Obama announces new stimulus plan
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Tess Vigeland: We mark this holiday by noting that there are millions of people in this country who wish they were laboring. We have the highest unemployment rate for a Labor Day in almost 30 years. Labor Day 1982 saw a 10.1 percent jobless rate. Today, it’s 9.6. In the midst of a so-called jobless recovery and just two months before a mid-term election, President Barack Obama was in Milwaukee today — endorsing another $50 billion in government infrastructure projects.
President Barack Obama: I want America to have the best infrastructure in the world. We used to have the best infrastructure in the world. We can have it again.
After last year’s $800 billion in stimulus money, there are questions about whether another spending program is the best strategy.
Marketplace’s John Dimsdale reports from Washington.
John Dimsdale: The president wants to pay for the new projects by ending a tax break for oil and gas companies. White House officials concede the jobs won’t be created until next year at the earliest. But that’s an indication the president is listening to economists who say it’s time to shift focus to long-term job creation.
Howard Rosen is with the Peterson Institute for International Economics.
Howard Rosen: At this point we need to switch our strategies from stimulating consumption to stimulating investment.
Rosen says cutting income taxes and offering tax credits for things like child care or buying a home may have helped stop the slide into recession, but they’re no good for creating stable employment. Now, he says it’s time to get companies to build new factories and equipment.
Rosen: So investment tax credit may be speeding up some depreciation allowances. Research and development tax credits.
But investment-based tax credits will only get you so far, says Robert Shapiro, a commerce under-secretary in the Clinton Administration.
Shapiro: They won’t drive recovery in themselves, because ultimately, business requires strong demand in order to justify investment whether or not it’s tax preferred.
He recommends creating more support for housing prices, which will make consumers more confident about spending. Still, later this week, the president is expected to announce several more investment-based tax breaks: A permanent extension of the research and development tax credit and possibly a temporary elimination of payroll taxes paid by employers.
In Washington, I’m John Dimsdale for Marketplace.
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