President Barack Obama outlined his main focuses to improve the nation’s economy in a speech Tuesday, including tax cuts and investment in transportation projects.
The president’s plan currently includes tax cuts for small businesses, investment in infrastructure such as highways and railroads, and a tax incentive for homeowners to weatherize their homes to make them more energy efficient, according to a White House statement.
Obama also proposed a policy of tax rebates for homeowners who weatherize their homes, making them more energy efficient. The goal of this policy is not only to improve the energy efficiency and reduce heating bills for homeowners, but also to create more demand for the workers who weatherize homes.
“The American people can be assured there is not a day that goes by that the president and his economic team do not discuss steps we can take to put Americans back to work,” said U.S. Secretary of Labor Hilda Solis during a conference call Tuesday.
Solis emphasized the president’s plan to cut taxes for small businesses, which would allow them to increase their investments and start hiring again. This, she said, will create the much-needed jobs essential to the growth of the economy.
However, Andrew Reschovsky, University of Wisconsin professor of public affairs and applied economics for the LaFollette Institute of Public Affairs, cautions the key to effective tax cuts is in the details of the policy.
“You don’t want to spend money to get people to do what they would do anyway,” he said. “You have to craft it in a way to get at people who wouldn’t have done it — then it’s a sensible policy.”
Christina Romer, chair of the Council of Economic Advisers, which aids the president in the development and execution of economic policies, said in the conference call the current economic climate is favorable for the measures Obama has proposed.
“The incentive to get homeowners to [weatherize] their homes for energy efficiency [is] something that’s likely to work better at a time when consumers are starting to feel more confident about the future,” she said. “So we think these are wise policies.”
To address Obama’s priority of investing in national infrastructure, such as bridges and highways, Reschovsky pointed out the necessity of short-term federal spending to improve the long-term health of the economy.
He said if the nation’s infrastructure needs could be met and improvement projects could “get off the ground” quickly, that type of investment would be a good use of tax dollars and federal spending.
“I think the general view of economists right now is that the economy is beginning to recover, but it will be slow,” Reschovsky said.
Romer stressed the fact that Obama said his policies were neither a silver bullet, nor a sum total of everything that needs to be done. Rather, they are a first step toward recovery.
