Liberals on and off of Capitol Hill were no doubt delighted to hear President Obama take his toughest stand yet on not reducing the federal budget on the backs of the nation’s most vulnerable populations, despite its sharply partisan tone. But that doesn’t mean they’re 100 percent on board with his plan, and some have already voiced concern over parts of his jobs bill and proposal to pay for it.
Georgia Tech University economist Thomas Boston supports Obama’s plan to allow the Bush tax cuts for the wealthy to expire, because solving the deficit problem cannot be solved by budget cuts alone, he said, adding that the federal government needs to also raise a significant amount of revenue. He also agrees that those tax cuts and the wars in Iraq and Afghanistan have largely been responsible for the nation’s ballooning debt.
But Boston, an Obama supporter and owner of Euquant, an Atlanta-based economic research firm, worries that some of the tax breaks included in Obama’s plan are unnecessary and make more difficult the task of balancing the budget. He cited the $4,000 tax break for businesses that hire unemployed workers as an example.
According to Boston, the tax break is not a big enough incentive for businesses to hire and it is essentially giving money to firms for hires they’d already planned to make. It is not a strategic way to allocate already limited resources, he argues, particularly when there is such an urgent need to preserve unemployment insurance an entitlement programs.
“Those are really high priority items, so the president and Congress have to be careful when they propose new policies that they’re getting the biggest bang for their buck,” Boston said. “I wonder whether that particular proposal does that.”
And while Boston realizes that the administration can’t develop legislation for African-Americans and Hispanics, who are disproportionately affected by the unemployment crisis gripping the nation, it could craft policies that would likely have a greater impact on them, such as measures that would increase the ability of African-American businesses to develop and grow.
According to a national survey of Black-owned businesses that Boston’s firm conducted, 60 percent of the people they employ are African-American.
“If we were directing resources to create jobs and wanted those resources to particularly help African-Americans who are disproportionately unemployed, the best way to do that would be to target African-American businesses, because for every 100 new jobs they create, two-thirds would go to African-Americans,” Boston said.
He also said that up until the recession began, minority-owned businesses were growing rapidly. Offering them additional resources, such as increased access to capital, would not only help the overall economy, but also would help address pockets of extremely high unemployment.