In search of job creation

President Obama spoke today at the Brookings Institution, using the occasion to outline a new set of initiatives meant to spark job creation. Here are the key elements:

Building on the tax cuts in the Recovery Act, we're proposing a complete elimination of capital gains taxes on small business investment along with an extension of write-offs to encourage small businesses to expand in the coming year. And I believe it's worthwhile to create a tax incentive to encourage small businesses to add and keep employees and I'm going to work with Congress to pass one.

These steps will help, but we also have to address the continuing struggle of small businesses to get the loans they need to start up and grow. To that end, we're proposing to waive fees and increase the guarantees for SBA-backed loans. And I am asking my Treasury Secretary to continue mobilizing the remaining TARP funds to facilitate lending to small businesses.

...Second, we're proposing a boost in investment in the nation's infrastructure beyond what was included in the Recovery Act, to continue modernizing our transportation and communications networks. These are needed public works that engage private sector companies, spurring hiring across the country. .

..The potential for abuse in a program of this magnitude, while operating at such a fast pace, was enormous. So I asked Vice President Biden and others to make sure - to the extent humanly possible - that the investments were sound, the projects worthy, and the execution efficient.

...Even so, there are many more worthy projects than there were dollars to fund them. I recognize that by their nature these projects often take time, and will therefore create jobs over time. But the need for jobs will also last beyond next year and the benefits of these investments will last years beyond that. So adding to this initiative to rebuild America's infrastructure is the right thing to do.

Third, I'm calling on Congress to consider a new program to provide incentives for consumers who retrofit their homes to become more energy efficient, which we know creates jobs, saves money for families, and reduces the pollution that threatens our environment. And I'm proposing that we expand select Recovery Act initiatives to promote energy efficiency and clean energy jobs which have proven particularly popular and effective.

It's a positive sign that many of these programs drew so many applicants for funding that a lot of strong proposals - proposals that will leverage private capital and create jobs quickly - did not make the cut. With additional resources, in areas like advanced manufacturing of wind turbines and solar panels, for instance, we can help turn good ideas into good private-sector jobs.

Finally, as we are moving forward in these areas, we should also extend the relief in the Recovery Act, including emergency assistance to seniors, unemployment insurance benefits, COBRA, and relief to states and localities to prevent layoffs. This will help folks weathering these storms while boosting consumer spending and promoting jobs.

Reaction:

• The elimination of the capital gains tax for small businesses is a welcome move. But why only small businesses? And is this a permanent move or temporary? If temporary it will do nothing to impact a business's long-term planning, and thus hiring decisions.

• Why is government lending to small businesses a good idea? What evidence is there that bureaucrats make good bankers? What reason is there to think political connections will not play a role in deciding who gets loans? Have we learned nothing from government lending via Freddie Mac and Fannie Mae?

• If infrastructure is in need of repair, then by all means let's do it. But the notion that tens of billions of dollars can be pushed out the door in short-order without significant waste and abuse is shockingly naive.

• The President's comment that there were many more deserving projects than funds available from the initial stimulus is instructive. One of those projects that did receive funding was a local dog park. If the dog park received funding and was deemed a higher priority than these other projects, what on earth are they? What kind of project is less pressing than a dog park yet still deserves funding? Hamster mazes?

• Why should renters such as myself be forced to subsidize the weatherization of homeowners? What about the waste this program has already produced? Why is weatherization a better use of taxpayer money than letting taxpayers spend it themselves? Is this even a role of the federal government or constitutional?

• What is a green job? And why are they better than other types of employment? Why should taxpayer money be used to subsidize them? If they are so great, why do they even require subsidies?

• In the light of yet more social spending, how will the deficit be reduced? What happened to the promised net spending cut? Why do states need a bailout? Why can't they reduce spending like the rest of us who have been impacted by the recession?