Recovery and Reinvestment Plan

I don’t need to remind you that when President-elect Barack Obama takes office, he will face what may well be the bleakest economic outlook since World War II. Over the past couple of years, we have stood by and watched as personal income has slowed to a crawl and then felt helpless and stressed these last few months because the economic forecasts have spiraled downward with ungainly speed.  Today, many experts believe that unemployment could reach 10 percent by the end of next year and our economy could fall $1 trillion short of its full capacity.   This translates into more than $12,000 in lost income for a family of four. This is on top of the money we have already lost in our investments and the value of our homes. But, this country will soon swear in a new president with a new plan providing us with a new hope.

With the nation facing a $1-trillion deficit and a rising jobless rate, some economic experts have suggested that Obama rework his tax plans. Their argument is that now is an inopportune time to lower middle-class taxes or to raise taxes on people earning more than $250,000 a year. But, President-elect Barack Obama’s top advisor, David Axelrod, said Sunday that Obama has a plan and this new administration wouldn’t back away from a promise to cut taxes on the middle class and raise them for the wealthiest Americans.    On Meet the Press, he made the case for a massive new stimulus package geared toward reviving the slumping economy. Obama wants lawmakers to give him a stimulus bill to sign soon after he is sworn in Jan. 20th. He wants to buoy the economy through hundreds of billions in new spending that also would be a step toward the broader economic transformation that he outlined as a candidate.  Axelrod said the president-elect wouldn’t budge. “Look, we feel it’s important that middle-class people get some relief now,” Axelrod said. “He’s promised a middle-class tax cut. This package will include a portion of that tax cut that will become part of the permanent tax cut he’ll have in his upcoming budget.”  The question is, how will he deliver this tax cut and will these cuts be noticeable in our paycheck?  If tax-payers are expected to stimulate the economy by spending, we will need to see a noticeable change in our take-home pay.

The Obama plan also includes job creation. His goal is to create 3 million new jobs by January 2011 with 80% of these jobs going to the private sector in the areas of technology and innovation. The Obama plan represents not new public works but, rather, investments that will work for the American public. Investments to build the classrooms, laboratories and libraries our children need to meet 21st-century educational challenges. Investments to help reduce U.S. dependence on foreign oil by spurring renewable energy initiatives.  Investments to put millions of Americans back to work rebuilding our roads, bridges and public transit systems. Investments to modernize our health-care system, which is necessary to improve care in the short term and is key to driving down costs across the board. Obama says that these are jobs that America needs.  Considering that there are 10 million unemployed workers in the US, this is a bold goal but how does this new administration know what jobs to create and where? Are these jobs going to be where the unemployed workers are now or will they have to relocate?  How many of these unemployed people are already prepared to accept these new jobs?  Do they have the skills and training needed?  Are these jobs going to be available on day one? According to Caroline Baum, government spending doesn’t increase aggregate demand.  As aggressive and innovative as this plan is, we may see that there is more money than opportunity.

The bottom line is that Barack Obama will be judged as President by whether he can save capitalism and return America to its former prosperity. The irony is that in order to save capitalism, we have to adopt a socialist government.  I hope he and his team have invested the time and energy to get the proverbial ducks lined up prior to doling out the cash.   As a taxpayer and a citizen, I am very concerned that we will only get one shot to get it right and I hope that for all concerned we do get it right and that the end justifies the means.’; //leave this line

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