The Danger of Assessing President Obama’s $447 Billion Jobs Plan?

Keywords or Terms:  Congress; Economy; Unemployment; Corporate Taxes; Jobs Plan; Tax Breaks, Stimulus; and American Job Act


As many economists and politicians go over President Obama’s proposed jobs plan, the content of his speech before the joint congressional houses, will serve as the barometer of measurement regarding whether it will contribute enough jobs or not, to make a dent in the unemployment rate. Outside economists will be able to assess his proposal based on its merits and its contribution to jobs creation in the succeeding quarters. By some account, it appears from the speech that if the plan is passed by congress, we may be able to see the unemployment rate start trending downwards.


But on what account does the President anticipate that this new plan will achieve the purpose of job creation? So many, as indicated in his feisty 38 minute speech; including the opportunity to revamp corporate tax code, rebuild America’s crumbling classrooms infrastructure and public transit systems, rebuild roads and bridges, retain classroom teachers that are laid-off or about to be laid-off, and some more. The President’s Administration wants to improve America’s competitiveness, cut red tape that is preventing new venture capitalists from establishing new ventures, subsidize apprenticeship programs in professions that are difficult to recruit trained hands, allow workers to hold on to some of their earnings that previously go to social security taxes, and help facilitate another GI bill for Iraq and Afghanistan veterans. To save valuable and scarce money on projects, an assessment strategy as to whether a project is needed and how much of it is readily needed at this time, are going to be built into the project’s initiation and completion. Obama’s Administration is offering an employer four thousand dollars to employ Americans who have been out of work for over 6 months. All these are laudable on paper; however, no one can tell if this new plan can achieve the totality of the President’s intention for the American economy and the unemployed.


For the most part, his past proposals, touted as reinvestment plans, have been difficult to appropriately assess, considering the dichotomy over whether they added enough jobs to the economy or not? Congressional Budget Office assessments of the last two stimulus plans indicate that about 1.5 million jobs were contributed to the economy and another two and a half million saved, just by taking the necessary action; although, some critics have doubts. Frankly, no one can adequately do justice to the assessment of the provisions of the new plan until the proposal comes to the hill, debated, passed and implemented. The President has promised to forward the jobs plan bill to congress in the coming week; and, he is going to sell the plan to Americans on the road.

The blog today documents the American Jobs Act, word for word, as offered in the President’s Speech on September 8, 2011 before congress; and, as released by the White house Press Office:

THE PRESIDENT: Mr. Speaker, Mr. Vice President, members of Congress, and fellow Americans:

Tonight we meet at an urgent time for our country. We continue to face an economic crisis that has left millions of our neighbors jobless, and a political crisis that's made things worse.

This past week, reporters have been asking, "What will this speech mean for the President? What will it mean for Congress? How will it affect their polls, and the next election?"

But the millions of Americans who are watching right now, they don't care about politics. They have real-life concerns. Many have spent months looking for work. Others are doing their best just to scrape by -- giving up nights out with the family to save on gas or make the mortgage; postponing retirement to send a kid to college.

These men and women grew up with faith in an America where hard work and responsibility paid off. They believed in a country where everyone gets a fair shake and does their fair share -- where if you stepped up, did your job, and were loyal to your company, that loyalty would be rewarded with a decent salary and good benefits; maybe a raise once in a while. If you did the right thing, you could make it. Anybody could make it in America.

For decades now, Americans have watched that compact erode. They have seen the decks too often stacked against them. And they know that Washington has not always put their interests first.

The people of this country work hard to meet their responsibilities. The question tonight is whether we'll meet ours. The question is whether, in the face of an ongoing national crisis, we can stop the political circus and actually do something to help the economy. (Applause.) The question is -- the question is whether we can restore some of the fairness and security that has defined this nation since our beginning. (watch the full speech at left)

Those of us here tonight can't solve all our nation's woes. Ultimately, our recovery will be driven not by Washington, but by our businesses and our workers. But we can help. We can make a difference. There are steps we can take right now to improve people's lives.

I am sending this Congress a plan that you should pass right away. It's called the American Jobs Act. There should be nothing controversial about this piece of legislation. Everything in here is the kind of proposal that's been supported by both Democrats and Republicans -- including many who sit here tonight. And everything in this bill will be paid for. Everything. (Applause.)

The purpose of the American Jobs Act is simple: to put more people back to work and more money in the pockets of those who are working. It will create more jobs for construction workers, more jobs for teachers, more jobs for veterans, and more jobs for long-term unemployed. (Applause.) It will provide -- it will provide a tax break for companies who hire new workers, and it will cut payroll taxes in half for every working American and every small business. (Applause.) It will provide a jolt to an economy that has stalled, and give companies confidence that if they invest and if they hire, there will be customers for their products and services. You should pass this jobs plan right away. (Applause.)

Everyone here knows that small businesses are where most new jobs begin. And you know that while corporate profits have come roaring back, smaller companies haven't. So for everyone who speaks so passionately about making life easier for "job creators," this plan is for you. (Applause.)

Pass this jobs bill -- pass this jobs bill, and starting tomorrow, small businesses will get a tax cut if they hire new workers or if they raise workers' wages. Pass this jobs bill, and all small business owners will also see their payroll taxes cut in half next year. (Applause.) If you have 50 employees -- if you have 50 employees making an average salary, that's an $80,000 tax cut. And all businesses will be able to continue writing off the investments they make in 2012.

It's not just Democrats who have supported this kind of proposal. Fifty House Republicans have proposed the same payroll tax cut that's in this plan. You should pass it right away. (Applause.)

Pass this jobs bill, and we can put people to work rebuilding America. Everyone here knows we have badly decaying roads and bridges all over the country. Our highways are clogged with traffic. Our skies are the most congested in the world. It's an outrage.

Building a world-class transportation system is part of what made us a economic superpower. And now we're going to sit back and watch China build newer airports and faster railroads? At a time when millions of unemployed construction workers could build them right here in America? (Applause.)

There are private construction companies all across America just waiting to get to work. There's a bridge that needs repair between Ohio and Kentucky that's on one of the busiest trucking routes in North America. A public transit project in Houston that will help clear up one of the worst areas of traffic in the country. And there are schools throughout this country that desperately need renovating. How can we expect our kids to do their best in places that are literally falling apart? This is America. Every child deserves a great school -- and we can give it to them, if we act now. (Applause.)

The American Jobs Act will repair and modernize at least 35,000 schools. It will put people to work right now fixing roofs and windows, installing science labs and high-speed Internet in classrooms all across this country. It will rehabilitate homes and businesses in communities hit hardest by foreclosures. It will jumpstart thousands of transportation projects all across the country. And to make sure the money is properly spent, we're building on reforms we've already put in place. No more earmarks. No more boondoggles. No more bridges to nowhere. We're cutting the red tape that prevents some of these projects from getting started as quickly as possible. And we'll set up an independent fund to attract private dollars and issue loans based on two criteria: how badly a construction project is needed and how much good it will do for the economy. (Applause.)

This idea came from a bill written by a Texas Republican and a Massachusetts Democrat. The idea for a big boost in construction is supported by America's largest business organization and America's largest labor organization. It's the kind of proposal that's been supported in the past by Democrats and Republicans alike. You should pass it right away. (Applause.)

Pass this jobs bill, and thousands of teachers in every state will go back to work. These are the men and women charged with preparing our children for a world where the competition has never been tougher. But while they're adding teachers in places like South Korea, we're laying them off in droves. It's unfair to our kids. It undermines their future and ours. And it has to stop. Pass this bill, and put our teachers back in the classroom where they belong. (Applause.)

Pass this jobs bill, and companies will get extra tax credits if they hire America's veterans. We ask these men and women to leave their careers, leave their families, risk their lives to fight for our country. The last thing they should have to do is fight for a job when they come home. (Applause.)

