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Thursday, September 9, 2010

OBAMA'S "HAIL MARY"

The score is 207 to 193 and it’s late in the fourth quarter. That’s the predicted Republican advantage to date in the House of Representatives with 35 seats labeled “toss-ups” but with Republicans only needing to win eleven of those 35 for a 218 majority after the November elections. After much media and Democrat criticism in the face of an electoral tsunami, President Obama has finally entered the game and thrown his best shot way down the field in an effort to respond to the number one election issue, jobs. The response from the “crowd” on both the red and blue sidelines has been underwhelming and the cheer leaders have all taken a hot dog break.

In an uninspiring address in Ohio, Obama outlined his plan to create jobs.
The centerpiece, if there is one, is the promise of $180 billion in new “infrastructure spending. That’s the perennial “roads, bridges, runways, rail” solution which comes up in every economic downturn and harkens back to Roosevelt’s Civil Conservation Corp of the 1930s. Although Obama isn’t proposing a federal agency that will directly employ construction workers, the money will go to states in the form of grants. Since the construction trades are only part of the unemployment problem the plan relies on the filter down multiplier effect of funds filtering through the economy to stimulate demand for consumer products and thus business expansion and hiring. This is not a short term phenomenon and it remains unsaid how much of that increased demand will result in larger imports of foreign consumer products which might provide a slight employment boost in China, Japan or Mexico. But in terms of the election, now just weeks away, it offers nothing but an attempt to repair the Democrat Party’s image as a jobs producer. The election will not be decided on image however, even if this proposal had the power to enhance that part of the Democrat’s problem.

Then of course comes the really exciting part of Obama’s proposal, sure to grasp the attention of struggling voters: new tax write offs for corporate research and new investment. While aspects of this proposal are already part of the tax code, and while encouraging research and investment is always a smart move in terms of stimulating economic growth, this isn’t exactly a headline grabber or an idea that will cause a wave of relief to spread across the electorate. Closely following “jobs” as the number one election issue is the concern over the 1.4 trillion dollar federal deficit and the 13.4 trillion dollar federal debt. Adding another $180 billion sounds to many voters, like another “stimulus”, a word currently in disfavor even among some Democrats. Thus concern over how to pay for these proposals enters the picture both in terms of the election and in the post election legislative process. Obama would recover the costs of the new initiatives by raising taxes on the same corporations to which he granted the tax incentives; specifically large corporations with an international framework and oil and gas companies.

The fact that little or none of this program is likely to find smooth sailing in the Congress after the election is of secondary importance to the primary purpose which was political. It neither stirred up much excitement as a significant contribution to the jobs problem, nor did it satisfy desperate Democrats faced with early retirement in November.

Hail Mary or no, the game is essentially over and Obama and the Dems are just running out the clock.

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