Saturday, November 01, 2008
OBAMA'S ECONOMIC PLAN: Analysis By A Business Owner Who Is Creating and Retaining Jobs Even In These Tough Times
Since the economy is supposedly voters' number one concern, I decided to take a point by point look at Obama's economic plan. The bold points below are directly from his website, followed by my comments on each. Based upon his website, this is his entire economic plan. (I have taken out some repetitive summary statements as well as some details.) I do not mean to sound snarky or rude in my comments. However, his economic plan is nothing more that traditional liberal politics -- build entitlement programs which ultimately hold people "down" in their economic positions and build big government which is always an ineffective use of taxpayer's dollars, requiring more taxes. But, if you give enough people enough freebies, you will get elected.

If you care about what happens on Novemeber 4, send a link to this post to everyone you know who may be considering a vote for Obama-Biden.

Enact a Windfall Profits Tax to Provide a $1,000 Emergency Energy Rebate to American Families:Barack Obama and Joe Biden will enact a windfall profits tax on excessive oil company profits to give American families an immediate $1,000 emergency energy rebate to help families pay rising bills. Think about it ... American family ... two cars ... 30,000 miles per year ... even if their cars average 25 miles per gallon (very unrealistic), this is 1200 gallons of gas a year. Here's your choice: $1,000 stolen from oil company profits, encouraging gas to be $4 per gallon and discouraging oil companies from developing new technologies. Or let gas prices eventually even out naturally to around $3 per gallon (or less), saving that family $1,200 or more per year while still encouraging oil companies to develop new technologies.

Provide $50 billion to Jumpstart the Economy and Prevent 1 Million Americans from Losing Their Jobs: This relief would include a $25 billion State Growth Fund to prevent state and local cuts in health, education, housing, and heating assistance or counterproductive increases in property taxes, tolls or fees. The Obama-Biden relief plan will also include $25 billion in a Jobs and Growth Fund to prevent cutbacks in road and bridge maintenance and fund school re?pair - all to save more than 1 million jobs in danger of being cut. $50 billion in notoriously inefficient pork barrel spending to save 1 million jobs. Remember -- this isn't creating jobs ... it is spending money inefficiently to try to save jobs. The depression-era WPA actually created a few jobs ... spent some money ... but absolutely did not jumpstart the economy. Neither will Obama's plan.

Provide a Tax Cut for Working Families: Obama and Biden will restore fairness to the tax code and provide 150 million workers the tax relief they need. Obama and Biden will create a new "Making Work Pay" tax credit of up to $500 per person, or $1,000 per working family. The "Making Work Pay" tax credit will completely eliminate income taxes for 10 million Americans. Problem #1: Every time we turn around, there is a different, and lower definition of a "working family". Pretty much anyone with an S-Corp or LLC small business, by the way, will not qualify. Problem #2: Far more than 10 million Americans already pay no federal income tax. Problem #3: In today's economy, most Americans will spend an extra $1,000 by paying down debt (which is helpful in some ways, mind you), replacing diminished retirement funds, or on increased gas prices. None of these things will create jobs to jumpstart the economy. Problem #4: If we don't get more meaningful jobs created, none of us will have income taxes to pay.

Eliminate Income Taxes for Seniors Making Less than $50,000: Barack Obama will eliminate all income taxation of seniors making less than $50,000 per year. This proposal will eliminate income taxes for 7 million seniors and provide these seniors with an average savings of $1,400 each year. Under the Obama-Biden plan, 27 million American seniors will also not need to file an income tax return. This is probably a good thing. It doesn't create jobs but it is a good thing.

Simplify Tax Filings for Middle Class Americans: Obama and Biden will dramatically simplify tax filings so that millions of Americans will be able to do their taxes in less than five minutes. Obama and Biden will ensure that the IRS uses the information it already gets from banks and employers to give taxpayers the option of pre-filled tax forms to verify, sign and return. Experts estimate that the Obama-Biden proposal will save Americans up to 200 million total hours of work and aggravation and up to $2 billion in tax preparer fees. Does anyone really think the government will be more efficient at doing my taxes than I will be? This would be big government spending galore. No thanks. I am not an accountant but yet I manage to complete my own multitude of forms each year. Let me keep my money and continue to do my own taxes. Don't make me pay to have others' tax forms filled out.