Pass this bill, and hundreds of thousands of disadvantaged young people will have the hope and the dignity of a summer job next year. And their parents -- (applause) -- their parents, low-income Americans who desperately want to work, will have more ladders out of poverty.

Pass this jobs bill, and companies will get a $4,000 tax credit if they hire anyone who has spent more than six months looking for a job. (Applause.) We have to do more to help the long-term unemployed in their search for work. This jobs plan builds on a program in Georgia that several Republican leaders have highlighted, where people who collect unemployment insurance participate in temporary work as a way to build their skills while they look for a permanent job. The plan also extends unemployment insurance for another year. (Applause.) If the millions of unemployed Americans stopped getting this insurance, and stopped using that money for basic necessities, it would be a devastating blow to this economy. Democrats and Republicans in this chamber have supported unemployment insurance plenty of times in the past. And in this time of prolonged hardship, you should pass it again -- right away. (Applause.)

Pass this jobs bill, and the typical working family will get a $1,500 tax cut next year. Fifteen hundred dollars that would have been taken out of your pocket will go into your pocket. This expands on the tax cut that Democrats and Republicans already passed for this year. If we allow that tax cut to expire -- if we refuse to act -- middle-class families will get hit with a tax increase at the worst possible time. We can't let that happen. I know that some of you have sworn oaths to never raise any taxes on anyone for as long as you live. Now is not the time to carve out an exception and raise middle-class taxes, which is why you should pass this bill right away. (Applause.)

This is the American Jobs Act. It will lead to new jobs for construction workers, for teachers, for veterans, for first responders, young people and the long-term unemployed. It will provide tax credits to companies that hire new workers, tax relief to small business owners, and tax cuts for the middle class. And here's the other thing I want the American people to know: The American Jobs Act will not add to the deficit. It will be paid for. And here's how. (Applause.)

The agreement we passed in July will cut government spending by about $1 trillion over the next 10 years. It also charges this Congress to come up with an additional $1.5 trillion in savings by Christmas. Tonight, I am asking you to increase that amount so that it covers the full cost of the American Jobs Act. And a week from Monday, I'll be releasing a more ambitious deficit plan -- a plan that will not only cover the cost of this jobs bill, but stabilize our debt in the long run. (Applause.)

This approach is basically the one I've been advocating for months. In addition to the trillion dollars of spending cuts I've already signed into law, it's a balanced plan that would reduce the deficit by making additional spending cuts, by making modest adjustments to health care programs like Medicare and Medicaid, and by reforming our tax code in a way that asks the wealthiest Americans and biggest corporations to pay their fair share. (Applause.) What's more, the spending cuts wouldn't happen so abruptly that they'd be a drag on our economy, or prevent us from helping small businesses and middle-class families get back on their feet right away.

Now, I realize there are some in my party who don't think we should make any changes at all to Medicare and Medicaid, and I understand their concerns. But here's the truth: Millions of Americans rely on Medicare in their retirement. And millions more will do so in the future. They pay for this benefit during their working years. They earn it. But with an aging population and rising health care costs, we are spending too fast to sustain the program. And if we don't gradually reform the system while protecting current beneficiaries, it won't be there when future retirees need it. We have to reform Medicare to strengthen it. (Applause.)

I am also -- I'm also well aware that there are many Republicans who don't believe we should raise taxes on those who are most fortunate and can best afford it. But here is what every American knows: While most people in this country struggle to make ends meet, a few of the most affluent citizens and most profitable corporations enjoy tax breaks and loopholes that nobody else gets. Right now, Warren Buffett pays a lower tax rate than his secretary -- an outrage he has asked us to fix. (Laughter.) We need a tax code where everyone gets a fair shake and where everybody pays their fair share. (Applause.) And by the way, I believe the vast majority of wealthy Americans and CEOs are willing to do just that if it helps the economy grow and gets our fiscal house in order.

I'll also offer ideas to reform a corporate tax code that stands as a monument to special interest influence in Washington. By eliminating pages of loopholes and deductions, we can lower one of the highest corporate tax rates in the world. (Applause.) Our tax code should not give an advantage to companies that can afford the best-connected lobbyists. It should give an advantage to companies that invest and create jobs right here in the United States of America. (Applause.)

So we can reduce this deficit, pay down our debt, and pay for this jobs plan in the process. But in order to do this, we have to decide what our priorities are. We have to ask ourselves, "What's the best way to grow the economy and create jobs?"

Should we keep tax loopholes for oil companies? Or should we use that money to give small business owners a tax credit when they hire new workers? Because we can't afford to do both. Should we keep tax breaks for millionaires and billionaires? Or should we put teachers back to work so our kids can graduate ready for college and good jobs? (Applause.) Right now, we can't afford to do both.

This isn't political grandstanding. This isn't class warfare. This is simple math. (Laughter.) This is simple math. These are real choices. These are real choices that we've got to make. And I'm pretty sure I know what most Americans would choose. It's not even close. And it's time for us to do what's right for our future. (Applause.)

Now, the American Jobs Act answers the urgent need to create jobs right away. But we can't stop there. As I've argued since I ran for this office, we have to look beyond the immediate crisis and start building an economy that lasts into the future -- an economy that creates good, middle-class jobs that pay well and offer security. We now live in a world where technology has made it possible for companies to take their business anywhere. If we want them to start here and stay here and hire here, we have to be able to out-build and out-educate and out-innovate every other country on Earth. (Applause.)

And this task of making America more competitive for the long haul, that's a job for all of us. For government and for private companies. For states and for local communities -- and for every American citizen. All of us will have to up our game. All of us will have to change the way we do business.

My administration can and will take some steps to improve our competitiveness on our own. For example, if you're a small business owner who has a contract with the federal government, we're going to make sure you get paid a lot faster than you do right now. (Applause.) We're also planning to cut away the red tape that prevents too many rapidly growing startup companies from raising capital and going public. And to help responsible homeowners, we're going to work with federal housing agencies to help more people refinance their mortgages at interest rates that are now near 4 percent. That's a step -- (applause) -- I know you guys must be for this, because that's a step that can put more than $2,000 a year in a family's pocket, and give a lift to an economy still burdened by the drop in housing prices.

So, some things we can do on our own. Other steps will require congressional action. Today you passed reform that will speed up the outdated patent process, so that entrepreneurs can turn a new idea into a new business as quickly as possible. That's the kind of action we need. Now it's time to clear the way for a series of trade agreements that would make it easier for American companies to sell their products in Panama and Colombia and South Korea -- while also helping the workers whose jobs have been affected by global competition. (Applause.) If Americans can buy Kias and Hyundais, I want to see folks in South Korea driving Fords and Chevys and Chryslers. (Applause.) I want to see more products sold around the world stamped with the three proud words: "Made in America." That's what we need to get done. (Applause.)

And on all of our efforts to strengthen competitiveness, we need to look for ways to work side by side with America's businesses. That's why I've brought together a Jobs Council of leaders from different industries who are developing a wide range of new ideas to help companies grow and create jobs.

Already, we've mobilized business leaders to train 10,000 American engineers a year, by providing company internships and training. Other businesses are covering tuition for workers who learn new skills at community colleges. And we're going to make sure the next generation of manufacturing takes root not in China or Europe, but right here, in the United States of America. (Applause) If we provide the right incentives, the right support -- and if we make sure our trading partners play by the rules -- we can be the ones to build everything from fuel-efficient cars to advanced biofuels to semiconductors that we sell all around the world. That's how America can be number one again. And that's how America will be number one again. (Applause.)

Now, I realize that some of you have a different theory on how to grow the economy. Some of you sincerely believe that the only solution to our economic challenges is to simply cut most government spending and eliminate most government regulations. (Applause.)

