Unemployment rates in the United States hit a four-year high in July, and inflation rates have risen 1.32% since January 2008.  In fact, economists believe inflation is the greatest threat to the US economy and worry the energy-driven rise in prices will become permanent.  Senator Obama’s response to the dire economic outlook is an “Emergency Economic Plan” that would take from rich oil companies experiencing record profits and give back to the American people in the form of stimulus checks, as well as invest $50 billion in states and infrastructure.

Obama’s Emergency Economic Plan

Unlike McCain, who can’t remember the price of gas or how many houses he owns, Obama recognizes working Americans are struggling.  In response to the current economic crisis, Obama’s Emergency Economic Plan offers both long and short term solutions.  In a move reminiscent of Robin Hood, Obama would take from rich oil companies and give to the American people. The emergency plan also includes a $50 billion stimulus package designed to save 1 million jobs.  Specifically, Obama’s plan includes:

1. Forcing big oil companies to take a reasonable share of their record breaking windfall profits and use it to help struggling families with direct relief worth $500 for an individual and $1,000 for a married couple. The relief would be delivered as quickly as possible to help families cope with the rising price of gasoline, food and other necessities. The rebates would be fully paid for with five years of a windfall profits tax on record oil company profits. This relief would be a down payment on Obama’s long-term plan to provide middle-class families with at least $1000 per year in permanent tax relief.
2. $50 billion in immediate measures to turn our economy around and help prevent more than 1 million Americans from losing their jobs:

• $25 billion in a State Growth Fund to prevent state and local cuts in health, education and housing assistance or counterproductive increases in property taxes, tolls or fees. The fund will also ensure sufficient funding for home heating and weatherization assistance as we move into the fall and winter months.
• $25 billion in a Jobs and Growth Fund to replenish the highway trust fund; prevent cutbacks in road and bridge maintenance and fund new, fast-tracked projects to repair schools – all to save more than 1 million jobs in danger of being cut.

McCain’s Response

McCain would rather help Big Oil than working Americans. Proposing corporate tax cuts and increased drilling won’t feed families.  McCain stated:

Across this country, Americans are hurting and today’s job numbers are just the latest reminder of the economic challenges we face. … Unlike Sen. Obama, I do not believe that raising taxes is the answer to our economic problems. There is no surer way to force jobs overseas than to raise taxes on businesses.

Raising taxes on Big Oil when they are making record profits only seems fair in these tight times.  Obama is not proposing taxing struggling businesses or working individuals.  When wealth is unevenly distributed, I believe it is the right of government to intervene on behalf of working citizens. Remember, these are “windfall” profits Obama proposes taxing; however, what happens to permanent tax relief and the State Growth Fund and  Jobs and Growth Fund when windfall profits don’t exist?  Perhaps a decrease in military spending could be the solution as we pull out of Iraq.

The Effectiveness of Stimulus Checks

How exactly would a $1000 stimulus check help American families. Obama claims it would:

• Offset the entire increase in gas prices for a working family over the next four months
• Pay for the entire increase in winter heating bills for a typical family in a cold-weather state

The first suggestion is reminiscent of the gas tax holiday proposed by McCain and Clinton that Obama critized as a “short-term quick fix”.  Stimulus checks are not a new idea, and I can’t help but wonder if Obama is simply following Bush’s plan that caused a short term boost to the struggling economy this spring to win votes.  What did you spend your stimulus check on?  I put mine in an IRA, which is probably what I would do with another one. I am learning to live more frugally during these times of high gas prices, and one check won’t go far enough to change that. It is important to remember though, that stimulus checks are only one part, and probably the least significant part, of Obama’s Emergency Economic Plan.

Image: freefoto

Related posts on Obama, energy, and the economy:

• Obama Campaign Seeks to Make Oil Prices Irrelevant

• McCain and Obama Differ on Energy

• It’s Not the Economy; It’s the Environment!

