The American Jobs Act: Rhetoric & Attacking Incentive Lives On

Tonight’s speech from President Obama started out great and offered great promise.  The Republicans and the Democrats are likely going to be further apart tomorrow than they were before.  The problem is that this speech was likely a re-dividing line between the parties in Washington.  Thankfully, we have no debt ceiling negotiations coming soon.  More importantly than the parties in Washington D.C., tonight’s speech may have acted as a more solid line in the sand on Main Street.

The speech contained great promises of infrastructure repair, jobs in teaching, tax credits for new hires, payroll tax cuts, tax cuts for the middle class, refining the patent process, and it was said to all be paid for by more undefined spending cuts.  But about 20 minutes into the speech, the line in the sand was drawn… The rhetorical attack on wealth and success continues.

President Obama kept saying through the speech, “You should pass this plan” with times of now, immediately, and soon.  Here is the problem: the rhetoric and attack on the wealthy and successful and on the tax loopholes for oil companies did not lighten up.  It may have actually intensified. “Pass this plan” was a sales pitch.  If you have ever been in sales you would recognize it.  Some would call it the “assumptive close” and others would refer to it by a myriad of other names.

It is doubtful that most Americans mind the direct attack on oil companies.  The problem is there is a reality versus headline and soundbite perception that does not always add up.  If one sector can immediately add jobs in the next few years it is the U.S. energy sector.  Realistically, many of the tax breaks for millionaires and billionaires in many cases are almost sickening.  The problem is that President Obama is not really attacking millionaires and billionaires.  His targeted level of “the wealthy” is really reaching far lower.  The rhetoric is really against the army of those who have the ambition, drive, desire, and the best shot of becoming millionaires.  The dividing line in the past (and likely in the future) of Mr. Obama’s “them” is individuals making more than $200,000.00 or families making more than $250,000.00.  That isn’t exactly “rich folks.”

Individuals making $200,000.00 or families making $250,000.00 are being forced to deal with a term you need to burn into your memory: TAXING INCENTIVE.  Even those at two-times and three-times that income threshold do not generally have private jets, they do not pay lower tax rates in percentages than Warren Buffett’s secretary, and they are certainly not all hedge fund managers trying to have their management fee incentives taxed as capital gains rather than income.

Mr. Obama might be a better communicator than what America was used to in the last decade.  He might be a great guy to have a pick-up game with, or a glass of wine with.  He might be a great family man.  He might be a great guy in general.  What he does not get is that he is attacking incentive.

Taxing Warren Buffett more is something that should be done.  In fact, he could write a $10 billion check without blinking an eye.  Should Exxon, Chevron, General Electric, and other multinational corporations be paying more?  Yes.

It is baffling that no one really calls Mr. Obama out that millionaires and billionaires are not the same as those who make $200K or $250K.  It is not even close.  There is an army of Americans who hope that this line in the sand is an oversight.  It just doesn’t feel that way.

Here is the hope.  The hope is a “come to the middle” from BOTH sides.  Find something REAL that is in the middle.  The hope is that the business incentives become real and that the tax representation becomes a fair one.  As it stands today, the incentive tax is still alive and well.

Now, for the some of the good parts of the speech, a brief summary:

• “It is all paid for”
• More spending cuts in government to pay for it;
• Create jobs in construction, for teachers, for veterans, and for long-term unemployed;
• Cut payroll taxes in half for small business;
• Small businesses will get a tax cut for hiring or for pay raises;
• Businesses can write off investments they make in 2012;
• Rebuilding America with infrastructure and a world class transportation system;
• Modernize at least 35,000 schools;
• Independent fund that funds after showing how badly a project is needed and what it can do for the economy;
• Thousands of teachers in every state will go back to work;
• Companies will get tax credits to hire veterans;
• Summer jobs for kids;
• Companies will get $4K for hiring anyone who has spent 6 months or more looking for a job;
• Plan extends unemployment insurance for another year;
• Working family will get a $1,500 tax cut next year;
• Expanding free trade;
• Patent streamlining.

JON C. OGG