Fight for Fair Trade: Obama and Biden will fight for a trade policy that opens up foreign markets to support good American jobs. They will use trade agreements to spread good labor and environmental standards around the world and stand firm against agreements like the Central American Free Trade Agreement that fail to live up to those important benchmarks. I hate to say it but, for the most part, foreign countries are in the driver's seat on trade agreements. Other countries don't need expensive American products. For the most part, all they really need to do is sell products to us. The main items where we can sometimes negotiate trade agreements are basic commodities -- metals, food, etc. Negotiating trade agreements on these items to increase export actually creates inflationary pressure here in the US. Increased foreign demand lessens supply and drives up prices at home. That's not good. I am all for more exporting but it must be value-added items that create jobs here at home. Unfortunately, negotiating agreements on those items is pretty much impossible.

Amend the North American Free Trade Agreement: Obama and Biden believe that NAFTA and its potential were oversold to the American people. They will work with the leaders of Canada and Mexico to fix NAFTA so that it works for American workers. First of all, this sounds like an empty promise because NAFTA can only be amended with the okay of all parties. Second of all, who says NAFTA isn't working? My company sells more and more product into Canada each year and we have never dreamed of outsourcing jobs to Canada or Mexico. Many companies that have tried outsourcing work to Mexico are actually now bringing it back or sending it to other countries (for other reasons).

Improve Transition Assistance: To help all workers adapt to a rapidly changing economy, Obama and Biden will update the existing system of Trade Adjustment Assistance by extending it to service industries, creating flexible education accounts to help workers retrain, and providing retraining assistance for workers in sectors of the economy vulnerable to dislocation before they lose their jobs. As an employer, the government coming in and re-training my team members to do other jobs helps me how? How does that encourage me to leave jobs here? Sorry but this is just more ineffective and relatively ridiculous pork. But it gives a few freebies and generates a few votes.

End Tax Breaks for Companies that Send Jobs Overseas: Barack Obama and Joe Biden believe that companies should not get billions of dollars in tax deductions for moving their operations overseas. Obama and Biden will also fight to ensure that public contracts are awarded to companies that are committed to American workers. The second point already exists but I guess it's nice that Obama/Biden would already like to take credit for it. As to the first point, no company "wants" to open up overseas. They are only going to do so if, in some way, it brings them dollars back here to the US, dollars that will be invested in the US. Rather than punish a business for sending jobs overseas, you need to create an environment that encourages jobs be left here. There is a big difference but the latter doesn't play as well with the people you want to give freebies to in order to get their votes.

Reward Companies that Support American Workers: Barack Obama introduced the Patriot Employer Act of 2007 with Senators Richard Durbin (D-IL) and Sherrod Brown (D-OH) to reward companies that create good jobs with good benefits for American workers. This is, as I understand it, a $3,000 tax credit for each created job. In most industries it costs a company a minimum of $100,000 to create one new job. Sorry, but a $3,000 tax credit does not make me go our and create jobs. I need a market for my product and I need workers who want to work. That will make me create jobs.

Invest in the Manufacturing Sector and Create 5 Million New Green Jobs
Invest in our Next Generation Innovators and Job Creators: Obama and Biden will create an Advanced Manufacturing Fund to identify and invest in the most compelling advanced manufacturing strategies.
This is a good idea. However, it is best administered on a state basis and is in fact already being done ... in states like Michigan and Indiana ... two states where the economy is very weak. While encouraging new and green technologies is great, these are still start-up organizations and it takes years for them to have a major impact on local economies in most cases.

Double Funding for the Manufacturing Extension Partnership: The Manufacturing Extension Partnership (MEP) works with manufacturers across the country to improve efficiency, implement new technology and strengthen company growth. This highly-successful program has engaged in more than 350,000 projects across the country and in 2006 alone, helped create and protect over 50,000 jobs. But despite this success, funding for MEP has been slashed by the Bush administration. Barack Obama and Joe Biden will double funding for the MEP so its training centers can continue to bolster the competitiveness of U.S. manufacturers. I do not know anything about this program. It sounds good on the surface but it also sounds like something that could be typical ineffective use of taxpayers' money. I do not think I have ever worked with this program but I have in the past had some involvement with three programs designed to increase manufacturing jobs and they were both absolutely worthless, employing people who were absolutely clueless as to what it really takes to increase manufacturing. One of them actually wanted me to make ashtrays our of my process scrap. Wow, glad I didn;t invest money in that idea. Ashtrays have gone the way of the dinosaur.