Well, I agree that we can't afford wasteful spending, and I'll work with you, with Congress, to root it out. And I agree that there are some rules and regulations that do put an unnecessary burden on businesses at a time when they can least afford it. (Applause.) That's why I ordered a review of all government regulations. So far, we've identified over 500 reforms, which will save billions of dollars over the next few years. (Applause.) We should have no more regulation than the health, safety and security of the American people require. Every rule should meet that common-sense test. (Applause.)

But what we can't do -- what I will not do -- is let this economic crisis be used as an excuse to wipe out the basic protections that Americans have counted on for decades. (Applause.) I reject the idea that we need to ask people to choose between their jobs and their safety. I reject the argument that says for the economy to grow, we have to roll back protections that ban hidden fees by credit card companies, or rules that keep our kids from being exposed to mercury, or laws that prevent the health insurance industry from shortchanging patients. I reject the idea that we have to strip away collective bargaining rights to compete in a global economy. (Applause.) We shouldn't be in a race to the bottom, where we try to offer the cheapest labor and the worst pollution standards. America should be in a race to the top. And I believe we can win that race. (Applause.)

In fact, this larger notion that the only thing we can do to restore prosperity is just dismantle government, refund everybody's money, and let everyone write their own rules, and tell everyone they're on their own -- that's not who we are. That's not the story of America.

Yes, we are rugged individualists. Yes, we are strong and self-reliant. And it has been the drive and initiative of our workers and entrepreneurs that has made this economy the engine and the envy of the world.

But there's always been another thread running throughout our history -- a belief that we're all connected, and that there are some things we can only do together, as a nation.

We all remember Abraham Lincoln as the leader who saved our Union. Founder of the Republican Party. But in the middle of a civil war, he was also a leader who looked to the future -- a Republican President who mobilized government to build the Transcontinental Railroad -- (applause) -- launch the National Academy of Sciences, set up the first land grant colleges. (Applause.) And leaders of both parties have followed the example he set.

Ask yourselves -- where would we be right now if the people who sat here before us decided not to build our highways, not to build our bridges, our dams, our airports? What would this country be like if we had chosen not to spend money on public high schools, or research universities, or community colleges? Millions of returning heroes, including my grandfather, had the opportunity to go to school because of the G.I. Bill. Where would we be if they hadn't had that chance? (Applause.)

How many jobs would it have cost us if past Congresses decided not to support the basic research that led to the Internet and the computer chip? What kind of country would this be if this chamber had voted down Social Security or Medicare just because it violated some rigid idea about what government could or could not do? (Applause.) How many Americans would have suffered as a result?

No single individual built America on their own. We built it together. We have been, and always will be, one nation, under God, indivisible, with liberty and justice for all; a nation with responsibilities to ourselves and with responsibilities to one another. And members of Congress, it is time for us to meet our responsibilities. (Applause.)

Every proposal I've laid out tonight is the kind that's been supported by Democrats and Republicans in the past. Every proposal I've laid out tonight will be paid for. And every proposal is designed to meet the urgent needs of our people and our communities.

Now, I know there's been a lot of skepticism about whether the politics of the moment will allow us to pass this jobs plan -- or any jobs plan. Already, we're seeing the same old press releases and tweets flying back and forth. Already, the media has proclaimed that it's impossible to bridge our differences. And maybe some of you have decided that those differences are so great that we can only resolve them at the ballot box.

But know this: The next election is 14 months away. And the people who sent us here -- the people who hired us to work for them -- they don't have the luxury of waiting 14 months. (Applause.) Some of them are living week to week, paycheck to paycheck, even day to day. They need help, and they need it now.

I don't pretend that this plan will solve all our problems. It should not be, nor will it be, the last plan of action we propose. What's guided us from the start of this crisis hasn't been the search for a silver bullet. It's been a commitment to stay at it -- to be persistent -- to keep trying every new idea that works, and listen to every good proposal, no matter which party comes up with it.

Regardless of the arguments we've had in the past, regardless of the arguments we will have in the future, this plan is the right thing to do right now. You should pass it. (Applause.) And I intend to take that message to every corner of this country. (Applause.) And I ask -- I ask every American who agrees to lift your voice: Tell the people who are gathered here tonight that you want action now. Tell Washington that doing nothing is not an option. Remind us that if we act as one nation and one people, we have it within our power to meet this challenge.

President Kennedy once said, "Our problems are man-made -- therefore they can be solved by man. And man can be as big as he wants."

These are difficult years for our country. But we are Americans. We are tougher than the times we live in, and we are bigger than our politics have been. So let's meet the moment. Let's get to work, and let's show the world once again why the United States of America remains the greatest nation on Earth. (Applause.)

Thank you very much. God bless you, and God bless the United States of America. (Applause.)





Early observations from Republican leaders indicate that there are parts of the current plan they love, others they can live with, a few they are willing to put their weight behind, and some, a no go area. For most part, this is good. Few things match the test of experience and time. Would the plan get the support and blessing of Republican lawmakers who have constantly attempted to blind sight the country and or work against the efforts of the President? Only time can tell!

The Big headline of the Republican Primary Debate at the Reagan Library: “Social Security is a Ponzi scheme – Gov. Perry?

Keywors or Terms: Regan's Library; Republican Nomination; Ponzi Scheme; Governor Perry; Social Security; Elder's and retirees welfare; Environmental Protection Agency; Climate Chahge Science; Tea Party; Brian Adams (NBS- News) and John Harris (Politico)

In his first debate as a candidate for the office of US Presidency at President Reagan’s Library, Simi Valley, California, Governor Rick Perry offered what would probably turn out to be the biggest hurdle for him in being the Republican flag bearer in the 2012 National Election. In a debate proctored by Brian Adams of NBC News and John Harris of Politico, Governor Rick Perry not only made what is probably going to be seen as a gaffe by main stream Republican Party, he railed against the social security program as a ponzi scheme. While remaining aggressive and countering the position of former Vice President Cheney and hitting hard on Karl Rove, a mainstream Republican strategist, Governor Rick Perry likened Social Security to a criminal enterprise.

Perry believes that he has done a better job in creating employment at the state level than his second closest opponent, Mitt Romney. He not only discountenance main stream Republican ideologues like Karl Rove, he went on a personal attack on President Obama, calling him a liar on the issue of El Paso, Texas's safety and Security. Rick Perry’s new personal attacks may sit well with the Tea Party faction of the Republican Party; but, will probably steer away voters from him in a general election, as many voters understand that Perry’s characterization is not only untrue, but demeans the office of the United State’s Presidency, which is still high on the pedestal of everyone. 

Governor Rick Perry is fighting for the hearts and souls of the extreme right, working his base in the south and espousing the vulnerability of Romney for his religion in the Southern Bible-belt America. If Governor Rick Perry was well qualified to be a candidate for the office of the Presidency as forward written by Newt Gingrich in Perry’s book; his performance regarding last night’s debate is simply this: The front runner, Governor Rick Perry, is not only a candidate that has a basket mouth but one that will pull Americans apart, considering his gaffes. His anti-federal government, anti-establishment, anti social security and Medicare programs, pro-secessionist and anti-Federal Reserve Bank Chief and or system, would probably go down as the best strategy for playing to his Republican right base; and, the worst strategy for attempting to win the nomination of a major political party for a general election.

While it may look too late to have Governor Perry adapt to a new attitude of civility in American politics, it is essential to reiterate that Perry’s candidacy is probably only a hair high over Congresswoman Bachmann’s Tea Party constituency’s bravado that does very little for America. American Voters may be seeking a President who could take this country from good to great in the task of jobs’ creation; but they are hardly looking for a President who is not cautious with his words. In observing Perry get off on other co-aspirants on the debate podium, one is attuned to offer his candidacy a chance at the highest political office in the land; but, his dossier of gaffes just in the first month of his entering the nomination contest for the Republican party are now making or about to start making many voters have a second thought, even within conservative party faithfuls. Governor Rick Perry may be good for Tea Party faction of the Republican Party; however, he is too extreme for main stream American voters.

