President Obama delivered an energetic, articulate speech outlining his “jobs agenda” last Thursday evening before a joint session of Congress and a national television audience.
As president of an association advocating for business, I’m asked, of course, what I think about such things. In this instance, will what the President is proposing work?
Unfortunately, the answer is “no,” not if the objective is to restore business confidence and encourage private sector investment and hiring.
In a nutshell, what President Obama proposed was more Keynesian demand-side spending that is very expensive – nearly $450 billion – and won’t work. It won’t work for two reasons:
- it focuses on public sector jobs (which will be paid for by tax hikes or the government borrowing more money, meaning less money is available in the economy to finance private business activity),
- and the private sector tax cuts and incentives are short-term. To begin restoring business confidence, the Administration and Congress would have to agree on permanent tax reform. That didn’t sound likely based on the comments made by both major political parties since the speech.
Here’s a statement by Dan Danner, the president and CEO of the National Federation of Independent Business released immediately after President Obama’s address:
– Small-business owners needed to hear something bold from President Obama tonight, but instead just heard more of the same. His plan does not address the fundamental problems facing small business today. In addition, recent history tells us that a huge federal stimulus program is the wrong approach, and again sends the message that the president thinks he can spend his way out of this recession.
– The truth is that small businesses need the government out of their way. Tax breaks are always a welcome help to small businesses, especially in these tough economic times. But those outlined tonight by the president are temporary, and avoid the question of meaningful business tax reform. Lack of sales is still a major concern and there is a great deal of uncertainty among small businesses thanks to the threat of higher taxes and the thousands of pending federal regulations. The president’s speech did little to ease those concerns.
Also, here’s an interesting piece in the Wall Street Journal that looks at the impact of the President’s proposal from a variety of perspectives.
The U.S. Chamber came out with its own 6-step jobs agenda. It focuses on trade, energy development, speeding up infrastructure projects, tourism, regulatory reform and tax relief.
In short, Mr. Obama’s plan is a government-centric approach focused on spending instead of a plan grounded in good business policy that creates a climate of certainty.
That’s the general business perspective. From the Fort Collins perspective, the impact depends on whether any of the expeditures proposed by the President would benefit Colorado State University in terms of research grants. Even then there would not be much job creation benefit unless the money goes to areas where research can be commercialized, which is typically a multi-year endeavor.