Tonight is the night of the big speech. The bets are the proposal will be somewhere between three hundred to four hundred billion dollars. A good deal of money will be for extending unemployment insurance and for payroll tax cuts. To keep giving people money who are unemployed is good, but does not add money to the economy to create demand, it only maintains the status quo. The payroll tax cuts do add money to the economy, but at the cost of hurting social security.
Another relatively large amount of money will go so that teachers and other public workers can keep their jobs. I say relatively because even four hundred billion dollars is small change compared to what I think is needed, two trillion dollars this year followed by another thirteen trillion over the next fourteen years. The money for teachers and public workers is well spent and needed, but does not create new jobs. It is a maintain the status quo strategy.
Another relatively large chunk of money will go encourage businesses to hire. When there is demand businesses don't need encouragement to hire and when there is no demand no amount of encouragement will cause a business to hire. So this is pure waste.
Finally there is a tiny amount of money to repair infrastructure. Yes this will create new jobs and this spending is absolutely necessary, but this is like putting a band aid on a wound that needs stitches. Worse, we need new infrastructure, not just old infrastructure repaired. Again this is money well spent but hardly enough.
The big issue that needs immediate attention, global warming, will not even be addressed. Much less issues like inexpensive energy, research, development, trade agreements, or a WPA to get people productive once more.
So the proposal from the president will most likely be inadequate to reducing unemployment and putting the country on track to pay down the deficit. But that is not the worst that can happen. I will address that below.
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