Fact check on Obama's claims (Jobs Speech Yesterday)

[manasia]

WASHINGTON (AP) â€" President Barack Obama's promise Thursday that everything in his jobs plan will be paid for rests on highly iffy propositions.

It will only be paid for if a committee he can't control does his bidding, if Congress puts that into law and if leaders in the future â€" the ones who will feel the fiscal pinch of his proposals â€" don't roll it back.

Underscoring the gravity of the nation's high employment rate, Obama chose a joint session of Congress, normally reserved for a State of the Union speech, to lay out his proposals. But if the moment was extraordinary, the plan he presented was conventional Washington rhetoric in one respect: It employs sleight-of-hand accounting.

A look at some of Obama's claims and how they compare with the facts:

OBAMA: "Everything in this bill will be paid for. Everything."

THE FACTS: Obama did not spell out exactly how he would pay for the measures contained in his nearly $450 billion American Jobs Act but said he would send his proposed specifics in a week to the new congressional supercommittee charged with finding budget savings. White House aides suggested that new deficit spending in the near term to try to promote job creation would be paid for in the future â€" the "out years," in legislative jargon â€" but they did not specify what would be cut or what revenues they would use.

Essentially, the jobs plan is an IOU from a president and lawmakers who may not even be in office down the road when the bills come due. Today's Congress cannot bind a later one for future spending. A future Congress could simply reverse it.

Currently, roughly all federal taxes and other revenues are consumed in spending on various federal benefit programs, including Social Security, Medicare, Medicaid, veterans' benefits, food stamps, farm subsidies and other social-assistance programs and payments on the national debt. Pretty much everything else is done on credit with borrowed money.

So there is no guarantee that programs that clearly will increase annual deficits in the near term will be paid for in the long term.

___

OBAMA: "Everything in here is the kind of proposal that's been supported by both Democrats and Republicans, including many who sit here tonight."

THE FACTS: Obama's proposed cut in the Social Security payroll tax does seem likely to garner significant GOP support. But Obama proposes paying for the plan in part with tax increases that have already generated stiff Republican opposition.

For instance, Obama makes a pitch anew to end Bush-era tax cuts for the wealthiest Americans, which he has defined as couples earning over $250,000 a year or individuals over $200,000 a year. Republicans have adamantly blocked what they view as new taxes. As recently as last month, House Republicans refused to go along with any deal to raise the government's borrowing authority that included new revenues, or taxes.

___

OBAMA: "It will not add to the deficit."

THE FACTS: It's hard to see how the program would not raise the deficit over the next year or two because most of the envisioned spending cuts and tax increases are designed to come later rather than now, when they could jeopardize the fragile recovery. Deficits are calculated for individual years. The accumulation of years of deficit spending has produced a national debt headed toward $15 trillion. Perhaps Obama meant to say that, in the long run, his hoped-for programs would not further increase the national debt, not annual deficits.

___

OBAMA: "The American Jobs Act answers the urgent need to create jobs right away."

THE FACTS: Not all of the president's major proposals are likely to yield quick job growth if adopted. One is to set up a national infrastructure bank to raise private capital for roads, rail, bridges, airports and waterways. Even supporters of such a bank doubt it could have much impact on jobs in the next two years because it takes time to set up. The idea is likely to run into opposition from some Republicans who say such a bank would give the federal government too much power. They'd rather divide money among existing state infrastructure banks.

___

Associated Press writer Joan Lowy contributed to this report.

http://www.chron.com/news/article/FACT-CHECK-Obama-s-jobs-plan-paid-for-Seems-not-2162363.php

[JeffreyS]

Moody's is predicting the plan would raise GDP 2-3% and cut unemployment by at least 1%.

[manasia]

Moody's is predicting the plan would raise GDP 2-3% and cut unemployment by at least 1%.

That's sure better than 0.

[BridgeTroll]

At least we now have a definition of "wealthy" or "rich". 

the wealthiest Americans, which he has defined as couples earning over $250,000 a year or individuals over $200,000 a year.

[Tacachale]

^You mean the "job creators"?

[BridgeTroll]

Yes!

[johnnyman]

I know the $900 billion did not do anything but this $400b is surely the answer.  I am so happy,, this is sure to work.  Good times are coming,,, and the best part about this plan,,, ITS ALL PAID FOR!!  Yeah.  If it does not work though,, you know its the Tea Baggers fault.

[Garden guy]

The republican party will do nothing..as they stated and have kept their word..."we want everything this president does to fail"...they are obstructionist and should be hailed as political terrorist. The party lead by the wealthy of america could care less about the average middle class american yet these exact people believe the lies and bs fed to them by the party...i think they'll turn this down.