Invest In A Clean Energy Economy And Create 5 Million New Green Jobs: Obama and Biden will invest $150 billion over 10 years to advance the next generation of biofuels and fuel infrastructure, accelerate the commercialization of plug-in hybrids, promote development of commercial scale renewable energy, invest in low emissions coal plants, and begin transition to a new digital electricity grid. The plan will also invest in America's highly-skilled manufacturing workforce and manufacturing centers to ensure that American workers have the skills and tools they need to pioneer the first wave of green technologies that will be in high demand throughout the world. Again, this is good but the real key to creating growth in new technologies is to create demand for the technologies. You can bring the horse to water but, in this case, you also have to make it drink. That is what is necessary with change.

Create New Job Training Programs for Clean Technologies: The Obama-Biden plan will increase funding for federal workforce training programs and direct these programs to incorporate green technologies training, such as advanced manufacturing and weatherization training, into their efforts to help Americans find and retain stable, high-paying jobs. Obama and Biden will also create an energy-focused youth jobs program to invest in disconnected and disadvantaged youth. Point #1 in this paragraph sounds good but, let me ask you this? Which do you think will create more jobs -- the government getting involved and trying to help business or the government encouraging people to buy and use clean technologies? The latter will work far better. As for the Point #2 in this paragraph: Um, yeah, that sounds "real" helpful. I am okay with providing training for disadvantaged youth but don't try to wrap it up as being good for the environment just to hide the fact that it really is pure pork.

Boost the Renewable Energy Sector and Create New Jobs: The Obama-Biden plan will create new federal policies, and expand existing ones, that have been proven to create new American jobs. Obama and Biden will create a federal Renewable Portfolio Standard (RPS) that will require 25 percent of American electricity be derived from renewable sources by 2025, which has the potential to create hundreds of thousands of new jobs on its own. Obama and Biden will also extend the Production Tax Credit, a credit used successfully by American farmers and investors to increase renewable energy production and create new local jobs. This is okay but, again, if you want people to develop and market new technologies, you do that not by "telling" them to do it or by giving them typically meaningless financial incentive to do so but instead by creating demand and markets for their products. As a manufacturer, I am not going to take government incentive money to create new technologies today unless I know there will be a market for my products tomorrow.

Create a National Infrastructure Reinvestment Bank: Barack Obama and Joe Biden will address the infrastructure challenge by creating a National Infrastructure Reinvestment Bank to expand and enhance, not supplant, existing federal transportation investments. This independent entity will be directed to invest in our nation’s most challenging transportation infrastructure needs. The Bank will receive an infusion of federal money, $60 billion over 10 years, to provide financing to transportation infrastructure projects across the nation. These projects will create up to two million new direct and indirect jobs and stimulate approximately $35 billion per year in new economic activity. As long as this is done in a cost effective manner and does not involve a lot of pork, it could be good. Otherwise, leave it up to the states to administer and do these things.

Invest in the Sciences: Barack Obama and Joe Biden support doubling federal funding for basic research and changing the posture of our federal government from being one of the most anti-science administrations in American history to one that embraces science and technology. This will foster home-grown innovation, help ensure the competitiveness of US technology-based businesses, and ensure that 21st century jobs can and will grow in America. This smacks of Obama's love for academic elitism (which bothers me greatly for many reasons) but, aside from that, I agree that our schools need to be more competitive and lead the way in technology development.

Make the Research and Development Tax Credit Permanent: Barack Obama and Joe Biden want investments in a skilled research and development workforce and technology infrastructure to be supported here in America so that American workers and communities will benefit. Obama and Biden want to make the Research and Development tax credit permanent so that firms can rely on it when making decisions to invest in domestic R&D over multi-year timeframes. I do not know anything about this program (which may say something in and of itself) but, if it is working, then I am sure that any administration will agree that it should stay.

Deploy Next-Generation Broadband: Barack Obama and Joe Biden believe we can get broadband to every community in America through a combination of reform of the Universal Service Fund, better use of the nation's wireless spectrum, promotion of next-generation facilities, technologies and applications, and new tax and loan incentives. This will happen just fine without the government's help.

Provide Tax Relief for Small Businesses and Start Up Companies: Barack Obama and Joe Biden will eliminate all capital gains taxes on start-up and small businesses to encourage innovation and job creation. Obama and Biden will also support small business owners by providing a $500 “Making Work Pay” tax credit to almost every worker in America. Self-employed small business owners pay both the employee and the employer side of the payroll tax, and this measure will reduce the burdens of this double taxation. In regards to point #1 -- how many small and start=up businesses have capital gains? Very few, possibly zero. How ridiculous! As for point #2: A credit to workers helps employers how exactly? I'm missing that one.

