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Colleen Becker

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Small-Picture Thinking

Posted: 06/09/11 22:19

It's the little things that count. When President Obama unveils his jobs plan on Thursday, this will likely be the message underlying his key proposals. "Only the little things remain," might be a more appropriate slogan, since his debt ceiling negotiations left him with few options for stimulating the economy. Reducing America's 9.1% unemployment rate will be nearly impossible without fresh sources of revenue, and even if he's able to push additional spending initiatives through Congress, he'll still be restricted by the new debt cap. Unable to pump money directly into the economy through large-scale spending, Obama's jobs plan is expected to display his trademark bipartisanship.

Many of the proposals currently on the table rely on the free market to correct the unemployment problem. They put money in the hands of consumers through mechanisms such as payroll tax cuts and offer businesses tax breaks, like those for clean energy, as well as promises of increased deregulation. This modest package is a far cry from the grand, FDR-styled rhetoric Obama initially parlayed to gain support for his stimulus program, and it is likely to disappoint the Democratic base. Moreover, some of the most publicized ideas, such as the payroll tax scheme, haven't resulted in anticipated job growth. http://wap.npr.org/news/U.S./140123346

Infrastructural projects targeting roads, railways, schools, and airports, are intended to give the construction industry a shot in the arm. Pending congressional approval, they will likely form the cornerstone of Obama's strategy, in part because of the immediacy with which they can create jobs. However, as one of Joe Biden's former key advisors has already admitted, the last time around, more stimulus funds were spent on machinery and equipment than personnel. http://hosted2.ap.org/APDEFAULT/*/Article_2011-08-30-Obama-Jobs/id-e8c83c8f127e4b07a6cc7a7fc855c2b4 Even on a small business scale, there is no guarantee that government funding or tax incentives will be used for employment.

Back in February, Obama named an advisory council on jobs, which includes the CEOs of publicly held corporations like American Express and AOL as well as the partners of venture capital and private equity firms. http://uk.reuters.com/article/2011/02/23/us-obama-panel-factbox-idUKTRE71M5XA20110223 While publicly held corporations are at least accountable to a public of shareholders, private companies are less transparent. Moreover, neither public nor private companies are beholden to taxpayers and voters regardless of "core values" manifestos or "philanthropic" branding and marketing campaigns. In any case, it remains to be seen what, if any, insight top-flight business leaders were able to lend the administration with respect to job creation.

The Republican-style collaboration between Democrats and big business was also reflected in Senate Majority Leader Harry Reid's recent statement on the Democratic Party's employment plan. http://democrats.senate.gov/2011/06/27/reid-putting-americans-back-to-work-must-be-our-most-important-debt-reduction-strategy/ Citing the input of three, unnamed CEOs, his top propositions included education, tax, and immigration overhauls. Mostly structural in nature, these recommendations aren't promising sources of jobs in the here and now; indeed, the benefits, if they were ever to materialize, wouldn't be seen for years. Somewhat hilariously given the context, Reid quotes Mother Theresa, urging faithfulness in "the small things," before listing some tall orders as additional suggestions from the hallowed CEOs: reform of air travel and the patent system as well as an increase in government grants to tech companies. It's hard to envisage how any of these proposals will "create jobs immediately," as Reid claims they will. Perhaps these mystery CEOs are simply dissatisfied with the quality of their in-flight business class service?

Baby steps towards prosperity are unlikely to put a dent in the unemployment rate, and they certainly will not leave a favorable impression on voters. Democrats are hopeful that the appointment, just days ago, of Princeton labor economist Alan Kreuger to chair the White House Council of Economic Advisors will provide a transfusion of new ideas to an anemic jobs plan. http://www.washingtonpost.com/lifestyle/style/of-princeton-pair-of-krueger-and-krugman-it-matters-which-is-going-to-washington/2011/08/31/gIQAq4874J_story.html However, Kreuger is known as a micro-specialist, and it has been widely reported that like Obama, he intends to focus on small-scale stimuli rather than sweeping plans for revitalization.

Having spent the summer extinguishing various debt ceiling fires, Obama's team is now reportedly "struggling" to cobble together an employment strategy that will appeal to both Democrats and Republicans. As with the debt ceiling resolution, Democrats will view his bipartisan approach as a capitulation, damaging his Obama's chances of electoral success in 2012. For their part, Republicans will continue to capitalize on the President's good intentions while becoming ever more stridently critical of his methods. However flawed, it is possible that bipartisanship is the only approach that stands a chance of passing his modest infrastructural proposals through the Republican-led House. Without some solid means of creating real jobs in the near future, Obama can kiss re-election goodbye.