The American Jobs Act Proposal Won’t Work, Critics Say, But Obama is Standing by His Plan

BY MALIA ZIMMERMAN– In a recent speech to Congress, President Barack Obama demanded that federal lawmakers pass his $447 billion jobs creation bill, the American Jobs Act.

The jobs act follows the president’s American Recovery and Reinvestment Act, where taxpayers funded a trillion dollar economic “stimulus” package to create jobs. Under that plan launched in 2009, the President promised to create 3.5 million jobs, but unemployment has actually increased by 2.4 million.

The American Jobs Act, which some are deeming “stimulus 2,” would be funded by the job creators and some taxpayers.

Taxes would be levied on the “rich” and spent on everything from rebuilding infrastructure, to funding transit projects, to fixing up homes that have been foreclosed on, to sponsoring job training.

“The purpose of the American Jobs Act is simple: put more people back to work and put more money in the pockets of working Americans. And it would do so without adding a dime to the deficit,” The White House said on its web site.

But not everyone is supportive of the idea, including economists who are questioning the wisdom of increasing both taxes and spending again in a time where the nation’s economy is at a critical tipping point and the nation’s deficit is at $1.23 trillion.

Lowell Kalapa, president of the non-partisan, non-profit Tax Foundation of Hawaii, said history shows the President’s plan won’t work.

Pointing out that President has never created jobs himself, Kalapa is highly critical of Obama.

“The President needs to sit down with business owners and find out why they aren’t investing and spending their money, not create new regulations and policies without an understanding of how business works and how jobs are created,” Kalapa said.

Kalapa said it is popular to propose increasing taxes on the rich but the rich create jobs and give to charity. “Does the President not read history? The plan will backfire as it has in the past and non-profits will suffer,” Kalapa said.

Since the 2008 market crash, Kalapa points out that Obama’s administration has been “marching to regulate businesses” and “holding a club over them” that has prevented investors and business owners from being productive and spending money. “The President needs to sit down with businesses and learn why they are acting this way,” Kalapa said.

Kalapa said the President’s plan is a disappointment. “Little thought gone into this this plan,” Kalapa said. “The President is making this out to be a partisan debate. But it is not. This plan just does not make any sense.”

Obama is demanding that the Republicans agree to all of the points in his plan, and The White House issued a statement this week pointing out how the nation and states like Hawaii would benefit under the jobs act. The states would gain federal funding for everything from job training, to unemployment benefit extensions, to construction funding, the administration said. For example:

• On a national scale, payroll tax in half to 3.1% for employers on the first $5 million in wages. In Hawaii, the president’s administration claims 30,000 firms will receive a payroll tax cut if the the American Jobs Act is passed.
• Nationally, $50 billion would be spent on highways, transit, rail and aviation. Hawaii would receive at least $174,900,000 for highway and transit modernization projects, and support 2,300 local jobs, the president’s administration claims.
• Another $35 billion would go into public education to prevent layoffs of up to 280,000 teachers, while also hiring of tens of thousands more. The proposal would also keeping police and firefighters on the job, The White House said. Hawaii would receive $122,300,000 to pay for 1,500 educator and first responder jobs and $82,200,000 in funding to improve school facilities, the plan said, supporting as many as 1,100 jobs.
• Community colleges would receive funding for facilities and equipment, with Hawaii possibly gaining $18,900,000 in the next fiscal year.
• The unemployment system would be revamped. For those who cannot get a job, the President is planning to extend unemployment insurance again. In Hawaii, this means 2,800 people looking for work would not lose their benefits right away. The Obama administration claims his plan this will help put back to work the 17,000 long-term unemployed in the 50th state.
• In addition, the “Pathways Back to Work Fund” could sponsor low-income youth and adults for work training including 400 adults and 1,000 youths in jobs in Hawaii.
• The president also wants to cut workers payroll taxes in half. That could mean $1,740 more a year for families with a median income, the White House claims.

While most of these proposals include more spending, something Republicans and many other Americans are opposed to, the President said he has plans create a “Long-Term Deficit Reduction Plan” with the help of a Joint Commission.

Hawaii’s senior U.S. Senator, Daniel K. Inouye, said the president’s speech clearly demonstrates that he is a national leader that will not rest until the work is done. “We need to put  Americans back to work and the President has a plan to create jobs by fixing roads, bridges, building schools and constructing the critical infrastructure our nation desperately needs and I support him,” he said.

Congresswoman Mazie K. Hirono (D-Hawaii) said “The people of Hawaii are clear that they want jobs and they want us to work together to get the economy moving. The plan has common-sense ideas that everyone can support, like fixing our aging roads and bridges, getting teachers back into the classroom, helping our veterans, and working to solve our housing crisis.  But our families can’t wait much longer to get back to work, they need action now.”

Bob Williams, spokesperson for State Budget Solutions, is critical of the president’s so called jobs act. “If funded, the President’s plan calls for $174,900,000 million in ‘immediate investments’ for highways, transit, rail and aviation.  We all know how poorly the ‘shovel ready’ projects worked last time.  More jobs could be created at less cost if the federal government reduced the federal gas tax from 18.4 cents per gallon to 3 cents per gallon and eliminate all the federal red tape including project labor agreements and prevailing wages and benefits,” Williams said.

The President also wants to spend another $15 billion to “rehabilitate and refurbish hundreds of thousands of vacant and foreclosed homes and businesses.” Hawaii could receive up to $20 million through a competitive bidding process. But Williams points out what many other critics of the plan have said: “This is not a federal responsibility.”

Regarding Hawaii, Williams notes that the president’s proposes to raise taxes on the “job creators” in order to pay for his $447 billion jobs bill. He also points out that if Hawaii is not required to pay prevailing union wages as the president proposes, the state could get at least a 25 percent savings on projects such as rehabilitating school infrastructure.

He isn’t just critical of Obama’s plan. His group, State Budget Solutions, has lived up to its name, coming up with a proposal of its own with 10 specific ideas.

They center around the idea that government should get out of the way and allowing the private sector job-creators the freedom to create jobs.

“President Obama’s approach to the job creation has not worked.  His efforts have focused on more centralized government control over the economy as illustrated by the failed stimulus, more government spending and the extension of unemployment benefits.  We now have more unemployment than before the stimulus was implemented, which is a problem facing all states and state budgets,” Williams said.

“Our country has lost its success model by assuming a centralized government could solve our economic problems and create jobs. Adam Smith noted over 230 years ago that job creation and the wealth of nations are most effectively promoted by economic systems that allow individuals the freedom to purse their own economic dreams.  We need to return to the market-based approach which has been the key to the success of our nation.”