Next month, probably after Sept. 15 or so, President Barack Obama will deliver a speech that may prove to represent the most important of his presidency. The topic: how to increase job growth in the United States.
Simply, the nation is short a staggering 14 million jobs, and the unemployment rate is a ghastly 9.1 percent. Equally distressing, the unemployment rate has been above 8.8 percent for a staggering 28 months.
What's more, if you include the number of Americans working part time who are seeking full-time work but can't find it, the job shortage is easily 20 million jobs.
Further, even though the majority of the problems the nation currently faces started long before President Obama took the oath of office in January 2009, those problems are now his, end of debate.
The reason? Political science survey research tells us that the American people elect a president to solve problems, regardless of whether or not he/she was responsible for their origin.
The American people will give the president credit for solving a problem, and blame if doesn't -- and if it's a big problem, the voters will vote him/her out of office.
But don't misunderstand: The American people will not vote President Obama out of office because the opposition party, in this case Congressional Republicans, have offered any semblance of a better plan to address the nation's No. 1 problem, the job shortage. They haven't. The Republican Party's stance has been appalling -- it's amounted to saying no, saying "hell no," obstruction, and advocating reckless policies.
It's just that the American people historically give the president credit when the economy is doing well and, conversely, assess blame to the president when the economy is performing poorly, even though the president does not have control over free market forces.
No, it isn't fair -- but that's the way the American people view the presidency: again, they elect presidents to solve problems.
Jobs Issue Probably Will Make/Break Obama Presidency
Hence, one can see that the jobs issue will likely say a great deal about Obama's re-election chances, all other factors being equal.
To be sure, a crisis or an unforeseen international event could always appear and represent a bigger issue for voters in November 2012, but absent that, the jobs issue will likely be the most important for voters in 2012.
Hence, with the above as a backdrop, what is Obama jobs speech likely to entail?
First, what is known: Obama administration officials have already said the proposals "would be fresh ones, not a rehash of plans he has pitched for many weeks and still supports," including his infrastructure bank to finance construction jobs," The Associated Press reported.
Beyond that, details from administration officials are light on job program/job creation incentive characteristics, with administration officials only noting that the jobs speech may also include a new debt reduction plan that's bigger than $1.5 trillion package Congress' super committee must identify by Thanksgiving.
Even so, look for the new Obama jobs plan to be bold -- it will probably contain several of the following ideas, and maybe forms of each:
Uber-tax reduction/incentive for hiring. Beyond an extension of the two percentage point payroll tax cut that is set to expire Jan. 1, 2012, the administration may very well announce some other tax credit that encourages corporations to start deploying their more than $2 trillion in cash on hand on new projects and expansion initiatives. The key is: the jobs created must be based in the United States.
Plant/equipment tax credit. The Obama administration may also launch a plan under which businesses large and small can receive an extra tax credit for plant/office equipment.
The goal is to gather plant/office equipment purchases in to "critical mass" to generate as much private sector GDP stimulus as possible. Moreover, the tactic can increase hiring. Example: if one farmer decides to buy 2 new harvesters instead of 1 because of the tax credit, that's a modest GDP impact. However, if 200 farmers each decide to 2 new harvesters or planters, now that can generate substantial hiring, particular for a company like John Deere (DE) or Caterpillar (CAT). And the same goes for other sectors.
Small business initiative. Next, the administration could very well propose a new gem dedicated solely to small businesses. Small businesses generate a considerable portion of job growth -- and those dollars often are recirculated faster in local communities -- something that invariably leads to quicker hiring, locally.
Free trade deals. Obama may also seek faster approval of selected free trade deals, which, although will not lead to many new jobs immediately, have shown historically to increase jobs related to exports and imports, long-term, although some free trade deals have done a better job of creating new positions than others.
Direct employment initiative/WPA/CCC. Finally, the Obama administration may propose a new program to undertake the dozens of tasks that need to be done in the nation. There are so many deserving projects in the United States -- the nation needs to expand and/or build thousands of roads and bridges, hundreds of schools and hospitals, and almost every airport (it seems) needs an upgrade or another runway.
Further, the electric grid needs a vast expansion to help the nation be ready for the 21st century GDP growth ahead. Many economists, certainly most Keynesian economists, argue that the United States must make these public investments if it hopes to have the infrastructure and facilities to compete in a tech-based, post-modern, 21st century, globalized economy.
In short, the list of infrastructure upgrades is nearly endless. However because of an austerity-minded Congress, the Obama administration will probably have to nip-and-tuck an existing program, but what the nation really needs is another, large, jobs-based stimulus package, for the aforementioned infrastructure work -- and more, something on the order of a $400 billion to $500 billion stimulus jolt in one year -- spent all at once, so that it can give the U.S. economy the biggest bang-for-the-buck, from a GDP standpoint, as Keynesian economic theory demonstrates. (For a classic example of the above see: U.S. Government spending in 1941-1945 for the mobilization for World War II -- government spending increased by a massive amount, and unemployment dropped below three percent.)
Congressional Republicans, of course, will fight Obama on that last idea.
But if they didn't, that second stimulus jolt would rev-up the U.S. economy and job growth in, as they say, a "New York minute."