Of course, Governor Perry may be focusing on playing to his newly found Tea Party base, attacking Social Security as a criminal enterprise and posting that Social Security Program is a monstrous lie, his newly found tirade is hardly meaningful for someone who is result-oriented for the nomination as his Party’s flag bearer. A governor making toxic comments like everyone knows Social Security is a ponzi scheme, or is anti-science and anti-evolution, is probably not an ideal candidate the mainstream middle class Americans in the Republican Party want to represent them in the coming contest. Fixing the shortcoming of the social security system may be a wise choice to save the whole social security program; however, abolishing a social policy that has worked very well for keeping elders out of poverty for over half a century is neither a good medicine for the economy nor a great strategy for a candidate seeking the votes of older Americans. Social security program worked very well for over half a century before congress began to raid the fund; however, coming out of the woodworks to terminate the program as proposed or anticipated by Governor Perry, is hardly realistic. The challenging economic environment may be dictating a singular spotlight on one of America’s safety net for our retirees and those who can hardly help themselves during trying time; however, it is unprincipled for an aspirant for the office of the Presidency to attack the program under the disguise of States’ rights as against federal right.

Governor Perry may be touting his qualification for the office of the Presidency to his largely anti-Mormon base, his appraisal of social security as a criminal enterprise point directly to his less than stellar qualification as a college student at Texas A & M University. A governor and candidate with less than stellar undergraduate and governance performance, may be okay to lead the state of Texas with a quarter of its population without health care insurance,  poorest high school graduation rate and majority residents working probably at the lowest paying jobs and most deplorable working conditions, he is absolute unsuitable for the office of the United States President based on his state’s record over many aspects of quality of living. America is seeking a President who is forward looking, motivated to make a change in their quality of life through better jobs’ opportunities; however, they are not looking for another Texan Governor that offers more bravado than substance. A candidate for Presidency, who shows a myopic view of science, men and women in his caliber; or, calls the President a liar, is absolutely unsuitable for that esteemed office.

Governor Perry may be a front runner among aspirants for carrying the flag for Republicans in the 2012 general elections; his un-insightful comments about independent public officials like the Chairman of the Federal Reserve and the President of the United Sates make him unqualified to lead the free world. Tea party members may be inspired by the aura of Rick Perry, but his less than endearing comments about important public policies, institutions, and issues that affect more than 60 American elders, make him unsuitable to be voted into the Presidency by mainstream American voters. Challenging President Obama to a second term may be important to many Republicans, however, oversimplifying the problems confronting America, getting into personal attacks on public officials or signing pledges that pin one’s choice to a set of values or positions that may scuttle the choices of Americans is unacceptable and uncautionable.

A compelling and decisive choice of a President must not be maligned by questionable assessment by an aspirant to the office; neither should a candidate for the office of Presidency, shuffle between critical national agenda or issues that he or she has a shallow knowledge about. Governor Perry make comments that fly in the face of scientific research and avoid mainstream voters conviction in evolution theory; he fails to recognize the importance of an Environmental Protection Agency and chooses to be oblivious to the reality of globalization. His practice of extremism for the sake of nomination or out of probable ignorance is tantamount to duplicity. Governor Perry’s absolution and ignorance about climate change may have a monstrous impact on the future of America, if he is nominated as republican flag bearer and ends up winning the general election out of default or genuinely.

Jobs Creation: Do Republicans see anything beyond cutting taxes for the Rich?

Keywords or Terms: Republican Party; Gov. Romney Jobs Plan; China; India; Trickle-down Economics; Corporate; Tax Breaks; Foreign Wars; NAFTA; President Obama; Infrastructure Spending; Tax breaks; and Bold and Revolutionary jobs’ creating strategy.

Within the Republican Party, are conservatives, ultra-conservatives, moderates and believe it or not, some liberals. Each of these groups has its favorite candidate among the slate of aspirants for the office of the Presidency in 2012. When each group member listen to any aspirant render a speech, each hears his or her own biases. But Governor Romney’s Speech on jobs' creation beats so many hollow to a point that some plainly said, there is hardly any thought or revolutionary reasoning in the aspirant’s proposal on the endeavor. In one sentence Romney wants to cut taxes for the rich, expand corporate welfare, drill more oil and slam down China for monetary policy. The blog today makes a case that it is going to take more revolutionary and earth shaking strategy than the old worn and unresponsive Republican mantra for resolving America’s problem of unemployment.

Given to the usual mantra of Republican strategy for governance, cut taxes, cut government to the bare bones, expand government corporate welfare, exploit more natural resources and go after the exclusionary communist state, Romney exhibited laziness of thoughts, absence of understanding of the reality of globalization in the new world order and a genuine understanding of what is going to take to turn this economy around. Governor Romney repeated the same things previous Republican Presidents advanced and romanticized with, which hardly yielded positive results for job creation in similar economic environment; or, offered solid solutions for unnerving the writhing grips of high unemployment. Romney identifies with the old Republican hollow mantra: Trickle-down Economic Theory or Reaganomics. This is a policy that Reagan himself relegated to the back waters, as he increased spending on some social welfare programs that were once criticized as bloated and reason for the nation’s huge deficit in late 70’s and early 80’s. Romney failed to address some short comings of NAFTA, which many observers of public policy denounce as one of the reasons, why unemployment is so high in today’s America. Although I do not share that last observation, as I am not so much of a protectionist, I still believe that there are some issues with NAFTA that are not working completely in the interest of America’s economy.

Republicans are completely focused on unseating President Obama; hardly taking cognizance of what it takes to address the jobs crisis in America. A survey taken recently by the Pollster found President Obama’s job approval rate at 62%; implying 38% are still likely to give him the benefit of doubt. The reason for his poor score card has been associated with how he has handled the economy. There is the argument that our congress and senior politicians, from both aisle of congress, have failed to address policy issues in bills that could have saved the nation from the pains and pangs of unemployment. Republicans have remained the stumbling block all the way, failing to stand up for what the people want: jobs, jobs and jobs, again. Democrats have not fared much better, considering that their jobs creating initiative has not been huge enough to create the required dent in the nation’s unemployment. From recent polls come the optimism of 38% percent of Americans; that, the President has stood firmly in support of America’s interest and showing commitment to grow this economy by creating jobs; but it seems that the nation’s tax laws reward more overseas investments by corporate America. The tax loop holes have made it somewhat difficult for the nation to grow jobs at the rate necessary to deal with high unemployment or a cyclical economic regime. The argument is for a revised tax codes among others, to help kick start the economy and grow jobs in America. The challenge for President Obama in his forthcoming speech to the joint session of congress on jobs’ creation is how to engage the 62% of Americans who are not so fund of his administration’s effort on job creation. It is up to the President to deliver and save his chance at a second term in his forthcoming speech to the joint session of congress and the nation.

According to Warren Buffet, it is about time the rich pay their fair share of the nation’s revenue shortfall by accepting increased taxes; and, better shared sacrifice from people like him. Similar observations have been made by the GAO, which indicate that if the nation allows President Bush’s tax cut for the rich to expire this coming January, the nation will be able to cut its deficit in half, that has so much been the concern of the Republicans. President Obama may only succeed by going beyond a small planned infusion of government’s investment in jobs creation. The Professional Association of America Engineers has indicated that there are about two and half trillion dollars infrastructural spending needed now to keep pace with our national needs and future expansion. Investing money in infrastructural refurbishing, rebuilding and enhancement are best bets for creating immediate jobs in the economy. Protecting seniors’ retirement portfolios and keeping them in their homes are essential ingredients for unraveling the current economic depression. Now, does Romney’s Plan or pseudo plan scratch the surface of these problems; or attempt to accomplish anything worthy of note? The answer to that question is a resounding no.

