President Obama's weekly radio address - Why his plan is a failure

   President Barack Obama                        (AP Photo/Charles Dharapak)

President Barack Obama outlined Saturday, in his weekly radio address, a series of initiatives designed to increase savings for workers.  These initiatives do not require Congressional approval. The following are some excerpts and comments from this address that I would like to talk about, comment on, and raise questions about.

As we spend time with family and friends this Labor Day weekend, many of us will also be thinking about the state of working America. Yesterday, we received a report showing that job losses have slowed dramatically compared to just a few months ago. Earlier in the week, we learned that the manufacturing sector has posted its first gains in eighteen months, and that many of the banks that borrowed money at the height of the financial crisis are now returning it to taxpayers with interest.

I'd like to comment on some of the points made.  First, the president mentions  "job losses have slowed dramatically", yet the Los Angeles Times reported today that "The nation's jobless rate unexpectedly jumped last month to a 26-year high of 9.7%". Both statements are apparently true, however I believe the President's remark to be extremely misleading, as he considers 216,000 lost jobs to be "signs that the economy is turning around".  Imagine the economy to be a leaky bathtub. If the rate the water is leaking out of the tub is still greater than the amount of water running into the bathtub, can that truly be said to be a reversal?  The tub certainly isn't filling up - the water is still going down.  It is not a step in the other direction and to imply that it is, seems very flawed logic.

And how about his assertion that the bank bailouts were, after all, a positive thing? Look, he says. Not only is the money being repaid, but the banks "are now returning it to the taxpayers with interest." Really? When will I get my check in the mail? After all, if we taxpayers have "invested" in these banks, we should be getting paid dividends now, correct?  And as a point of clarification, when the President uses the word "taxpayers", is he referring to everyone, or only to those people who actually had to pay taxes? Will each person that actually paid taxes be getting a refund, proportionate to the amount of tax he or she paid in?  At what point in history did "taxpayer" and "government" become synonymous? 

Throughout America today, tens of thousands of recovery projects are underway, repairing our nation’s roads, bridges, ports and waterways; renovating schools; and developing renewable energy. We’re putting Americans back to work doing to the work America needs done – and mostly in private sector jobs.

Note the above quote, where the President says the stimulus package is "putting Americans back to work" and "mostly in private sector jobs." I'm sorry, if your checks are coming from the government, can that really be called a private sector job? Can the government even create jobs? If they take enough in taxes to "create" a new job, doesn't that necessarily mean they have also taken enough money in taxes to -prevent- a new job from occurring elsewhere?  If deficit spending is used to create a job, borrowed money  which will one day in the future have to be paid back, haven't they also necessarily destroyed a job that would have been created in the future?

 The drop in home values, for example, has also meant a drop in the value of the largest single investment most families have. And the decline in the financial markets has led to a decline in the value of 401(k)s and other sources of savings and retirement security. As a result, over the past two years, the American people have lost about $2 trillion in retirement savings.

Why are high home prices the sacred cow here in America? Isn't the American Dream to own your own home?  Which will make that easier to occur - high home prices, or low home prices?  Obviously, having a home which increases in value can, in some circumstances, be beneficial for home owners.  For those reliant on a fixed income though, in general I would suggest that rising home prices are a bad sign.  When the assessed value of your home rises, the result will be you pay more in property taxes - which can be disastrous to someone on a fixed income.  Falling home prices also benefit those looking to buy a home.  For every other product in society, it seems we clamor for cheaper goods and services.  Do we expect a $50,000 car to rise in value the longer we own it and use it?  Land may be a scarce resource, but houses are depreciating assets, not investment vehicles - ask any accountant.  Just look at his next paragraph.

And having too little in savings not only leaves people financially ill-prepared for retirement, but also for whatever challenges life brings. It places in jeopardy so many dreams, from owning a home to attending college.

In one paragraph, he talks about keeping the value of homes high, so as to protect the "savings" of Americans, and in the very next, complains that Americans have too little savings to own a home!  Can he really not see the logical inconsistency of these two statements?  

If you work hard and meet your responsibilities, this country is going to honor our collective responsibility to you: to ensure that you can save and secure your retirement.

Collective responsibility? I don't even know what that is, but I'm quite sure I never saw that in the Constitution.  Let's focus on that first sentence there.  If a person worked hard, and was able to meet their responsibilities, then they wouldn't need to rely on the "collective responsibility" of the country.  If they need the nation to support them, then obviously they didn't meet all of their responsibilities.  For the record, there is no such thing as a collective responsibility.  It reminds me of grammar school, when the teacher would punish the entire class because of the irresponsible behavior of just a couple students.  What happened to personal responsibility?

You’ll be able to check a box on your tax return to receive your refund as a savings bond.

According to TreasuryDirect.gov, the current savings bond rate is 0.00%. In other words, you will earn absolutely no interest whatsoever on your savings bond.  Which makes sense, because that's exactly the same percentage of interest the government paid you throughout the preceding year on the income tax you over-paid into the system. I really can't believe that this is how the Administration wants you to be able to save for your retirement - investing in 0.00% savings bonds - any profits of which are of course taxable income.

And fourth, the IRS and the Treasury Department are creating a plain-English, easy-to-follow guide, as well as a website, to help folks navigate what are often very complicated waters, especially for workers changing jobs who often are unsure how best to continue saving for retirement. Because the rules ought to be written to encourage people to save – instead of discouraging them.

You know what the best way to encourage savings and investment would be? The removal of the income tax from all wages and investments.  Imagine having an extra 10-30% per paycheck that you are able to invest into an IRA of your choice, that grows tax-free for your retirement, with no penalties for early withdrawal.  If the Obama administration was truly serious about making sure American citizens were able to save for their retirement, this is the plan they would immediately advocate. 

This worthless legislation they are foisting on the American people proves how ideologically bankrupt and ethically corrupt this Administration truly is.