JOBS Idea: Let ALL "Bush" tax cuts expire, but create a package of 2011 OBAMA tax cuts

2011 OBAMA tax cuts replacing Bush tax breaks dollar-for-dollar, but only for those earning below $250k a year, and giving extra help to ACTUAL small-business job creators. Propose these tax cuts in a "Win the Future" White House budget that features CBO-scored estimates of the number of jobs these Obama 2011 tax cuts will create, as well as their budget impact.

Include options for stimulus spending cloaked as tax cuts, such as refundable per-child tax credits and capped nonrefundable credits for buying Infrastructure Bank bonds. Together with extension of the current payroll-tax break that put $1000 in the pockets of the median worker, these options would stimulate consumer demand and job creation by CBO-quantified amounts. And, to fend off Republican opposition, they'd exploit Republican addiction to tax cuts of any stripe.

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DETAILS

Now that the debt ceiling has been raised through the end of next year, Democrats need to bring the country back to REALITY! Since Republicans are concerned only with budget cuts, Democrats must take the initiative on improving the economy, fighting unemployment, and getting the wealthy to pay their fair share of taxes. Fortunately, 2001 and 2003 extra tax breaks for the wealthy already are set to expire automatically at the end of next year. But so are Bush tax cuts for those earning under $250k a year.

We've already seen that trying to extend Bush tax cuts just for the bottom 98 percent won't work; Republicans will hold tax cuts for the bottom 98 percent hostage to get extension of extra tax breaks for the top 2 percent. But Republicans who want to make the Bush tax rates from 2001 and 2003 permanent cannot force the Democratic Senate majority to vote FOR such extension beyond December 2012. A minority cannot filibuster the ABSENCE of legislation!

And if Republicans try to enact alternative NEW extra tax breaks for the top 2 percent in election season, while they are committed to austerity measures, good luck to them! The wealthy still will be getting their extra Bush tax breaks through the end of 2012. And trading loophole closures for lower tax rates on so-called "job creators" is in the purview of the "super-Congress committee" created by the debt-ceiling bill (which is likely to end in Republican walk-outs just like previous negotiations with Democrats this year).

Obama tax cuts (other than extending the current 2 percent payroll tax break) could be set to peak this year and next (due to weak economic growth and high unemployment now), and then diminish in 2013 and beyond. Over 10 years, their total cost could be set to match the total expected cost of Bush tax cuts for those earning under $250k a year (including the cost of Bush tax cuts for the bottom 98 percent through December 2012).

The recent debt-ceiling circus has revived both parties' reliance on the credibility of Congressional Budget Office scoring. In proposing Obama tax cuts it will be important to contrast the job-creating advantages of various middle-class and small-business tax breaks over puny CBO job-creation estimates for Bush-style income tax breaks (option (5) in the table below). Here are some generic CBO estimates of jobs created per billion dollars spent on various fiscal policies:

(1) 6,000 to 15,000 jobs: Increasing Aid to the Unemployed
(2) 7,000 to 16,000 jobs: Reducing Payroll Taxes for Firms Increasing Payroll
(3) 4,000 to 10,000 jobs: Investing in Infrastructure

(4) 3,000 to 9,000 jobs: Non-Infrastructure Aid to States
(5) 1,000 to 4,000 jobs: Reducing Income Taxes

Source: Congressional Budget Office: http://www.cbo.gov/doc.cfm?index=10803 .
Notes: Additional details on each policy option are provided on pages 19ƒ26 of the CBO pdf.
(For a quick summary of key findings, see also http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=9518706&mesg_id=9518709 .)

A large part of the Obama package could include a tax policy close to CBO option (1): refundable per-child tax credits that would go to the unemployed and underemployed, boosting economic demand disproportionately in areas of high joblessness, and creating new jobs where they are needed most.

Another tax policy could bring forth the substantial job-creation of CBO option (3): capped non-refundable tax credits for buying Infrastrucure bonds issued by Federal and State Infrastructure Banks.

And just DARE Republicans in the House to vote AGAINST a package of job-creating middle-class and small-business tax cuts, or Senate Republicans to filibuster one, during a campaign season of slow growth and high unemployment!