Not all Republican’s response to getting the nation’s economy back on track are dismissive; however, when a candidate attempting to unseat the current President is engaging in demagoguery like growing our economy will be achieved by cutting taxes for the rich and not growing government, or offering loose statements about a foreign country’s currency regime, most of which Democrats have insistently made effort to correct in the past few years, you begin to wonder: where has Governor Romney been in the past decade, when Republicans opened up government coffers to the rich through huge tax cuts and engaged in lousy and contestable foreign wars? It is about time that Republican aspirants begin to make the most of the available economic advisers within their campaign ranks or team. Instead of improvising plans that have previously been offered and found wanton in fighting unemployment, Republican aspirants have to show a noticeable way to unravel the unemployment problem, if they want any voter to look their way come 2012.

For instance, President Obama’s last stimulus plan was close to fifty percent tax cut; yet we have not been able to make a huge dent in the unemployment rate. This same ineffective and somewhat loose strategy is being proposed by a candidate presumed to be a front runner among some Republicans for nomination to be the flag bearer for their party. I’m a proponent of effective economic public policy, which can make a difference in solving challenging national problems. Take investments in infrastructural spending to boost job creation for example; it isn't really a completely hot solution for resolving the huge unemployment problem; but, it stands the best chance at bringing about million of jobs in building, construction and manufacturing. This is the type of revolutionary and responsive initiative that is needed to engage this problem. Now, for this strategy to make a remarkable difference, the infrastructural spending must be huge enough to cut into unemployment rate across the board. As much as it is probably going to add to our deficit in the short-term, it stands a better chance of bringing about change in the number of jobs available to Americans, fifteen million of whom have been out of work one day too many. Yes, this concept may push so many fiscally concerned or conservative voters out of their comfort zone; however, it is probably the best or the most powerful to engage the unemployment problem that has beleaguered the nation’s economy recently.

Any job plan at this time in the nation’s effort or dilemma, must not only be revolutionary, it must be huge enough to make a noticeable difference in the unemployment problem and the challenges facing middle class America. Governor Romney’s plan looks more like an improvising plan to what Democrats have already tested and found insufficient to take on the problem. Romney’s plan makes so many Republican candidates that may be running behind him for the party’s flag bearer, awkward and utmost lousy in their efforts. Cutting corporate tax rate, expanding exploitation of carbon-based fuel sources, giving more tax cuts to the wealthiest among us and bashing a foreign country for her currency regime are not as revolutionary for any candidate seeking to unseat President Obama. A former Massachusetts governor that touts his 25 year experience in the private sector ought to do better than the plan advanced by Romney on jobs' creation.  Some critics have indicated that buying up failing firms or investing in companies to make quick monetary returns as characteristic of Romney’s past experience in the private sector, hardly translates or means experience in creating jobs; especially, when he had actually specialized in laying workers from his newly reconstituted firms after a buy out or take over. As the governor’s experience has involved, merging companies, cutting wages and unloading labor force after buying those companies on the cheap, it is really hard to believe that such a candidate can address the issue of jobs creation as we now need in America.

If Governor Perry is the Republican front runner by some polls out there, the ideal question for Mr. Perry now is: Where is your job plan or, when is he going to lay out his plan? The demand for work in America today is limitless. America is badly seeking plans and strategies that create opportunities for the skilled and unskilled labor force. Leadership in jobs creation is essential for the nation to match the challenge at hand. One half of the nation’s retirees’ wealth has evaporated and there is probably a glut of 4 million foreclosed homes and another five million in the pipeline, if the unemployment problem does not budge. The nation is not seeking a smooth talker or a wishful thinker, what the nation needs, is a leader who can get Americans jobs, allow them to hold on to their mortgages and rebuilding their lives once again! It is unlikely that Americans voters will simply improvise anyone for the current President just because he or she says he has the experience to create jobs out of merging companies or buying them on the cheap for a quick turn around; or that their state has the lowest unemployment in the past years. All those out of work seek employment and hardly care about promises or past achievements of any candidate for the White house’s oval office, at this time.

Labor Day Treatise: finding a road to economic recovery and solutions to high unemployment?

Keywords or Terms: Labor Day; Economic Recovery; Unemployment; Congress; Whitehouse; China; Macroeconomics Public Policy; President Obama; Capital Project; and Political Party Leader

How can America get out of this nasty recession? Would giving many speeches over the pains and difficulty of job loss be an ideal model for resolving this recession? In fact, is there a single silver bullet to solve the unemployment and housing foreclosures problems that have characterized this current recession? Despite the severity of the unemployment problem and home foreclosures, and their implication for quality of American life, it does not seem as though our Republican friends in congress are paying much attention to the negative impact of the current recession. In simple terms, the middle income groups – those who bust their butt to ensure that the engine of America’s progress doesn’t come to a halt – are probably obfuscated for good by the current nemesis of unemployment and dastardly effect of the recession. On Labor Day, the blog contemplates finding a road to economic recovery and solutions to high unemployment.

Democrats and Republicans in Congress must wake up to reality. They cannot continue to play politics with people’s lives and expect high job rating or positive fervor from the millions of Americans seeking employment. Statistics from United States Department of Labor show that in the preceding month, August 2011, not one single job was created in the economy. A 2009 statement from the former Chairman of Presidential National Economic Advisers, Dr. Summers, projected that high unemployment was going to be with us for a very long time. However, this does not have to be. This is America, a nation that once financed a Marshall Plan for Europe and lifted Japan from the depths and despair of the Second World War. A nation that once created jobs nearly every day during the late sixties, gave life to Taiwan manufacturing despite the oppressions of Communist Party Leaders in China. A nation where ‘made in china’ meant so little in the sixties and early seventies before Nixon went to China and projected the possibility for exploiting China’s cheap labor force.

Is this the same country that encouraged manufacturing in a country where the average high school graduate is better known for wrote memory rather than independent thoughts, genuine creativity or invention; which some absent-minded Americans are now touting as threatening America’s dominance of productivity in the world? Well, for those who have short-memory or may have forgotten: American Companies shipped America’s manufacturing industries to China and several other third world countries, because of government public policies that can be reverted! I have seen it done before and I know, if America and our congress are ready to deal with the unemployment problem and other associated problems of this recession, they can solve the current 15% unemployment problem. You cannot ship your manufacturing base to other countries and expect national unemployment to trend down rapidly. Manufacturing industries within our borders means jobs for our teaming millions. In short, a manufacturing base is a guarantee of jobs in any economy.

Our political leaders must not mind naysayers, they will always be with us, and we only need to prove them wrong or put them in their proper place, to get this country moving again. We can explore several alternative job creating public policies, because current policies and past initiatives of government under both Republicans and Democrats, encouraged firms to move capital and business overseas. The purpose of leadership is to bring about change where and when necessary, especially now with so many Americans out of work. The hard fact of the current unemployment is many Americans, professionals and non-professionals, college educated, old and young , workers are now out of work, just like high school diploma holders known in the past for the drudgery work. The task for our political leaders is to create a clear and aligned vision and strategies which will not only create jobs in the economy, but also hold them for longer than in the past. Congress must work with President Obama to translate his vision for immediate job creation to reality, once he gives his speech on Thursday.

It is okay to create jobs from government spending, because that is probably what we have left as many private sector gurus are holding tight to their money and not reinvesting in America to create jobs. We cannot allow the current disinvest behavior of many corporations and their executives to cascade into further disaster for the economy. It is also okay to spend on developing, upgrading and retooling skills of laid-off workers, so they can be ready for a newer and probably greener economy; without which, we may be looking at an unprepared labor force, unable to take on the challenge of the twenty-first century industry; and or, a 25% unemployment rate down the road. Our ability and capability as a labor force can only be enhanced at this time, if government investment in skills development and enhancements are not frugal. Yes, I have heard the political pessimists say we cannot afford this kind of government spending, but ask them what the alternative is, and they all come up with rambling and dabbling statements that exhibit their ignorance of macro-economics principle. Tough unemployment problem requires tough and determinant macro-economics public policy solutions, some of which may be unpalatable for a while.

