While Obama's rousing presentation of his jobs bill to Congress was hailed as a return to form, the address depressed me. I see the US spending another $447 billion in order for nothing to change. It's baffling why government policy wonks never seem to consider how one might respond to behavioural incentives as a normal person.
Take Obama's proposal to halve Social Security taxes (akin to National Insurance) for 2012, benefiting the average American family by $1,500. Of course, the jobs plan is aimed at unemployment, so the idea isn't merely to prop up workers with the luxury of a salary. Theoretically, Uncle Sam puts more money into consumers' pockets, and then they spend it, raising demand for products and services, which spurs new hiring.
Right. But think about actually being a breadwinner in this average American family. That kindly provision is merely an extension of the 2011 payroll tax cut (which didn't create jobs either), so the extra money won't feel like a windfall; you're already accustomed to a slightly fatter pay cheque. Worse, like all Obama's promises to reduce tax take, this relief is temporary. Your taxes will bounce right back up in 2013. Everywhere you turn, gloomy newscasters are predicting a double-dip recession. With an un- and under-employment rate of 16.1 per cent, you're not feeling too secure in your own job. Where will that $1,500 go?
I'll tell you where: the supermarket. For the same eats that you were going to buy anyway. Just as in the UK, American food prices are going through the roof, up 5.4 per cent in the last year — including beef up 9.3 per cent, eggs 13.3 per cent, butter 21 per cent, potatoes 14.7 per cent. Shopping in New York this summer, my husband and I had a rule of thumb: "Everything costs five dollars." We didn't mean steaks, but mustard. Eight miserable ounces of cream cheese.