A proposal like this could be worked into a President's Budget for FY 2012, which starts in two months. Other parts of the President's budget could establish Federal and State Infrastructure Banks, help community colleges establish job training and placement programs, fund basic medical and other research, and include all the other measures the President has proposed to "Win the Future".

The White House could sell its "Win the Future" Budget with the same zeal Newt Gingrich applied to the "Contract With America" in 1994. Republicans would be put on the defensive and have their slavish devotion to the interests of the very wealthy spotlighted during a Presidential Election year.

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WHAT'S YOUR ***POSITIVE*** CONTRIBUTION OR TWEAK TO THIS IDEA? Please focus your comments on JOB CREATION ideas.

Don't know if it would be enough to create demand. If there are more budget cuts, those would cancel it out.

MORE. From what I heard on MSNBC today, the CBO has scored the package of $800 billion in cuts in the just-passed S365 (the Senate vote on it tomorrow at noon will just be a formality IMO).

CBO found that only $21 billion of the $900 billion would occur before 2013.

Even Simpson-Bowles was careful not to schedule budget cuts during 2011 and 2012.

IMO, with knowlegable Democrats such as Kent Conrad among the 12 members of the second-round Select Committee charged with additional defict closures, and with public pressure on those 12 Committee members, cuts could continue to be staved off until 2013 at the earliest.

Hate the second part.

posting in any case, even if you don't reply to this question from me.

The second part is, create a package of 2011 OBAMA tax cuts. I've seen just about all the tax cuts I want to see for the rest of my life. Fuck neoliberalism and the horse it rode in on. But most importantly, since you have labeled these OBAMA tax cuts, I would assume they would be crafted to conform to Obama's ideology. I think that is an incredibly bad idea.

Unlike the first part of my post, the Details section requires work to get through. Hard work if you haven't seen the CBO job-creation estimates before (Rachel Maddow featured some of the CBO policy option charts, but I don't remember whether she got to CBO jobs numbers).

They can hire workers and the factories that make stuff will have to make more stuff... In other words spread the money around. It will grow jobs quicker than visas for cheap foreign workers, and tax breaks for the wealthy....

1. Stop taking money from the poor and middle class... They are the engine that makes this country grow....

2. No more foreign visas for nurses. It drives down wages for nurses.

3. Create a jobs program immediately, and stop telling us it's not the govt. job to create jobs.

get through a Republican House focused single0mindedly on budget cuts?

IMO, the President has thought deeply about the political problems with explicit stimulus spending, and come up with some great ways to sell new programs. For example, an Infrastructure Bank would mainly leverage PRIVATe money to create construction jhobs, and aid to community colleges for job-training and placement programs would replace past government-run job-training efforts.

We need to do things that will make the country a better place for businesses invest in new plant and and manufacture things here. Without that, all of the extra cash you'd generate will be spent on goods produced in China and other low cost countries. That's the basic problem now - the stimulus, trickle down economics, etc, are creating jobs, but not here.

It won't matter how much taxes are cut unless consumers use the extra cash to buy goods that are produced here. That won't happen unless we get more competitive in the world market place and attract businesses to invest here.

for the bottom 98 percent of income-tax filers.

Did you actually read the OP? See CBO option 2 in the table, and note my call
for "extra help for ACTUAL small-business job creators." That has to be part of the solution to low growth and high unemployment, along with measures to boost consumer demand.

What you seem to be taling about is legislation to encourage investment in plant and eqipment for big businesses. In the past, allowing businesses to "expense" plant and equipment expenditures through a date certain has been used for that purpose. Byt such measures have not been part of the personal income tax code.

How would YOU propose to "attract businesses to invest"? Big business is sitting on TRILLIONS in cash that they could turn into new plants and equipment. And some of them are investing, just not in the US. For example, Jeff Immelt of GE just announced he was moving their X-Ray business to China. What legislation, outside the purview of the personal tax code, would you suggest?