Congressional leaders must understand that the ability to relate to the problems of the country is one crucial quality of leadership. Each congressional lawmaker, Republican or Democrats, come out of cities, counties and states that are looking at between six to twenty percent unemployment rates. Data of people out of work or who have dropped out of the labor force may not be complete; however, each lawmaker has a dossier of how bad things are in their constituency; and, many of them can truly tell you: “things are tough in the America’s wasteland.” The onus now is to set aside party politics and yield to the demands of millions of Americans for work. We cannot continue to have a nation of 'haves' and a disproportionately high number of 'have not’s. Seasoned politicians will tell you what we now have is a recipe for political unrest, just as we have seen in some countries of Europe, Middle East and Asia.

So much grandstanding going on among political party leaders in congress is not good; as most have failed to understand the human impact of prolonged recession; especially high unemployment in inner cities and among minority groups. Each party leader is currently protecting their political or ideological toughs and each to some degree, is looking away from the realities of unemployment among some sectors and areas of the nation. As any community action leader and planner know, without assertive and altruistic initiatives to resolve a very thorny problem in communities, it may just be difficult to bring about some order or change to a problem impacting a largely disproportionate number of people in the community. President Obama, a seasoned community organizer and politician, is probably seeking a team-based approach to resolving the high unemployment rate among Americans. It is now the responsibility of political leaders from both aisle of congress to give him the chance or benefit of doubt by avoiding party politics and grand standing, on this very nasty problem of unemployment.

There is hope that if both party leaders in congress engage with the President, it is possible to create jobs that can have huge impact on the unemployment rate. However, to arrive at this solution or destination, there is a need to engage the heads and hearts of every politician in congress, governors’ houses, policymakers at the federal level and in various state capitols, counties and cities. Everyone must now reject party politics or myopic political self-interest as the unemployment problem is an American problem, not a political party problem as many self-serving politicians want America to believe. This means, all hands must be on deck to bring about change to this skyrocketing unemployment rate, once plausible solutions are advanced by the President come Thursday.

The following is my contribution to the solution to the unemployment problem; a few of my suggestions I have blogged in the past and may resonate with some of my readers and politicians, who are truly interested in helping America take care of her number one problem, job creation:

1)      Investment in capital projects. No matter where you look, our roads, airports, dams, piers, bridges, classrooms and electrical power grids are crumbling. The dilapidated infrastructure can be replaced, with government investments in these endeavors, creating jobs in the construction, manufacturing and building industries.

2)      Elevating public laws to meet changing times. There are some outdated government regulations and laws that are encouraging disinvestment in America or shifting of jobs overseas. It is time to consider the day-to-day impact of stifling government regulations and laws that are making America’s entrepreneurs to shift businesses and money overseas. However, this effort must not be designed to undo or undermine necessary regulatory safeguards that are essential to running a safe workplace.

3)      Prioritizing Government Investment Projects. Proposed initiatives or public policy must focus on infrastructure projects that will create a large number of jobs, immediately. Policymakers in the Obama’s Administration cannot afford to see many Americans out of work by the first quarter of 2012; or else, President Obama’s second term is signora!

4)      Challenge the Status Quo. Take a firm stand on jobs creation, not only in the current recession, but also in the future ones. How about mandating constitutional amendment to guarantee that all people willing and seeking to work, finds employment? Well, that will be going too far, except one is a member of the Tea Party faction in the Republican Party? All jokes apart, it is known that faster job creation increases National Income and output; and, among other things, raises the ratio of employees paying into social security retirement fund, thereby lowering the average contribution of each worker to Medicare and Medicaid costs and similar social safety net. Now, those are genuine reasons to create jobs!

5)      Elevate Proactive Thinking in Labor Policy Formation. Consider other more responsive public policy than giving money to employers to hire and retain employees on their payroll. European countries would tell you from experience that such initiative or government programs hardly make much of a difference as many of such companies end up laying off those same workers, immediately the subsidy is over. Labor Policy contemplated must be clear, contextual and long term to be able to make an impact on the unemployment rate.

Frankly, there are no legitimate arguments to having unemployment as high as 9% in America. Government policies and political party leaders’ muscle flexing, or other minor inconsequential, can have huge impact on the number of workers in America. Yes, our economy suffers some cyclical inadequacies that make unemployment to rise or fall with the expansion and contraction of the economic indicators. However, once our political party leaders understand that the problem of unemployment is not the domain of one political party; the earlier we are able to resolve this problem. Further, the earlier politicians appreciate that finding solution(s) to the problem of unemployment cannot be completely left to a party leader in the Whitehouse; or, to leaders of political party in majority in congress; and that the problem impacts the lives of people, some of them family members, neighbors, friends, and acquittance, the better we are able to get ourselves out of this maze. Finally, unless our politicians appreciate that many of the 15 million unemployed are voters; and that if quick and drastic solutions is not found to the current unemployment problem, many of them will be thrown out of congress and White House, maybe we will start to see the silver lining at the end of this tunnel!

Of Storms, Hurricane and Tornados: surviving the winds and aftermath disaster?

 Keywords or Terms: Winds; Storms; Tornadoes; Hurricanes; National Hurricane Center; Meteorologists;  South Eastern and Eastern States; Experienced Residents; Storm Chasers;  Type A and Type B people;  Optimists; Risk Adverse; and Relaxation

I’ve always been intrigued by the hurricane seasons, not for the annihilating effect of the storms on the environment and people, or the damages to properties and pains left behind, but the uncommon and unusual state of the mayhem before another hurricane and storms hit. When the storms and hurricanes come, they come in multiples and no one can actually say they are prepared for them or that they have it together all the time. How about the adage: when it rains, it pours? But some resilient people in the path(s) of the storms inform me of the thrill of these times.

The National Hurricanes or Meteorologist Center that name these storms and hurricanes are occasionally confused, they interchange the historical experiences of one of the storms or hurricanes for another when reporting to the public. Perhaps the hurricane center’s meteorologists and or weather meteorologists want the names to depict specific aspects of the storms each year; however, survivors would rather forget the names and the experience. If you add the costs of the damages to the way of life of residents in the paths of the storms and hurricanes, you begin to understand, why the storms and hurricanes are no one’s cup of tea.

The historic high water levels of some rivers and inland water ways during and immediately after the storms, sometime test the mettle of inland tugs and barges operated by oil and gas companies. No wonder, oil and gas companies like most residents of the gulf and on the paths of the storms, are no fans of the destruction during this time of the year. The hurricanes and storms are hitting the Gulf Coast tonight and many residents of Florida and Mississippi coasts are not laughing or having any fun about the current storms and winds. No one in Southern Mississippi State or any others in the path of the winds in the east coast are brave enough to say they are ready for the challenge of the current tornado storms and or probable associated disasters coming with them. Not even last week’s experience with the storms in the northeast could have prepared anyone or companies to engage the destructive force of these new storms and hurricanes from Mother Nature.

My conversation with some friends and residents of Florida and Alabama today indicate that the big one is on the way and their effort at boarding up their homes and businesses are but, shallow sense of security meant for a feel good experience for those just being broken into the severe weather. As one of the older residents of Florida said: When nature comes with its power and fury, not even an iron gate can keep the water and winds out! Experienced residents of the Gulf Coast States have developed somewhat of a thick skin against the storms and hurricanes. A few of them actually look forward to the experience and intuitively prepare for them before they come down, each year. As unsettling and somewhat scary these storms and hurricanes are for first timers, there is a feeling among the old timers: what you can’t help, you learn to live with! What don’t kill you only makes you strong!! When the unthinkable happens, some residents in the paths of the storms, see it as old friends showing up, once again, in the neighborhood!!!

