Smoke and Mirrors Bus Tour: Tax Cuts That Aren’t

Pres. Obama has been traveling around North Carolina and Virginia in his Stealth Bus, the all-black $1.1 million Canadian-American customized luxery coach, the Death Star of the roads. Republicans claim the trip is a taxpayer-funded campaign tour, a charge the White House denies. Let’s face it, anything a politician—of any party or persuasion—does or says in public has a campaign element to it. So, all you Republicans who felt Pres. Bush got chastised by the media for everything he did, get over it, stop pointing at Obama, sit down, and stop saying “but, but, but…”

Features in the American Jobs Act, uncannily similar to 2009′s $720 billion Stimulus, seems like a half-hearted attempt, at only $448 billion. More troubling is the fact it’s not really a new idea and, if Big Stimulus didn’t work, why would anyone think Baby Stimulus will? Maybe that’s why Senate Democrats didn’t take up Obama’s bill, but saw their own version defeated last week. Even so, it gives the President political mileage: “100 percent of Republicans in the Senate voted against it [the Jobs bill]. That doesn’t make any sense, does it?”

One of the points in Obama’s jobs plan is payroll tax cuts, intended to put more money into workers’ pockets and encourage employers to hire at reduced costs. What the President doesn’t tout is he wants to extend the current worker tax cut, due to expire at the end of the year, and increase it from 2% to 3.1%. That’s just half of the normal 6.2%. He’s already blaming Republicans if this doesn’t happen and he can just see jobs withering away from less money in your pocket.

Fact Check: First, the current extra pocket money is not making it into the economy as most people pay down debt or save it. Something else no one is talking about is the payroll tax holiday reduces contributions to the Social Security Trust Fund. Has anyone forgotten the dire predictions for the immenent collapse of Social Security?

Smoke and mirrors: here are a few coins for your pocket today, but they won’t be there when you retire. In this case, paying it forward doesn’t make any sense to me. In his speech in Jamestown NC today, Mr. Obama obfuscated the matter (emphasis added):

So don’t be bamboozled. (Laughter.) Don’t fall for this notion that somehow the jobs act is proposing to raise your taxes. It’s just not true. Under this—here’s what will happen. If we don’t pass the American Jobs Act, if we do not pass the provision in there that extends the payroll tax cut that we passed in December, most people here, your taxes will go up by $1,000. So voting no against the jobs bill is voting in favor of middle-class families’ income taxes going up. And that’s a fact. Don’t take my word for it—all the reporters here, they can check on the facts on this thing. That’s the truth.

Are any reporters fact-checking the only payroll taxes the Federal government collects are Social Security (FICA) and Medicare?
 

Previously on Obama’s jobs bill:

• Obama Grandstands for Stimulus 2.0 Jobs Bill
• Déjà Vu: Obama’s Jobs Plan is Just Stimulus 2.0
• In Detroit: Obama’s Jobs Plan? Just Stimulus 2.0

Green Jobs Evaporating from Michigan

Riddle me this: how is it that Michigan is the only state to lose so-called green jobs? According to a report released this week by the Brookings Institution, Michigan lost 1,596 “green” jobs from 2003 to 2010. That is a 0.3% decline during each of those 7 years.

With excess manufacturing capability, skilled labor and engineers aching for work, and a good transportation network, Michigan should have been gaining high-tech “green” jobs. Former Gov. Jennifer Granholm (D) made growing the state’s “green” economy a priority of her administration. As recently as two weeks ago, Granholm bragged “green” economy investment helped Michigan:

In the space of about a year and a half. we were able to convince 17 battery companies or their suppliers to locate inside Michigan, and those companies promised to create 63,000 jobs.

Apparently the part Granholm missed was where all those new jobs were going to be. Former Gov. Granholm’s administration focused on growing “green” jobs during most of the time Michigan was actually loses such jobs.