I know I'm going to get flamed, but energy costs are too high here and will be driven a lot higher by upcoming EPA actions like MACT, Section 316(b), CCR and others. China and low cost producers don't need to do that and with substantially lower energy costs, they enjoy a huge competitive advantage over US producers. If we can't or won't lower our energy costs, then we need to to level the playing field in some other way. I'm not a big fan of renewable energy. It's expensive and it only works when it's supported by tax incentives. If we're going to use the tax code to incentivize investment in renewables, then the tax credits should be tied to high domestic content (might require renegotiating trade agreements).

I would also change the depreciation schedules to allow new plant to be written off faster - maybe in less than 5 years. I would lower the corporate tax rate and devise a scheme where businesses building new plants here could negotiate a reduced corporate income tax rate for a guaranteed fixed period of time (at least 10 years). It might be a sliding scale based on creating and maintaining new jobs. More jobs = lower corporate tax rate. Sorry if that goes against trade agreements, we should revisit those.

I don't think labor costs here are competitive with the world market, but I'm not sure about how to address that. Given the high unemployment rate, I wonder if deals could be brokered between organized labor and manufacturing entities that would ensure more competitive labor costs over a longer term. Is it capitalizing on peoples misery to offer them a lower paying job with some longevity as opposed to the prospect of long term unemployment without Unemployment Insurance? There is probably an optimum balance point, but I don't know where that would be. I do believe that many jobs left because American labor priced itself pout of the market. How should we rectify that? If we don't, will those jobs ever return?

Did you see the recent report (on 60 Minutes? PBS Newshour?) about piecework, profit sharing, and a longstanding no-layoff policy at Lincoln Electric?

Worker salaries rise and fall from year to year along with company revenues and company profits, but no one has been laid off for any reason other than inadequate job performance in DECADES. Such a wage structure might be a long-term solution to global competition for many other countries. Lincoln Electric is a perennial business-school case study at Harvard, Stanford, and many other top business schools worldwide.

See, for example, http://www.plu.edu/~connortd/E-Portfolio/Lincoln%2520Electric%2520PPT.pdf

that's exactly how I found the one that seemed the most concise.

Here, I'll do it for you--just click on this Google link:

http://www.google.com/search?hl=en&source=hp&q=%2B%22Lincoln+Electric%22+piecework&btnG=Google+Search

To lower energy costs for business, Infrastucture Banks (mentioned a couple of times in the OP) conld make 'smart grid' loans for projects that upgrade obsolete long-distance power lines, along with railway, airport, seaport, and other more-immediately-job-creating projects.

Geothermal, tidal, wind, biomass, and solar energy could be moved along such 'smart grids' from the out-of-the-way places where they are plentiful, to areas where power-hungrymanufacturers and office buildings are concentrated.

You have some great economic ideas there, badtoworse, even though they mostly don't exactly pertain to my OP here. Please continue posting them!

would hold Bush tax cuts for the bottom 98 percent hostage to tax cuts for the top 2 percent.

O'Donnell's guest Robert Greenstein (chief and founder of the Center for Budget and Policy Priorities) agreed with me that the Select Committee charged by S365 with finding a biggerr second round of deficit-reducers would HAVE to fail and ostensibly trigger automatic across-the-board sequestration cuts starting in 2013.

But no one on the show suggested a REPLACEMENT for Bush tax cuts for the bottom 98 percent. Seems to me such a replacement tax cut logically would be needed in light of O'Donnell's and Greenstein's predictions.

vote on S365 (debt-ceiling bill) today. In mini-press conferences, the President, Sen Schumer, Jim Clyburn (D-SC) Rosa DeLaura (D-CT?) and Nancy Pelosi mentioned Infrastructure Banks, FAA reauthorization, "Make It in America", and Rural Energy Savings, emphasizing Republican stalling on legislation to implement these programs.

Steny Hoyer said it best: "Talking about jobs is talking about debt. Because the only way we'll deal with debt is to create jobs and economic growth"

see them. Only part of the President's post-vote remarks made it to the cable shows--I saw nothing from Pelosi et al--and the media cut out completely Presidential remarks about jobs!