In ways many of us have never seen or experienced, the lure of the disorientation that accentuates or accomplishes the storms and hurricanes, are hardly one to be cozy about and or, cherish. But trust my experienced Gulf Coast heroes, storms, hurricanes and cyclones are just part of the deal of living in brave old stormy ally. The concept of being careful and apprehensive of the storms and the associated disasters are only for the faint at heart. Residents of the stormy ally are often ready with the sledgehammer to board up their residents and businesses; and, wait for the unpredictability of the storms. It is just a way of life they’ve all been accustomed to throughout the years.

Fast forward to a day like this, the unusual experience of standing on pins and needles among many families and relatives living far away from the path(s) of the storms; show the enormity of the stress and anxiety channeled through phone calls to ensure that all is still well with loved ones during these excruciating times. And, while many of our friends and relatives almost want us to relax and man up, the growing anxiety of time and the unexpected are combinations that keep us all awake as long as we know that our loved ones are in arms way. Many of our friends and relatives living in states that are often bombarded by the hurricanes and storms, show some resilience and bravery that will make a million of us crawl into the woodwork. The thought of our loved ones standing against the unexpected and unpredictable winds and tornadoes is sometimes, if not always, overwhelming, no matter how those friends and relatives tell us to relax! Like my wife says, the storms separate the Type A people from the Type B; it’s just the reality for those folks and somehow, they are able to wade the storms.

We are now in the middle of gusty winds, cold front, moisture and heavy rains, severe weather condition in the south east and east coasts. The meteorologists on the weather channel say the latest and current storm is called: Lee! What a name to give isolated storms in Georgia, Alabama, West Florida; and, flooding in many low lying areas in the east coast. You imagine when you are building a wind farm; you’ve got to expect many towers; that’s how some residents of the Gulf see the winds, waves and lots of rains accompanying the current hurricanes. Tropical storm Lee is giving Southern Mississippi residents run for their money; tornado is forecasted for most parts of the area; and the Doppler radar is as active as it can be or get. No one knows where the forward wind streams and flooding are going to head; and, all things are just unsettling in most parts of the eastern shores. Despite all these, some residents of the Gulf want to go surfing. Where to go guy? Mother Nature is being destructive or excited and all you can think of is going surfing? This is very dangerous, but some of the older residents of those areas are saying these are the best times to surf and swim; you get the feel of being in high heavens!

As with other parts of life, the storms and hurricane seasons remind all, how fallible life truly is; and, why nature has a grandeur plan for the whole of universe, bigger than anyone could ever imagine. You hear: here today, gone tomorrow; and, you wonder what these people are talking about? We are often so sure that all will work out well; or for the best. We are not sure, but we want to expect the best and prepare for the worst. A few want us to believe that there is hardly any disaster that the world has not seen; and just being pessimistic is not going to help anything differently. Somehow in between the known and unknowns, we find a middle ground, where we can show some sigh of relief after the storms and we hear our loved ones say: all is well. You know, some of us are risk averse, while others love the adrenaline and rush that comes with crisis or disasters. As unusual as it may seem to some, a few people actually likes disaster and the challenge to rebuild and start all over again. For this latter group: hurricanes and storms season are unbeatable exciting times. The first thing some in this group want to do is chase the storms and see where the tornado is going to hit the ground. You’ve heard of storm chasers and you wonder, what is wrong with this kind of people? Are they for real; or just ready to lay their lives down just for a cheap trill? However, seasoned weather scientists remind me that, if those storm chasers don’t understudy the storms, we will never know how the storms form; and or, how to better prepare for them. Oh my Goodness, imagine what Sally does for a living?

To the brave souls in Southern Mississippi and Central Alabama tonight, including Biloxi, Mississippi and Mobile, Alabama, my prayers are with you. To workers evacuated from the two hundred and thirty platforms and over twenty oil rigs in the Gulf Coast, you deserve to be safe, be thankful. To the moms and dad with children in the path of the storms, I pray you find some solace in understanding that your loved ones are safe; or as safe as they want you to believe and cherish. To the storm chasers, may the force be with you! To the weather forecasters, may you never miss a wind or storm as you read the radar. To apprehensive and risk adverse folks like me: may we learn to understand what it takes to be optimistic at all cost; and, probably learn to always relax!

Where are America’s Housing Market and Unemployment Rate Heading?

Keywords or Terms: Housing Market; Fannie Mae; Freddie Mac; Unemployment Rate; Housing subsidies; Nominal Interest Rate; Home Equity Loans; Government Revenue; Loan-to-value ration threshold; Employment Data; Public Employment; Private Employment; Economic Performance Indicators; Veteran Benefits; Social Security Benefits, Medicaid and Medicare Benefits. 

The challenging housing market and high unemployment rate in America inspire a review of past policies and some possible recommendation on the best options available to government to avert Economic Armageddon due to the slumping housing market and painful unemployment problem. Given that no true solution for the depressing housing market and unemployment rate can be complete without addressing government subsidies in the housing, banking and finance sectors, it will be premature to make recommendations that are short-term in unraveling current challenges. Further, it will be superficial to expect long term changes in the housing glut without addressing the underlying issue of subsidized home ownership strategy of the past decades, through subsidies to the US Mortgage Market, via Fannie Mae and Freddie Mac. As Banks refine their lending practices, making home owner’s credit tighter and the mortgage market a little more stable, with huge inventory of foreclosed homes, it may be time for the Federal Government to consider policy strategies that lessen its involvement in both banking and house ownership subsidies to avert the continued slump in the housing market. The blog today undertakes a discussion of strategies to counter the slump in the housing market and the unyielding unemployment problem in America.

Just as it seems infinitesimal at this time for the Federal Reserve to keep nominal interest rate at zero during high unemployment, the expectation that employment will grow without clearing of the housing glut in the market is probably over simplistic and whimsical. The disproportional distribution of the housing glut across many states in the union, complicates the tax revenue base for some bigger cities and markets with huge inventory of foreclosed homes. As the housing glut continues to grow partly due to high unemployment, it maybe necessary to pull out the mortgage interest deduction at 50% rate and initiate the taxing of rental property income to a threshold of 80%. Such policies are likely to increase government revenue, pull back government subsidy to the housing market and assist in the clearing of foreclosed homes in various markets; hence affording for increased activities in the building industry and some form of revenue base for many cities that are hurting due to poor tax base and over inventory of foreclosed homes.

The owner-occupier housing strategy buttressed by full mortgage interest deduction at the end of the year has created a high ratio of property ownership in the recent past. While very helpful to assist in increased home ownership, the challenges of the time demand that we look over most responsive public policies to effect immediate changes in the housing market. It is probably safe to assume that at the peak of the heated housing market, home ownership in the United States reached up to 70% of households. In hindsight, it is probably not the best policy to follow, even though; it places the country at the highest rate of home ownership in the world. The reality of a public policy that deregulated lending practices in mortgage financing and allowed banks to get into dubious derivatives without necessary oversight, is probably part of the reasons why the economy is in a slump and unemployment, out of whack. 


The competitive landscape that fuels cautious consumer behavior was absent just before the collapse of the housing market. Banks and finance houses manipulated screening, administrative and maintenance costs of mortgage loans. The net effective cost of underwriting loans became so small for banks as most  maintenance and administrative costs of mortgage underwriting were defrayed to Fannie Mae and Freddie Mac, who in turn seeded the risk involved in most of these underwriting to government bonds. The less than stellar practice that allowed home-owners to borrow against equity in their homes may work well for high income and rich folks, but it has been a disaster for the low and middle income earners, majority of whom became first time home owner under a vastly deregulated finance and mortgage market. The challenge now is how to restore confidence in the mortgage and housing market.

