Jeff  Carter

“Pass this bill”, is not a rallying cry that one can run to. Obama’s big speech was not Kennedyesque, Reaganesque, or even Martin Luther Kingesque. More like a Nixonesque speech. But I don’t think Obama has a silent majority.

The last time Republicans and independents heard, “Pass this bill”, we got Obamacare. So pardon us if we really examine what the President is proposing and analyze the economic consequences of it.

It’s a $447 billion dollar monstrosity. There are tax cuts for businesses to hire. They are payroll tax cuts. There is a sunset on them, so even if you got a tax cut today, you will still have to pay more in tax tomorrow. Figure in the extra costs of employment when Obamacare kicks in and it’s still not cheap to hire anyone. I have heard more than one businessman say a $200 tax break isn’t going to make them run out and place want ads on the internet. Obama’s plan doesn’t do anything to the budget, since all the spending cuts happen years from now.

Obama calls for $55 billion in new spending to extend unemployment benefits. Economically, collecting unemployment benefits and scheming to stay on them has been correlated to extended time on the unemployment line. It sounds cold hearted, but if we end the government transfer payments it’s probable Mr/Ms Unemployed worker will get off their duff and find some gainful employment doing something somewhere.

Of course, there is stimulus. $85 billion to local and state governments who won’t spend it but will use it to shore up already beat up books to make the accounting look better to voters. $10 billion in infrastructure improvements. Obama said he would take his plan to every corner of the US. He must need to rebuild some bridges to get there.

Question: Why are states and local governments laying off teachers? Why aren’t they laying off bureaucrat paper pushers instead?

Jeff Carter

Jeffrey Carter is an independent speculator. He has been trading since 1988. His blog site, Points and Figures was named by Minyanville as one of The 20 Most Influential Blogs in Financial Media.