For context, see Better Believe It's GD thread on a Robert Reich blog post at http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=439&topic_id=1661141&mesg_id=1661141 , or click on the last link below.

Re 11aug2 "Hostage Crisis" post. Aren't you overlooking the Republicans' "Achilles heel" (tax cuts)?

I usually agree with 100 percent of everything I hear you say, but I think you're being too pessimistic this time.

Expiration of the 2 percent payroll tax break, and looming expiration of Bush income tax cuts, offer multi-trillion-dollar opportunities for job creation, IMO.

Remember, we're entering campaign season. Letting the current 2 percent payroll tax break expire would cost more than 900,000 jobs in 2012 (according to an EPI report). And Republicans and their guru Grover Norquist would be hard-pressed to square with their anti-tax pledge allowing a $1000 tax increase on the average worker.

IMO, renewal of the payroll tax break is the opening for Democrats to put specific jobs legislation on the table, including new 2011 "Obama" tax cuts.

Republicans are going to push to continue the most idiotic accomplishments of a near-moron (George W. Bush's 2001 and 2003 tax cuts tilted toward the extremely wealthy).

IMO the WH needs to push a 'Win the Future' Budget. focused on JOBS, to take back the initiative and get back to the REALITY hundreds of millions of Americans face. Such a budget need not actually be enacted into law to tilt the electorate to our side during the crucial “framing” phase of the 2012 campaign.

In this budget, the WH could propose letting ALL "Bush" tax cuts expire, but create a package of “2011 OBAMA tax cuts” replacing Bush tax breaks dollar-for-dollar, but only for those earning below $250k a year, and giving extra help to ACTUAL small-business job creators. Propose these tax cuts in a "Win the Future" White House budget that features CBO-scored estimates of the number of jobs these Obama 2011 tax cuts will create, as well as their budget impact.

According to CBO estimates, income tax cuts have the WORST "bang for the buck" on both job creation and economic growth.

In contrast, 2011 Obama tax cuts could include options for stimulus spending cloaked as tax cuts, such as refundable per-child tax credits and capped nonrefundable credits for buying Infrastructure Bank bonds. Together with extension of the current payroll-tax break that put $1000 in the pockets of the median worker, and with renewal of extended unemployment benefits that have the CBO-scored best "bang for the buck" on job creation, these options would stimulate consumer demand and job creation by CBO-quantified amounts. And, to fend off Republican opposition, they'd exploit the Republican “Achilles heel” of addiction to tax cuts of any stripe.

More detais on this idea are at at http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x1636415 .

The blog post of yours I'm responding to is at http://robertreich.org/post/8396689309 .

it masterfully. The EITC is THE model for the kinds of "stimulus cloaked as tax cuts" I'm proposing in this thread.

On Bill Hahr's show this weekend, Joan Walsh talked about how Bill Clinton almost completely replaced federal welfare benefits for poor kids with a refundable tax credit that "phases out" steeply with income, the EITC (Earned Income Tax Credit). This was a BRILLIANT move by Clinton. Any attempt by Republicans to get rid of the EITC would be attacked vehemently as a TAX INCREASE on the most vulnerable Americans. Such a response occurred on the Senate floor this very week, when Orren Hatch took the floor to demand that the poor pay more income taxes.

Most people have ho idea the EITC has been in the tax code and has been expanded for fifteen years. Of course, it's no use to the UNEMPLOYED poor, but it still is available to 70 or 80 percent of the poor.

In the OP, I proposed several ways the idiotic Bush income tax cuts could be REPLACED by other tax breaks focused on JOB CREATION. For example, a REFUNDABLE PER CHILD TAX CREDIT with a steep phaseout schedule would help the unemployed poor as well as the employed poor.

The Bush tax cuts are set to expire anyway. As long as Obama is re-elected next uear and Democrats continue to control at least 34 Senate seats, President Obama can VETO any attempt to renew them again. IMO, this is an opportunity for TRILLIONS in economic stimulus. cloaded as "tax cuts" just like the EITC.

I posted an earlier version of this reply to a GD thread at http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=439&topic_id=1675685&mesg_id=1678029 .