more, not take it way for the government. That is really lame, but that is your president in action.
» wrote on 09.13.11 @ 04:05 PM
ANnie, lets add someguyinsb to the barrel of idiots along with geewhillikers that we don’t waste keystrokes on - whaddaya say? Earl, thanks for your comments.
» wrote on 09.13.11 @ 10:32 PM
In support of Earl - folks should educate themselve on the Bill and Melinda Gates Foundation and their donations an methoed of operation. Unlike government giveaways that simply shovel money at problems with no real plan for solution, BMGF gifts come with requirements for and monitoring of performance. I know some of the people involved and they make the typical charitable organization and NGO management look like the ignorant but oh-so-well-intentioned fools that they are. And that guy Buffet who is sucking up to Obama on taxing the rich? He’s alreaady pledged his money to BMGF.
» wrote on 09.13.11 @ 11:30 PM
Yep Johnny another empty suit. I mean really, that was his best shot? Yikes he actually made Willie look damned good, at least you can get Willie to answer a question or raise a point or two but this loser has nothing, completely vacuous.
I caught the charitable deduction scam today, thanks for the reminder Earl. Of all the things to screw for more tax dollars, God do they know no shame? There are quite a few other little surprises in the president’s job bill. That was one of the worst but there are others. Most of it is just crap he has already tried to get passed before, most of which his own party wouldn’t vote for. I’ll see if I can dredge up the jist of it so we can all have a good laugh (or cry).
Wireless you are right on the money and again bring up an important distinction that the left never seems to get, moving currency around does not make more wealth. If wealth were a pie it’s the equivalent of stirring the pie. Hmmmm, seems there is still the same amount of pie just in a different place. How’s this my left loonies, lets make more pie? Actually if you make enough then everyone not only gets a bite but gets stuffed on it. Oh I forgot, my lefty loony friends don’t know how to make pie. They only learned how to stir.
» wrote on 09.14.11 @ 03:04 AM
Spending on the wrong things me thinks.
New Nuclear to free up natural gas for uses other then electricity production.
High speed rail to replace city air routes in the 300 to 1000 KM range.
Increase Tram network density in the more rational cities.
Replace the long distance trucking network with nodal rail depots / light truck distribution.
Of course this will not work unless there is a dramatic change of tax policey - taxing Cars and the fuel that they use I am afraid.
Concrete & Cars is so 20th century.
If this is not done with much elan the monetory structure will have to change - maybe these guys really want debt free money ?
» wrote on 09.14.11 @ 06:30 AM
What do NY 9 and Nevada have in common? The Hapless Professor. Good riddance in 2012.
» wrote on 09.14.11 @ 07:29 AM
James, you definitely have a couple items correct…but you need to step away from failed socialism / Keynesian policies.
“New Nuclear to free up natural gas for uses other then electricity production.” TOTALLY AGREE, but you will have to fight innumerable watermelons.
“High speed rail to replace city air routes in the 300 to 1000 KM range.” Possibly in the west but the city, and national enviro, special interests have killed every such project with delays.
“Increase Tram network density in the more rational cities.” AGREED
Replace the long distance trucking network with nodal rail depots / light truck distribution. That is being done right now.
“Of course this will not work unless there is a dramatic change of tax policy - taxing Cars and the fuel that they use I am afraid.” WRONG!! Allow the technology that has already been created (diesel that gets 150 MPG) into the U.S. - which would mean that both the enviro and corp special interests would have to be totally sidelined. Lower investment and capital gain taxes to ZERO, lower the corp tax to repatriate overseas funds. GET GOVERNMENT OFF OUR BACKS.
“Concrete & Cars is so 20th century.” How did you get to work today? If you drove or took public transportation then you do not have the commitment needed.
“If this is not done with much elan the monetory structure will have to change - maybe these guys really want debt free money ?” HUH?
Bottom line is that a totally new mindset has to be in place. Both the enviro watermelons and corporate crony capitalists have to be pushed totally out of the way through means that will not allow them to interfere.
» wrote on 09.14.11 @ 09:26 AM
Hmmmm. What happened to all the lefties? Pummeled into submission by facts.
» wrote on 09.14.11 @ 10:21 AM
Here is some interesting data on how successful our man-child president has been in redistributing the wealth. His primary goal in life:
The highlights:
The official poverty rate—defined as a family of four earning less than $22,314—rose to 15.1%. That’s up from 14.3% in 2009 and 12.5% in 2007. The official rate significantly overstates poverty by missing government income transfers, but this increase is faster than during any three-year period since the early 1980s.
Meanwhile, the share of Americans without health insurance rose to 49.9 million, or 16.3%, from 48.99 million, or 16.1% in 2009. The share of Americans on private insurance continued to decline while those on Medicare and Medicaid rose. ObamaCare doesn’t fully kick in until 2014, but we already know that it isn’t reducing the cost of health insurance.
Comments from our Marxist friends? I guess this is all Bush/Cheney’s fault.
» wrote on 09.14.11 @ 11:28 AM
James I agree with your plans except the tax policy. Like energy, transportation is the most regressive system we have in this country, meaning every dollar more it costs hurts the poor the most. I really don’t understand how we as a country can say on one hand we have compassion for the poor and need to tax the rich even more and then turn around and hit the poor where they have virtually no escape with higher energy and transportation costs.
If we truly want to get people out of their cars why don’t we find a better alternative, you know one people actually want to use, rather than always looking at punitive and coercive methods like hammering the poor with higher costs?
» wrote on 09.14.11 @ 05:09 PM
Wireless, the Lefties ALWAYS disappear when facts enter the debate!
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