Socialist Alternative

Obama’’s New Jobs Proposal: Can it Turn the Economy Around?

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Under pressure from the growing fear of a double-dip recession, and spurred by the need to boost his image, on September 8 President Obama made his much-anticipated jobs speech. He urged Congress to pass, without delay, a jobs bills that he argued would at the same time create much-needed jobs and provide a framework for debt reduction. This plan has been described as Obama’s chance to appear strong, to score a win on the economy, and to influence the upcoming presidential elections. The jobs bill comes as a blend of Obama-style bipartisanship, “free market” economic doctrine, and electoral positioning.

On Septmber 19, Obama went a step further with his pre-election fake populism, calling for – meager – taxes on the super-wealthy and an end to talk of attacks on Social Security. This is a smokescreen for historic attacks on New Deal programs as the economy goes from bad to worse. Like the jobs speech and all the “hope and change” before that, we are dealing with inadequate and mostly empty rhetoric. Socialist Alternative will provide a response to the more recent speech in the coming days.

The September 8 jobs speech came after the announcement that the unemployment rate in August held firm at 9.1% ( and a few days before a 2010 census report stating that there are 46.2 million Americans now living below the official poverty line. That is the highest poverty rate in the 52 years that the government has been calculating poverty statistics. This report, which is based on the official poverty line – a line set notoriously low – and uses census data that almost certainly leave out a large number of people – for example, many impoverished undocumented immigrants – nevertheless shows 1 in 6 Americans living in poverty, (

In the face of the massive nature of capitalism’s crisis, the $447 billion Obama has requested to fund the American Jobs Act seems relatively modest. It seems even more modest when we look at the way the money would be spent. One analysis ( breaks it down this way: About $100 billion will go to pay for various infrastructure projects, such as repairing roads and upgrading school facilities. This part of the proposal resembles Obama’s earlier stimulus package, which partially succeeded in putting a bottom on the recession through a limited job creation.

However, once you add the total number of unemployed to the official unemployment rate, then tack on all the people in part-time work who want and need more work, you get, according to one estimate, 25 million people who need more work or just any work, ( If Obama’s proposal creates – as the most optimistic estimates predict – 1.9 million jobs, there are 23 million people who still need attention. Socialists call for nothing less than full employment with living wages and benefits.

About $100 billion would go to direct assistance, with $35 billion to keep teachers, firefighters and police on the job and the rest going largely in the form of an extension of unemployment insurance. The extension, however, isn’t all that is proposed for unemployment insurance.

The American Jobs Act would offer unemployment insurance money to workers whose employers choose “work sharing” over layoffs. In its statement on the act, the Center for Economic and Policy Research defines what is called “work sharing” in this way: “Rather than just paying workers who have lost their job, work sharing allows workers to be partially compensated for shorter work hours. Instead of one worker getting half pay after losing her job, under work sharing five workers may get 10 percent of their pay cut after their hours are cut by 20 percent,” ( Notice it says “partially compensated.” Rather than a kinder, gentler way to have our standard of living cut, socialists call for sharing out the available work with no loss of pay. Have the CEOs who helped to cause the crisis received only partial “compensation”?
As it turns out, the proposal for unemployment insurance is also one of the more “bipartisan” aspects of Obama’s proposal. Part of it promotes a new model of unemployment that claims to move people off of unemployment benefits more quickly by allowing the unemployed to take temporary work or pursue on-the-job training. This part of the proposal is so bipartisan that the number two Republican in the House, Eric Cantor, even claims that the Republicans proposed it first. He said it is “something that we should be able to get to work on right away,” (“Could Obama’s jobs bill help end jobless benefits as we know them?”, 9/13/2011).

