President Barack Obama has now given three speeches promoting his American Jobs Act: Last Thursday before a Joint Session of Congress, Friday at the University of Richmond, and Monday in the White House Rose Garden. He is expected to give similar speeches Tuesday and Wednesday, for a total of five speeches in seven days.
The Jobs Act, which is best described as Obama’s “Stimulus II,” will cost somewhere around $450 billion — more than half as big as Obama’s first failed stimulus. White House budget director Jack Lew is the man charged with identifying how Obama will pay for this new spending bill. The answer will not surprise you: It’s all about tax hikes.
Lew kicked off yesterday’s White House news conference by saying he wants to limit tax deductions for individuals making more than $200,000 a year (and families making more than $250,000 a year), raise taxes on capital gains, raise taxes on oil companies and slow down tax depreciation of corporate jets. If that sounds familiar, that’s because it is the exact same list of tax hikes that Obama pushed Congress to include in their debt limit deal this summer. At that time, Obama was pushing these tax hikes as part of the “shared sacrifice” needed to reduce the debt. Now, he’s using these same provisions to pay for even higher deficit spending.
Pressed to explain how Obama could use the same tax hikes to both meet the debt deal’s deficit reduction targets and to pay for his new stimulus plan, Lew admitted that even Obama can’t count the same tax increases for two separate purposes. Instead, Lew said that Obama would be introducing a whole new slate of tax hikes next week, when he plans to give yet another deficit reduction speech.
Obama again insisted yesterday that his second stimulus will be “fully paid for.” This is problematic on several levels. If Stimulus II is fully paid for with immediate tax hikes, then it isn’t the kind of deficit spending that Obama’s Keynesian logic demands. If it is only paid for later, at the end of the 10-year horizon, then this amounts to a budget gimmick, because Obama will be long gone from office by then.
So which is it? Is Obama’s Stimulus II really just a complicated wealth redistribution scheme accomplished through the tax code? Or does it leave difficult tax hikes to be implemented by future presidents?
Whatever the answer, do not expect to hear it from Obama during his next two stimulus speeches.