Create a National Network of Public-Private Business Incubators: Barack Obama and Joe Biden will support entrepreneurship and spur job growth by creating a national network of public-private business incubators. Business incubators facilitate the critical work of entrepreneurs in creating start-up companies. Obama and Biden will invest $250 million per year to increase the number and size of incubators in disadvantaged communities throughout the country. Historically, job incubators have been very ineffective at creating long term jobs and sustainable growth. I would be very interested to know what makes the Obama plan different from past attempts at this which have typically required lots of taxpayer dollars to create very low paying and short-lived jobs.

Obama and Biden will strengthen the ability of workers to organize unions. He will fight for passage of the Employee Free Choice Act. Obama and Biden will ensure that his labor appointees support workers' rights and will work to ban the permanent replacement of striking workers. Obama and Biden will also increase the minimum wage and index it to inflation to ensure it rises every year.

Ensure Freedom to Unionize: Obama and Biden believe that workers should have the freedom to choose whether to join a union without harassment or intimidation from their employers. Obama cosponsored and is strong advocate for the Employee Free Choice Act, a bipartisan effort to assure that workers can exercise their right to organize. He will continue to fight for EFCA's passage and sign it into law.
Ensure Freedom to Unionize.
Fight Attacks on Workers' Right to Organize

Protect Striking Workers.
Raise the Minimum Wage.
I agree -- all the verbiage around these points sounds great but here's what has been proven time and time again to really happen with unionization: 1) Encourage employers to outsource to other countries. 2) Make US made products less competitive in both domestic and foreign markets. Isn't what has happened to our automotive industry proof enough of just how damning and damaging unionization is? Holy cow!

Create a Universal Mortgage Credit: Obama and Biden will create a 10 percent universal mortgage credit to provide homeowners who do not itemize tax relief. This credit will provide an average of $500 to 10 million homeowners, the majority of whom earn less than $50,000 per year. This is just "sounds good" verbiage. The ability to deduct your mortgage interest expense is there for a reason -- use it!

Ensure More Accountability in the Subprime Mortgage Industry. First of all, let's remember that it was Bill Clinton and other Democrats who encouraged subprime lending in the last 1990s, the start of today's mess. Second of all, the banking industry is now fully aware of the dangers of such practices.

Mandate Accurate Loan Disclosure: Obama and Biden will create a Homeowner Obligation Made Explicit (HOME) score, which will provide potential borrowers with a simplified, standardized borrower metric (similar to APR) for home mortgages. The HOME score will allow individuals to easily compare various mortgage products and understand the full cost of the loan. This information has always been available, for as long as I have been buying houses at least. I do not think folks have ignored it -- they just simply felt optimistic and thought things would be fine.

Close Bankruptcy Loophole for Mortgage Companies: Obama and Biden will work to eliminate the provision that prevents bankruptcy courts from modifying an individual's mortgage payments. They believe that the subprime mortgage industry, which has engaged in dangerous and sometimes unscrupulous business practices, should not be shielded by outdated federal law. Mortgage companies have already realized they must consider modifying terms of bad loans and they will do so if they can keep afloat. They do not need the courts telling them what to do.

Create a Credit Card Rating System to Improve Disclosure: Obama and Biden will create a credit card rating system, modeled on five-star systems used for other consumer products, to provide consumers an easily identifiable ranking of credit cards, based on the card's features. Credit card companies will be required to display the rating on all application and contract materials, enabling consumers to quickly understand all of the major provisions of a credit card without having to rely exclusively on fine print in lengthy documents. This is fine but remember one thing: What state is a haven for credit card companies because they find encouragement there for their practices and a US Senator who has always represented their voice on Capitol Hill? Joe Biden's state, Delaware! He is part of the problem, and should not now represent himself as part of the solution.

Establish a Credit Card Bill of Rights to Protect Consumers: Obama and Biden will create a Credit Card Bill of Rights to protect consumers. The Obama-Biden plan will:
Ban Unilateral Changes
Apply Interest Rate Increases Only to Future Debt
Prohibit Interest on Fees
Prohibit "Universal Defaults"
Require Prompt and Fair Crediting of Cardholder Payments
Again, Joe Biden claiming to be part of the solution to a problem that he helped create!

Reform Bankruptcy Laws
Obama and Biden will reform our bankruptcy laws to protect working people, ban executive bonuses for bankrupt companies, and require disclosure of all pension investments.
Point #1: No one should be protected from their own stupid decisions. Points #2 and 3: I agree fully.