Previously on jobs in Michigan:

• Snyder Has One Tough Row to Hoe
• Michigan Jobless Numbers: Smoke and Mirrors
• Michigan Surrenders Top Jobless Spot
• Michigan’s Stool of Tears
• Stimulus Money Not Helping Michigan
• Michigan Holds the Lead for 40 Months; Unemployment Hits 15.2%
• Michigan Unemployment Down, But Not Really
• Obama Promises Retraining for Lost Auto Jobs
• Eyes Wide Shut: Stimulus Not Creating Jobs

Michigan Jobless Numbers: Smoke and Mirrors

The Michigan unemployment rate fell to 13.2%, continuing a slow, but steady, decline over the last couple months. And this is the second consecutive month for which Michigan doesn’t have the highest unemployment rate in the nation. But it’s still not good.

But the news is not as good as it sounds. Department of Energy, Labor, and Economic Growth spokesman Bruce Weaver said fewer people were looking for work. When people who’ve quit looking, or part-timers seeking full-time work are counted, Michigan’s rate of unemployment and under-employment is 21.7%. To that end, 42,000 fewer workers were hunting for jobs this June compared to June 2009.

As to whether the recession is ending, initial jobless claims were down 29,000, but seasonally adjusted unemployment still topped 4.7 million across the country for the week ending 10 July. That’s an increase of 247,000 over the previous week. For the week ending 03 July, Michigan was third in increases for initial claims (+5,323).

Obama Going for Jobs Trifecta

On 18 March, Pres. Obama signed what’s been called the jobs bill into law. Touted at $38 billion, it’s really closer to $100 billion in cost over 10 years, according to the Congressional Budget Office. Besides it’s so-called jobs provisions, it also includes a $60 billion extension of unemployment coverage, an obvious back-to-work program if ever there was one. Titled the American Workers, State, and Business Relief Act of 2010, the bill’s touted tax breaks are really just extensions of already existing breaks and there’s nothing uniquely job-creating in the law.

Earlier, there was the so-called stimulus bill. Officially titled the American Recovery and Reinvestment Act, the stimulus package was supposed to “create or save” 3-4 million jobs. The national unemployment rate was 8.1% in February 2009 when the Stimulus bill was signed into law. For February 2010, the national unemployment rate was 9.7%. I’m not a statistics whiz, but it seems pretty clear to me that more people are unemployed this year than before passing the Stimulus package. More jobs would likely have been created had the Stimulus money been put to better use.

so, the Stimulus bill has seen job loss rather than job creation, no matter what anyone claims. In February 2009, there were 12.5 million unemployed. With all the jobs “created or saved” by the Stimulus package, February 2010 unemployment stood at 14.9 million and 9.7%. I’m thinking that’s not an improvement.

Next up, and coming to a vote in the House, perhaps as I write, is health care reform, based on the Senate bill and a House “reconciliation” measure. Some have argued health care reform is also a jobs creation bill. This has become a “do or die” bill, as if this is the only opportunity the country will have to fix health care. I don’t think anyone disagrees there are issues with health care. The problem is the Senate bill is a Frankenstein’s monster of vote-buying and gerrymandering. Never mind whether Congress has the authority to require citizens to buy health care insurance. And then there’s House Speaker Nancy Pelosi (D-CA) saying health care overhaul will create 4 million jobs. She must be spending a little too much time with that medical marijuana. As we approach the final hours, it sounds like the Wicked Witch of the West has gathered the necessary votes to pass health care reform.

While some, such as Pelosi, claim health care reform will create jobs, others claim health care reform is a jobs killer. In fact, Caterpillar Corp. says health care overhaul would cost them $100 million in the first year. I lived in Illinois during times when Caterpillar was struggling. So, if they’re concerned, I’m concerned. And it makes me wonder why the domestic automakers aren’t speaking out, except 2 of 3 are wholly owned subsidiaries of the government.

Let’s see. Billions spent on job creation under Stimulus I didn’t work. The jobs bill under “mini-Stimulus” is actually nothing new for tax credits but counters job creation with extending unemployment benefits.

So, after all this hope and change, why would you support the Stimulus bill, the jobs bill, or health care overhaul? Seems to me Obama is playing a zero-sum game, at best.

