I can't watch political speeches anymore. So you'll excuse me if I waited for the morning-after analyses of the President's jobs proposal. First off -- as I've said before -- I don't believe that it is the government's job to create jobs; government's role is to create a stable, consistent, predictable environment for business to create jobs. So a proposal entitled the “American Jobs Act” doesn't really grab me, and it's a feedbag of ideas and initiatives meant to be politically palpable and expedient. The good, bad, and ugly?
Not much bad or ugly, but some of it is half-baked. Modernizing schools, surface transportation, and infrastructure? Bully! Exactly what government should do to facilitate education and commerce. Letting the unemployed collect benefits while training or doing volunteer work? Excellent transition and networking opportunities. Money to states to keep teachers, police and firefighters employed? OK, but that's kind of bailing out state governments that made poor budget and policy decisions.
As for the half-baked elements, the President "proposed not only extending a 2% payroll-tax cut scheduled to expire in December, but increasing it to 3.1%—half the employee’s normal contribution to Social Security. He also called for an equivalent 3.1% cut in the employer’s payroll tax for the first $5m of payroll, and elimination of the entire 6.2% tax on the wages of new hires or on pay raises for current employees." (The Economist)
Huh? As the chief operating officer for a small business, I appreciate the nod to cutting employment taxes and reducing the cost of hiring. But the cuts are only through for 2012, and I'm going to have to calculate the new rates for only those employees that are new -- calculations that will cost me accountant time and money.
As I proposed in my blogpage "Taxes: Let's Start Fresh", the better long-term approach is to eliminate all employment and corporate income taxes, substituting a flat-rate business revenue tax that moves the tax burden downstream to when goods and services actually sell. As for the President (and everyone else), he missed another opportunity to overhaul the horrific mess that is the individual and corporate tax code -- a system that is overly complex, is terribly inefficient and costly, and makes compliance difficult.
And what of ending wasteful, distorting subsidies such as those to agriculture ($20B/year) and U.S. Postal Service ($10B/year) to help pay the bill? The President made no mention of that "low-hanging fruit". Instead, he passed the entire duty of finding savings to the new congressional "supercommittee".
The President chose to present a proposal that is not bad, but not great. In the current political environment perhaps "ordinary" and "unobjectionable" are achievements. I prefer to reach for "exceptional".