Cap Outlandish Interest Rates on Payday Loans and Improve Disclosure: Obama and Biden will extend a 36 percent interest cap to all Americans. They will require lenders to provide clear and simplified information about loan fees, payments and penalties, which is why they'll require lenders to provide this information during the application process. Better yet, outlaw Payday Loans!

Encourage Responsible Lending Institutions to Make Small Consumer Loans: Obama and Biden will encourage banks, credit unions and Community Development Financial Institutions to provide affordable short-term and small-dollar loans and to drive unscrupulous lenders out of business. I would need to know details on this. Sounds good on the surface but could open the door to another banking and S & L crisis.

Reform Bankruptcy Laws to Protect Families Facing a Medical Crisis: Obama and Biden will create an exemption in bankruptcy law for individuals who can prove they filed for bankruptcy because of medical expenses. This exemption will create a process that forgives the debt and lets the individuals get back on their feet. And, how, exactly, does this fit within the Obama healthcare plan? (I really don't know ... doesn;t sound good though.)

Expand the Family and Medical Leave Act: The FMLA covers only certain employees of employers with 50 or more employees. Obama and Biden will expand it to cover businesses with 25 or more employees. They will expand the FMLA to cover more purposes as well, including allowing workers to take leave for elder care needs; allowing parents up to 24 hours of leave each year to participate in their children's academic activities; and expanding FMLA to cover leave for employees to address domestic violence. As a business owner, I can tell you that FMLA is a horribly onerous thing from a paperwork standpoint. It is a discouragement to employ over 50 people and would be an encouragement for businesses to go below 25 employees. Businesses that are profitable (not over-taxed), and have a government that encourages markets for their products will take care of their employees who are loyal ... including the points that Obama's plan calls for.

Encourage States to Adopt Paid Leave: As president, Obama will initiate a strategy to encourage all 50 states to adopt paid-leave systems. Obama and Biden will provide a $1.5 billion fund to assist states with start-up costs and to help states offset the costs for employees and employers. These decisions are already being made on a state basis. We do not need $1.5 BILLION in federal tax dollars to make this happen! Geesh!

Expand High-Quality Afterschool Opportunities: Obama and Biden will double funding for the main federal support for afterschool programs, the 21st Century Learning Centers program, to serve a million more children. Obama and Biden will include measures to maximize performance and effectiveness across grantees nationwide. I would certainly look for all other options aside from a federal program, including various available faith and local community based organizations but, at the end of the day, I see value to the idea of increased afterschool programs. I do, however, think that parents should be paying for them -- it should not be free babysitting.

Expand the Child and Dependent Care Tax Credit: The Child and Dependent Care Tax Credit provides too little relief to families that struggle to afford child care expenses. Obama and Biden will reform the Child and Dependent Care Tax Credit by making it refundable and allowing low-income families to receive up to a 50 percent credit for their child care expenses. I am okay with this but it should not be to the point of where we're paying people to work when they would otherwise be better off financially to have one of the adults in the household stay home and take care of the kids.

Protect Against Caregiver Discrimination: Workers with family obligations often are discriminated against in the workplace. Obama and Biden will enforce the recently-enacted Equal Employment Opportunity Commission guidelines on caregiver discrimination. Again, in my experience, employers who are not stretched thin by the government already will naturally do these things for employees who are loyal, stable, and hard working.

Expand Flexible Work Arrangements: Obama and Biden will create a program to inform businesses about the benefits of flexible work schedules; help businesses create flexible work opportunities; and increase federal incentives for telecommuting. It does not take federal dollars to help business figure this out. We've been figuring it out for years and determining how it applies to our individual businesses.

Obama and Biden will also make the federal government a model employer in terms of adopting flexible work schedules and permitting employees to request flexible arrangements. Okay, as much as I think this type of thing can be well administered in the private sector, I have no faith in a Democrat-controlled government being able to do this. (Okay, that comment was indeed a little snarky.)

  posted at 10:13 PM  

At 9:13 AM, Blogger Draw The Line said...

Todd.. Regardless of how much proof there is about Obama's economic plan and how it's "not going to work", people are still going to vote for him. Small business people like yourself know it's all a bunch of feel good crap. I use the word crap for lack of a worse word. Thanks for your expert commentary. By the way, it's ok to be snarky.


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Todd M


An ordinary guy. A wife I love very much. A great son. Wonderful friends. A metal roofing business and a sales training business. A loving church family. A few trade associations. A Christian school. And a four-pound poodle. Just trying to follow God and see where He leads.

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