Amy Peikoff
Other than the affected, urgent tone, and the repeated refrain, “You should pass this jobs plan right away,” there wasn’t much that was new about Obama’s much anticipated “jobs speech.” He blamed a “political crisis” for making the economy worse. He used “poignant” examples of suffering and need, in order to appeal to his audience’s emotions. He made several appeals to authority, including:
“Everything in here is the kind of proposal that’s been supported by both Democrats and Republicans — including many who sit here tonight.”
“And now we’re going to sit back and watch China build newer airports and faster railroads?”
“This idea came from a bill written by a Texas Republican and a Massachusetts Democrat.”
“[L]eaders of both parties have followed the example [Abraham Lincoln] set.”
He also tried to make legislators feel guilty: “The people of this country work hard to meet their responsibilities. The question tonight is whether we’ll meet ours.”
“[W]e are bigger than our politics have been.”
He took a swipe at “corporate profits,” which he said “have come roaring back.” And he derided ideology, characterizing principled opposition to the welfare state as “some rigid idea about what government could or could not do.” Most importantly, he laid out what amounts to a $450-billion stimulus package, which he calls “the American Jobs Act,” but which we may as well call the “Sacrifice Some Americans to Others Act,” because it is, as we might have anticipated, replete with calls for more sacrifice as a way to “provide a jolt to an economy that has stalled.” (At least he admits that it has stalled.)
“Sacrifice” means “the surrender of a greater value for the sake of a lesser one or of a nonvalue.” It does not mean, e.g., choosing to work longer hours now for the sake of increased wealth and more leisure later; it does not mean choosing to give some of your extra money, for which you had no preferred use, to your friend, relative, or charity of your choice. So, with that in mind, here are five sacrifices that Obama wants to implement, right away.
5. Funding of construction projects: “[W]e’ll set up an independent fund to attract private dollars and issue loans based on two criteria: how badly a construction project is needed and how much good it would do for the economy.”
We will need more details on this proposal to see the extent of sacrifice that will be required to implement it, but “setting up an independent fund” sounds to me like creating some sort of government bank. This means money spent to pay whoever will run the bank, plus support staff. For how long? And how will the administrators of this fund decide how badly a construction project is needed? My guess is that part of that determination will be based upon whether the government bodies who should be responsible for the repair, maintenance, or improvement projects at issue are broke and unable to pay for the project. This means those state and local government agencies who have managed their funds well are unlikely to have their expenses offset by some of the money from this independent fund, while those state and local governments who have mismanaged their finances will, in effect, be “bailed out.”
And of course there’s the matter of where the money in this “independent fund” will come from. While Obama called on Congress to “pass this jobs plan right away,” he will not even submit his proposal for budget cuts meant to “pay” for it until a week from Monday. All we know, based on Obama’s speech last night, is that he plans to close “tax loopholes for oil companies” and eliminate “tax breaks for millionaires and billionaires.” Since those, even taken together, cannot come close to providing the $450 billion needed, and because it’s doubtful that the super committee will manage to make even the already planned cuts, my guess is that this spending will have to come from a “quantitative expansion,” with more inflation as a result. In other words, we will all pay, just as if our taxes were increased.
(Obama’s plan to subsidize the hiring of “thousands of teachers in every state” is similar in nature and effect.)
Image of Los Angeles, California, courtesy of Andy Z. / Shutterstock
4. A combination of carrots and sticks designed to force people to buy and hire “American”:
“[W]e’re going to make sure the next generation of manufacturing takes root not in China or Europe, but right here, in the United States of America.”
“I want to see more products sold around the world stamped with three proud words: ‘Made in America.’”
A labyrinth of regulations combined with government-mandated minimum wages and collective bargaining “rights” have combined to make the United States uncompetitive in many industries. Instead of agreeing to eliminate any of these root causes, Obama apparently has, as part of his proposed jobs plan (and likely as part of various “free trade” agreements), a number of carrots and sticks that should “encourage” people here and abroad to buy and hire American. Obama mentions providing “incentives and support,” which I assume means either subsidizing or giving tax breaks to companies in industries that hire Americans, when it otherwise would have made more sense for them to outsource. In general, I’ve never met a tax break I didn’t like, because I think everyone should be able to keep more of their money. However, when tax breaks are doled out like candy, in order to create various “incentives,” then the result can only be market distortions and inefficiencies. And if we’re talking about subsidies, the problem again becomes: from where will the government get the money to pay for all this? (See #5, on the previous page.)
