This column appeared in New Jersey’s Gannett newspapers on October 23, 2012 as part of a larger news package on the presidential candidates’ economic plans.
New Jersey is in tough shape. It trails 46 states in its recovery from the Great Recession. “The Jersey Comeback” is a myth – it’s more like the “Setback.”
What’s clear is that this recession was deeper and broader than anything since the Great Depression. New Jersey got hit hard like everyone else, but our neighbors like New York and Connecticut are bouncing back. Right now we’re stuck.
The presidential election offers a clear choice – one that will be keenly felt here in the Garden State.
The Republicans think that they can offer every single taxpayer a 20 percent break, slash most federal spending (including Big Bird but not the military) and cut federal deficits.
President Obama offers a more balanced approach: let the Bush tax cuts expire for the wealthy, slow spending increases for the Pentagon, reduce federal spending over time, but also invest in infrastructure, health research, college scholarships and other programs required for a modern economy.
Here’s an example of the differences. Last year President Obama proposed the “American Jobs Act” to invest in America’s future and create jobs. The plan included upgrading highways, public transit, and flight safety; extending high-speed wireless to 98 percent of Americans; rehabilitating vacant houses; modernizing schools and community colleges; and protecting the jobs of first responders and teachers.
To spur private-sector job creation Obama proposed tax credits that work: small businesses would get $4,000 for hiring someone out of work for more than six months, $5,600 for hiring a returning veteran and $9,600 for hiring a disabled vet. Payroll taxes would be cut by 50 percent, saving $1,500 a year for a family earning $50,000.
Wall Street analysts estimated that adoption of the “American Jobs Act” would create between 1.9 and 2.6 million jobs relatively quickly. If New Jersey got its fair share – say 4 percent – between 76,000 and 104,000 jobs would be added in a state with almost 450,000 unemployed. Let’s a¬ssume that “American Jobs” was passed last year (it was ignored by House Republicans), and that it produced 90,000 New Jersey jobs. The state’s unemployment rate would be two full points lower – 7.8 percent, not 9.8 percent where it sits today.
But wouldn’t all this government spending add to our supposedly crushing debt, you ask?
The answer is simple: no. President Obama’s proposal would pay for itself.
How? He suggests placing a 5.6 percent surtax on those earning $1 million or more. Most folks making more than a million dollars each year would probably oppose the idea (and they tend to be very well represented by Washington lobbyists).
Let’s see how that the surtax would affect the most scrutinized tax return of recent months, that of Governor Romney. In 2011, he reported income of $13.7 million and taxes of $1.95 million (14 percent of his income). The surtax would cost him an additional $109,000, reducing his disposable income to $11,640,000 – and leaving him with just under $1 million a month to survive on. Do you think he would notice?
Governor Romney hasn’t said a peep about how he’d produce “12 million jobs.” President Obama has specified how he’d produce 2 million. It’s a clear choice.
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