[KuroiKetsunoHana]

The republican party will do nothing..as they stated and have kept their word..."we want everything this president does to fail"...

that seems a little farfetched.  source?

[JeffreyS]

I heard a few Republicans at work today including one real Obama hater that were fairly positive on the speech.  Most were wondering where that had been all along.

[buckethead]

I'm just glad we're finally saved!

[Pottsburg]

I know the $900 billion did not do anything but this $400b is surely the answer.  I am so happy,, this is sure to work.  Good times are coming,,, and the best part about this plan,,, ITS ALL PAID FOR!!  Yeah.  If it does not work though,, you know its the Tea Baggers fault.

please tell me this was you being sarcastic.  this is the most outlandish comment I've seen here in a while

[KuroiKetsunoHana]

i'm quite sure he was, and you not beïng sure tells me a lot about your expectations ov people who disagree with you.  you seem to think we're all political cartoons.

[JeffreyS]

I know the $900 billion did not do anything but this $400b is surely the answer.  I am so happy,, this is sure to work.  Good times are coming,,, and the best part about this plan,,, ITS ALL PAID FOR!!  Yeah.  If it does not work though,, you know its the Tea Baggers fault.

Remember that over half of that 400 bl is not spending but the Tax cuts that republicans worship like golden calves.

[jaxnative]

It's obvious the real "worshippers" have never learned or taken the time to learn from history.

[/quoteBefore 1929, the US government did not systematically attempt to moderate or reverse general business contractions. Recovery usually came about spontaneously within the market system within a year or two. Exceptions to this rule, especially the protracted slump of the mid-1890s, reflected major uncertainties about the government's adherence to the gold standard and about its possible interference in the market system as urged by Populists and others. Beginning with the Hoover administration and running to the present, however, the federal government has attempted by a great variety of measures to smooth the boom-bust cycle.

These measures, which run the gamut from "pump-priming" expenditures to protectionism to changes in taxes and regulations to forced reorganizations of broad sectors of the economy, share three qualities: they focus on the attainment of visible benefits while more or less disregarding unseen burdens and other negative consequences; they focus on ostensibly beneficial short-term changes while more or less disregarding harmful longer-term effects; and they represent actions founded on the pretense of knowledge â€" top-down impositions by central planners who use the government's coercive power to make the general public act in accordance with the ruling elite's one-size-fits-all designs.

"Notwithstanding all of these ostensibly anti-Depression measures, full recovery had not been achieved when the New Deal petered out in the late 1930s."During the 1930s, these actions began with the Hoover administration's interference with the wage rates offered by major employers; attempts to keep up farm commodity prices; increases in public-works spending; approval of the Smoot-Hawley tariff bill; creation of the Reconstruction Finance Corporation to prop up banks and other firms; sponsorship of steep tax increases; and many other measures. The Roosevelt administration went much further by taking the country off the gold standard; cartelizing the entire industrial economy; semicartelizing agriculture; further increasing taxes; greatly extending the scope of federal regulations, especially in banking, securities markets, and labor markets, among many others; engaging the federal government directly in the production and marketing of electricity; and intervening in many other ways. Notwithstanding all of these ostensibly anti-Depression measures, full recovery had not been achieved when the New Deal petered out in the late 1930s.

The George W. Bush and Obama administrations seemingly looked to the New Deal as a model of how to respond to a perceived economic emergency. Bush undertook stimulus programs and, more important, the Troubled Assets Relief Program as well as a host of bailouts, takeovers, and other interventions in financial markets by the Treasury and the Fed. Obama upped the ante by gaining enactment of a massive "stimulus" program, taking over GM and Chrysler, and continuing to use the Fed and the Treasury to flood the economy with liquidity in hopes of stimulating lending and consumer spending. Notwithstanding the welter of government antirecession actions during the past three years, the economy continues to wallow far short of complete recovery, with high unemployment, depressed private investment, and tepid growth of real output, at most.

The webinar to be presented on September 16, via the Mises Academy, will deal with these topics, drawing on examples from the Great Depression and the present recession to show how the government's antislump actions and programs have the effect overwhelmingly of slowing, rather than speeding, recovery. By propping up de facto bankrupt banks and other firms and malinvestments (especially in housing) that should be liquidated, interfering with the operation of the price system, and creating regime uncertainty, the government's antislump activity tends to make slumps deeper and longer than they would be if the government followed the traditional pre-1929 policy of letting the economy repair itself.

]
http://mises.org/daily/5594/How-Government-Impedes-Recovery