3. Tax credits for hiring less desirable employees: “Pass this jobs bill, and companies will get a $4,000 tax credit if they hire anyone who has spent more than six months looking for a job.”
Other things being equal, those who have been looking for a job longer, without success, are those who are less qualified or who otherwise seem less likely to generate net income for a prospective employer. This provision of Obama’s plan would subsidize the hiring of only these individuals, rewarding the less qualified at the expense not only of the more qualified, but also at the expense of everyone else because, again, who will be making up the difference required to provide the $4,000 tax credits? Also, we may all suffer the consequences of less productive individuals producing the goods and providing the services upon which we depend.
(Obama’s plan to give “hundreds of thousands of disadvantaged young people…the hope and dignity of a summer job next year” is similar in nature and effect.)
2. More mortgage bailouts: “[T]o help responsible homeowners, we’re going to work with federal housing agencies to help more people refinance their mortgages….”
This is all Obama says about this particular proposal, but as it is described above, I see it doing two terrible things: first, it perpetuates the existence of those “federal housing agencies” which were responsible for creating the housing crisis in the first place. Second, it rewards those who took on mortgages that were too large, or that had terms that incorporated too much risk, at the expense of others who were more sensible in their choice of mortgage — or who decided not to take on mortgage debt at all. Unfortunately, this was one of three elements of Obama’s plan over which Congress has no control. Obama describes it as one of the “steps” his administration “can and will take…on our own.”
1. “The plan also extends unemployment insurance for another year.”
This redistribution of wealth is a sacrifice, because those who will be paying for it would no doubt prefer to spend the money on other things. Moreover, the extension of unemployment insurance will, other things being equal, have the effect of discouraging those who are receiving unemployment benefits from trying to get a job — a disvalue.
Obama is betting that most Americans will get behind his plan, and will call their congressmen and senators to demand its passage. Since he has yet to reveal where most of the money is coming from to pay for all this, all we are supposed to know at this point is that at least some of the money will come from “a few of the most affluent citizens and corporations.” And since Obama “believe[s] that the vast majority of wealthy Americans and CEOs are willing to…pay[] their fair share,” maybe we should allow ourselves to believe that implementation of his plan would not require sacrifice.
Image courtesty hurricane / Shutterstock
But the fact that “affluent citizens and corporations” aren’t voluntarily pulling out their checkbooks indicates that doing so would be a sacrifice to them. And, no matter how wealthy someone is, today it could be nothing but a sacrifice for someone who cares about this country to voluntarily write a check, of any amount, to our government. Only at such time as our politicians have laid out and committed to a clear plan of spending cuts and transition steps required to convert our government back into one that performs only its proper functions would it be proper to write a check to help pay off the national debt. Until then, all the check-writer would be doing is rewarding the status quo.
Nonetheless, even though Obama is clearly calling for sacrifice, I believe many of his proposals will succeed in getting passed by congress. This is because of something that Obama alluded to in his speech: Americans’ conflicted identity. On the one hand, Americans have always believed in the right to pursue their own happiness. In Obama’s words:
Yes, we are rugged individualists. Yes, we are strong and self-reliant. And it has been the drive and the initiative of our workers and entrepreneurs that has made this economy the engine and envy of the world.
In other words, Americans’ pursuit of their own self-interest has been the key to our success. On the other hand, says Obama, “there has always been another thread running through our history.” This other thread consists of collectivism (“there are some things we can only do together, as a nation”) and altruism (“We have been…a nation with…responsibilities to one another”). Altruism is the moral principle that says “man has no right to exist for his own sake, that service to others is the only justification of his existence, and that self-sacrifice is his highest moral duty, virtue and value.” If Mitt Romney’s remarks during Wednesday’s debate are representative, then the GOP, in spite of its calls for reducing the size and scope of government, continues to subscribe to the altruist morality: “We have always had, at the heart of our party, a recognition that we want to care for those in need….” If so, how can they possibly resist Obama’s call for sacrifice?
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