The insolvency of many banks and insurance companies in the beginning of the recession may partly be blamed for government subsidies of home ownership. The fact that Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Association) under-wrote the lending risks involved in home loans carried by commercial banks and other mortgage finance houses, created an impression that government guarantees aggregate credit risks that is undertaken by the financial institutions. Further, the fact that the bond market financed to some extent, Fannie Mae and Freddie Mac, allowed some banks and a few finance houses to avoid due diligence, which in turn encouraged frivolous mortgage products, which some banks and finance houses probably knew were dubious and criminally culpable, since the end costs of the risk were eventually shifted to taxpayers, but which those banks and finance houses could hardly pass over in the heat of the mortgage debacle.

The implicit federal guarantee of Freddie Mac and Fannie Mae, made effective rate of borrowing for home-ownership artificially low, as these pseudo-governmental institutions, were able to borrow at marginal cost over the treasury bills rate. Although they may want to deny it, mangers at Freddie Mac and Fannie Mae understood that an insolvency of their operations may cause disruptions in the whole financial system; however, they hardly felt any responsibility to adequately inspect all the devious derivatives or bundling from commercial banks and mortgage finance companies doing volume business in real estate lending. With unusual increases in aggregate mortgage delinquency from rising unemployment and sluggish economy, it was just obvious that foreclosure rates were going to go on the increase. With many banks and mortgage finance companies undertaking huge risks, with products like 'zero down, zero payment' for the first 12 months, 'roll into mortgage principal, interest costs of the first six months of a loan', and no one bating an eye-lid at Fannie Mae and Freddie Mac, because these pseudo government institutions considered their securities as substitutes or close to substitutes, for treasury bonds, no wonder the economy went into a spiral when the housing market bottomed out in the middle or at the end of the recession.

Many Americans are still trying to understand what was going on in the mortgage market and what exactly was the contribution of devious financial institutions, whether there were duplicities or omissions of any sort that may be considered criminal; however, as of to date, no one has gone to jail for the size of collateral deviousness involved in the mortgage risks taken by many banks and financial institutions. The tricky thing is, no one has been able to explain truthfully, how these duplicity and criminally culpable negligence have contributed to many Americans loosing their jobs during the recession. Many households have defaulted on their mortgage loans and a few have actually stayed put or walked away, deciding not to pay any more mortgage because their houses had lost too much value and probably are now worth less than half of what they paid for them at the height of the mortgage bonanza or boom. It is probably necessary to see that a few in the financial and mortgage industries went to jail for their complicity, and contribution to the recession; it is probably doubly necessary to investigate the extent to which executives at Fannie Mae and Freddie Mac knew of the devious derivatives sold to them, and which they in turn refinanced in the bond market. Without some form of accountability, it is probably unlikely that this or similar events in the mortgage industry will not repeat themselves.

Fannie Mae and Freddie Mac seem to have been a success story in helping Americans own their first homes, prior to the deregulation of the finance and housing markets. The fact that precipitous deregulation of the financial sector of the economy under President Bush afforded all types of devious marketing and transaction inadequacies, make it imperative that the fault of the tanking  America’s economy be laid squarely at the door step of the last Republican President. Dubious financial instruments or portfolios and renegotiated repurchase agreements littered the banking and mortgage industries, yet no one is paying for these. Imagine the absence of implicit guarantee of Fannie Mae and Freddie Mac for underwritten mortgage portfolios; wouldn't banks have been less frivolous and cautious as they underwrote many of the mortgages that are now in foreclosures? The fact that Fannie Mae and Freddie Mac, pseudo government entities, considered their debts just as safe as treasury bonds, probably led to the debacle in the housing market. It is time to undo the subsidies to the housing market in terms of direct interest rate write-offs for home ownership, to help correct for part of the problems associated with the housing glut and repercussions of high unemployment.

To get away from the housing slump, it may be necessary for government to tax the banks, insurance and mortgage finance companies and use revenue from these financial institutions’ to buy private mortgage loans that were dubious in writing. Use aggregate house values in each market as basis for valuing each delinquent private mortgage loans bought over and insist that newly purchased mortgages involve compulsory mortgage loan insurance to 100% value, plus 50% additional insurance coverage to be carried by banks and insurance companies underwriting mortgage loan for the first ten years. The additional insurance to be carried by banks must be sourced from private insurance companies not Fannie Mae or Freddie Mac. This arrangement will discourage lousy mortgage products marketed by banks and mortgage finance institutions. speculation in the housing markets by short-term investors, seeking to make a buck during the heated housing market.

To deal with the current foreclosure crisis, it is time to evaluate the trend in the liquidation sales revenue of foreclosed homes in various market regions and compare them with market prices of repeat sales index across regional markets. This will allow the government, banks and financial institutions appreciate the average losses in various market and use this as an index for underwriting future loans on mortgage products. It is apparent that the realistic values of homes sold at the peak of the housing boom or mortgage debacle was hardly based on the realistic value of each home sold. It is known that many home owners avoid foreclosures by either selling their homes, refinancing them or paying off the arrears on the mortgage. This edging behavior is likely not to stop except there are incentives for home owners provided by the lenders. The volatility of the housing foreclosures depends on the speediness of either of the latter three actions in the various market regions. Areas with high unemployment has suffered tremendously from the speediness with which either of the three actions were undertaken by home owners. The removal of government subsidies of mortgage interest is to make carrying mortgages at higher loan to income threshold less attractive. Effective interest rates has the tendency to weed out those home-owners likely to default from entering into mortgage contracts that are excessive for their income threshold.

New data on employment has not been very promising. Though companies are recruiting and hiring, the employment rate is not keeping pace with the number of people seeking work.There is going to be a need to re-energize employment by investing in programs to encourage increased and stable employment in virtually all sectors of the American economy, including expansion of public employment. The argument that the private sector creates jobs is well taken; however, cities, counties and state governments have been shedding jobs in recent years at unprecedented rate. Employment programs must not only address increased private employment, there is need to create jobs for teachers, fire-fighters, police and other public employees, if we are to revert the trend of the vehement unemployment rate. Unfortunately, it is fiscally unlikely that the country can afford this choice; however, if Republicans are willing to play ball it is very possible to accomplish this end in the coming twelve months and more.  The United States Congress must get on board now, if the unemployment problem is not going to end up being a political fiasco in the coming general elections.


The job creation strategies anticipated to be released by President Obama must include the following, if a dent is going to be made in the unemployment problem in the country: 1) Subsidies for increased private employment, including investments in schools and college buildings, waterways, airports and highways redevelopments and expansions; 2) ample public employment to be financed with increased government revenue base, including jobs at state, county, towns, cities, parishes, burroughs and similar local governments; 3) investments in social support programs for Afghanistan, Iraq and Libya veterans; 4) private and public reinvestment initiative in health support programs for infants, adults and vulnerable groups; and, 5) encourage the Federal Reserve Bank to increase the nominal interest rate to at least one percent to see what difference this will make in the market place. One thing to definitely avoid and to campaign against, if he so chooses, is an obligatory balanced budget initiative as advanced by the Republicans, as this will only stifle government's ability to react to emergencies as the recent floods, hurricanes and storms in the North East, funding of social safety net as the Social Security Benefits, Veteran's Benefits, Medicare and Medicaid. The aggregate welfare effect of obligatory balanced budget initiative is close to negative, no matter what Republicans may continue to espouse.


Finally, there is the question of whether government subsidies contribute to federal deficit?  A very credible answer to this question is simply this: If the private sector continues to sit on tons of cash in the bank without investing in the economy, the federal government has the obligation to invest in the economy to prevent further deterioration of the economy. The essence of government spending is to force increased economic activities that can help expand the economy and create jobs. One way for the nation to succeed at this time is to ensure that economic growth and jobs creation are fore-front in the list of things to be done to help expand national income. For instance, Federal Government needs to be innovative in its approach to resolving the unemployment problem; and, in its effort at measuring economic performance variables or indicators, including how stimulus spending are invested in various sectors of the economy; else, we end up with similar result from previous effort.