Stimulus Money Not Helping Michigan

A few days ago, the government released their estimate of how many jobs were created or saved from Stimulus bill Federal contracts. It’s not clear to me how they figure how many jobs they save. Is it “thank goodness for that Stimulus money; I was gonna lay Bob off next week”? Anyway, Federal contracts using Stimulus money supposedly equated to 30,000 jobs. These are for things like new fencing at government installations and such. Not what I consider long-lasting jobs for the future. In any case, the Federal contracts amount to about 5% of all Stimulus money.

So, how did Michigan fare in jobs from Stimulus Federal contracts? Certainly the Obama administration is doing everything they can to help the state with the highest unemployment in the nation, right? Well, no. No, they’re not. According to the Detroit Free Press, Michigan is 25th in Stimulus jobs from Federal contracts. Worse, 397 jobs compared to Colorado’s nearly 4,700 isn’t even 10% of the top job-getter. This in a state where unemployment in August fell to just 7.3%! What’s up with that?

The whole point of the Stimulus was to jumpstart the private sector. Instead, states are using a large share of their Stimulus dollars for state government life support. While that may save some jobs, mostly government jobs, it also defers making hard choices for a year or two. When there are no more Stimulus dollars, states will need to take chainsaws to their budgets or turn peoples pockets inside out. Simple as that. Politicians don’t get the structural deficits they’ve built into budgets. It’s gonna be ugly.

Back to all those Stimulus jobs, though. The US unemployment rate inched up to 9.8% in September. In fact, the unemployment rate has risen every month for the last 21 months. So far this year, 4,127,000 people have lost their jobs. Construction, an area where Stimulusshould be playing a big part, has seen a monthly average of 66,000 jobs disappear, most during the summer construction season.

Source: theblogprof

And in Michigan, the situation is even more dire. With the highest unemployment rate in the country, 204,000 Michiganians lost their jobs this year. That brings the state’s total unemployment to nearly a quarter million: 740,000. So, those 379 jobs from Federal Stimulus contracts? A mere 0.05% of the unemployed. Gov. Granholm said Stimulus money created or saved 33,000 jobs on Fox News Sunday. So, can somebody explain to me why Michigan’s official website says only 19,498 jobs were created or saved? Is Granholm math dislexic or something?

Her view of Stimulus: “Clearly the stimulus helped although unemployment is at a ridiculously high level.” Really? Using Michigan Recovery’s number of jobs saved or created, 19,498 is still only 2.6% of the total Michigan jobs lost this year. Even Granholm’s inflated number represents a pathetic 4.4%. Better than nothing, but Stimulus is not a long term solution. In fact, it’s not even a short term solution.

Michigan Unemployment Down, But Not Really

Grand Rapids Press

At 15%, Michigan’s seasonally adjusted unemployment rate is down two-tenths from June’s figure. That’s still 55% higher than last July’s rate of 8.3%. And, experts figure Michigan’s rate will still be the highest in the country.

But, hey! Michigan gained jobs, right? If you consider 7,000 were in the hotel and leisure industry, it’s not rocket science to realize most of those will disappear after Labor Day. While there were other gains, notably in government and healthcare, retail and construction jobs were down. Excuse me? What happened to all those Stimulus bill construction jobs?

While Michigan “gained” 18,000 manufacturing jobs in July and fewer factory workers were laid off, don’t forget most autoworkers were already laid off. Since they were already unemployed, the Big 3 didn’t need to do their traditional July changeover shutdowns. To put it in perspective, from the Grand Rapids Press:

The rise in manufacturing jobs “does not reflect any real improvement in the job picture, but is just an artifact of the seasonal adjustment process,” said Rick Waclawek, director of the state Bureau of Labor Market Information and Strategic Initiatives.

Michigan has lost 119,000 manufacturing jobs the past year. About 281,000 total nonfarm payroll jobs have been lost in that time.

Hang on to your hats. Michigan’s unemployment ride is bound to be bumpy for the rest of the year. It’s likely we’ll see month-to-month fluctuations, making the overall picture less than clear.