Editor's note: This contribution by the late journalist I.F. Stone first appeared in our January 1975 magazine.
President Obama went to the Brookings Institution on December 8 to give his much-anticipated speech on jobs.
But he decided to play small ball instead of taking the big steps necessary to resolve the job crisis that afflicts so many millions of Americans.
At least he recognized the moral dimensions of the crisis, calling the unemployment level “a continuing human tragedy.”
He added: “Behind these statistics are people’s lives, their capacity to do right by their families.”
And at the end, he talked about the anguished letters he’s been receiving from workers and business owners and family members. “The toughest letters are in children’s handwriting—kids write to me, my dad just lost a job; my grandma is sick, she can’t afford health insurance—kids who can’t just be kids because they’re worried about mom having her hours cut or dad losing a job, or a family without health insurance.”
This was refreshing from Obama, who too often speaks like a technocrat or an economics professor.
But when he got down to policies, his speech fell far short.
His first proposal was “a complete elimination of capital gains taxes on small business investment along with an extension of write-offs.”
That’s a very inefficient way to promote growth. According to a study by Mark Zandi of Moody’s Economy.com, for every dollar spent on this kind of tax cut, the economy as a whole gains only 37 cents. Some businesses will simply pocket the tax cut and won’t do any more hiring.
Second, Obama proposed “a boost in the nation’s infrastructure.” This is a much more sensible way to go, yielding $1.59 for every dollar spent, according to Zandi.
Third, Obama proposed “a new program to provide incentives for consumers who retrofit their homes.” Nothing wrong with that, except that “Cash for Caulkers,” as it is called, will provide much less of a boost to the economy than “Cash for Clunkers” did, since caulk is a lot cheaper than a car.
Lastly, Obama proposed extending “emergency assistance to seniors, unemployment insurance benefits, COBRA, and relief to states and localities.” All good, sound ideas. Extending unemployment benefits yields $1.64 for each dollar spent. And providing relief to state and local governments yields $1.36, according to Zandi.
But Obama didn’t spell out how much he was willing to spend on each facet of his jobs program.
And nowhere did he even suggest that he was willing to invest at the level that is truly necessary.
That level is around $400 billion, according to a new report by the Institute for Policy Studies entitled, “Battered by the Storm: How the Safety Net is Failing Americans and How to Fix It.”
The report says the government should shell out $270 billion to state and local governments, a little more than $100 billion to rebuild the social safety, and $40 billion on a public jobs program.
At Brookings, however, Obama again derided public sector jobs programs. Sounding like an old Rotarian, he said, “Job creation will ultimately depend on the real job creators: businesses across America.” And then he hailed the Business Roundtable.
For those who dreamed they were getting FDR when they voted for Obama, wake up.