This part of the proposal is called the “Bridge to Work” program. Work for the millions of unemployed is a good thing, as is job training. However, it is important to take a second look. If you look at recent historical precedent, it is difficult not to see this proposal as yet another veiled attack on the social safety net, a further infringement on the part of the “free market” doctrine that public programs, wherever possible, should provide profits for the pockets of a few private capitalists. In 1996, Bill Clinton ended welfare as we knew it – without ending the need for welfare. We have seen delicate and not-so-delicate moves to privatize Social Security. And now we must ask: Why should government programs direct workers into insecure, low-pay, no-benefits temporary work? Why build a “bridge to work” when the work at the other end of your bridge is so unstable? It is entirely possible – and needed – for the government to create a massive, direct-hire public works program to meet the needs of people and to massively invest in green energy from the ground up. This, as well as full employment, is what we must demand.

The bulk of the American Jobs Act – around $250 billion – would go to tax cuts. Most of this $250 billion will go to a massive reduction of the payroll tax. You can find a good explanation of what the payroll tax is and of current payroll tax rates here: Usually, this tax is paid by both bosses and workers on a 50/50 split. Obama’s proposal would temporarily reduce the current – already reduced – rate by a further 0.9% for workers and by 3.1% for the bosses, who up to now have been paying their usual rate of 6.2%.

The idea that further tax cuts will provide an incentive for new hiring on the part of employers is a further extension of the bailout idea: that if we just let so-called “job creators” have enough money, they will hire workers and get us out of this recession. Actually, bosses hire workers when they think that they can profit from their labor. Currently, they don’t want to hire because they know there is a lack of effective demand for their products, which must be sold in order to bring in profits. The bosses won’t hire workers to make products they can’t sell, so a payroll tax reduction for them, while it may have a minimal effect in new hiring, will on the whole serve merely as an incentive to further hoarding.

Working people already pay too much in taxes, so a payroll tax cut for workers may seem like a positive measure. However, this is the most right-wing way to give workers a tax cut. Payroll taxes fund the Social Security program, and Obama’s proposed payroll tax cut will prepare the way for worse attacks against Social Security. After the program is undermined by this cut in funding, the corporate politicians will then perversely use the deficit their actions created as an excuse for further attacks on Social Security. The ruling-class strategy to undermine public education – starve the schools for money and then introduce reactionary “reforms” because they are “failing” – is now being brought to bear against Social Security.

Moreover, the effect that a payroll tax cut would have as an economic stimulus measure would be minimal. Given the turbulent economy, workers may be inclined to save this money. The many who are already too behind on bills to save it may use it to pay off some debt, but this is neither a source of new demand nor a lever to boost the economy out of crisis. There are far better ways – such as directly creating decent jobs – for Obama to push for progressive stimulus measures that will put money in workers’ pockets.

Nevertheless, AFL-CIO President Trumka, who has lately made disapproving comments on the Democratic Party’s lack of fight on issues important to working people, welcomed Obama’s speech as a sign that the president “is willing to go to the mat” for job creation. In his statement on the proposal, Trumka reminds his readers that “this economic crisis was not created overnight, and it will not be solved overnight.” Counseling patience and reliance on the president, Trumka reminds us that this is “only the opening bid” in a series of moves to end the crisis (

Given this administration’s record, we may well wonder whether the closing bid will come shortly after election day. When it comes to protecting ourselves from the ravages of the capitalist economy, working people can only rely on ourselves. We desperately need a movement organized in the streets and in the workplaces to push the situation in our favor, the favor of the vast majority. The only change we can believe in is the change we make for ourselves.

We need rallies around the country to demand:

  • 1.Hands off Social Security, Medicare, and Medicaid! No cuts to education and social services!
  • 2.We need jobs, not Cuts! Fund a federal public works program to create millions of jobs for the unemployed.
  • 3.Tax the super-rich and big corporations!
  • 4.End the wars in Iraq and Afghanistan! Slash Pentagon spending!

This could kick-start a movement and a coalition to fight for more far-reaching demands with a wider strategy including strikes, direct action and independent candidates against budget cuts.

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