Over the last few weeks, there have been a smattering of reports about a modern-day David vs. Goliath struggle in federal contracting. In this saga, large government contractors are winning bids for contracts that are designated by the government for small businesses. At the end of July, the Small Business Administration (SBA) Inspector General released a report that found Blackwater USA may have won numerous contracts (39 in fact) set aside for small businesses. This report is the result of a request and investigation of Blackwater launched by House Oversight and Government Reform Committee Chairman Henry Waxman (D-CA) back in March. What might be the worst part of this is the SBA has repeatedly tried to hide the fact that huge companies were winning small business contracts.

The Blackwater case is not an isolated incident either, nor is this restricted to the SBA. According to Chris Gunn with the American Small Business League (ASBL), there have been more than a dozen federal investigations since 2003, all of which have concluded that Fortune 500 companies and other large businesses are winning contracts designated for small businesses. News reports, government investigations, and additional evidence make a pretty convincing case that Goliath is winning this battle despite government's efforts to the contrary, and has been for a while.

That's why I was surprised today when I got a press release from the ASBL warning about a new Bush administration policy that would make the reporting of annual revenue and number of employees optional for contractors when they register with the Central Contracting Registration (CCR) system (see CCR notice). That's right - this change would make it more difficult for the government to award small business contracts to small businesses. Past investigations have concluded that even when required to report this information, contractors deliberately mislead government officials, information that was provided was poor, and worst of all, government employees did not consider the poor quality of the information in making contracting decisions.

Well, then, what makes the administration think that this situation will be improved by having less information about whether companies are small or not? Granted there is more than one problem with the current system, but having too much information is not one of them. Once this rule is implemented, it will be that much harder for the government to award small business contracts to the right entities - something it is already having a very difficult time doing. Doesn't President Bush know that David is supposed to win?

Source:  www.ombwatch.org

WASHINGTON — Santanu K. Baruah, a former Commerce Department official, began serving this week as acting administrator of the Small Business Administration.

President Bush appointed Mr. Baruah on Aug. 15 as acting administrator under the Federal Vacancies Reform Act of 1998, which allows him to remain in the post through the end of the current administration.

He was nominated on June 26 but his confirmation ran into bipartisan concerns over several issues at the agency, particularly a multimillion-dollar provision for government contracts for female-owned businesses.

Last December, the agency issued a rule narrowly defining the women’s government contracting program, which set off protests on Capitol Hill and among women’s groups.

Senator John F. Kerry, Democrat of Massachusetts, who is chairman of the Senate Committee on Small Business and Entrepreneurship, accused President Bush on Thursday of circumventing the confirmation process and of undercutting efforts to open government contracting opportunities for women.

“This nominee and the administration know that I am vehemently opposed to them moving forward with the unconstitutional women’s procurement rule that makes it harder for women to access federal contracts,” Mr. Kerry said.

Lawmakers were further irked because the Small Business Administration sent a final draft of the women’s contracting rule to the Office of Budget and Management. Its contents will not be officially released until October.

Opponents fear that despite having received some 1,600 comments since the rule was published in the Federal Register earlier this year, the agency has retained the narrow definition that elicited the protests in the first place. Critics say they believe that would flout Congress’s 2000 mandate that female-owned businesses receive at least 5 percent of the $435 billion in annual government contracts.

Senator Olympia J. Snowe, Republican of Maine, who is the ranking minority member on the committee, tried to extract a pledge from Mr. Baruah on the issue at a meeting last month. Ms. Snowe said she “demanded Mr. Baruah make a commitment to either withdraw this proposed rule or defer action on this issue until the next administration.”

Mr. Baruah, who was assistant secretary for economic development at the Commerce Department, did not make a commitment. Even so, Ms. Snowe this week issued a statement welcoming his designation but urging him to “rectify the administration’s recent failure to implement a meaningful women’s contracting rule.”

Although little known in the small-business community, Mr. Baruah spent more than two years at the Economic Development Administration, which gives development grants to communities that have suffered job losses for reasons like the movement of manufacturing overseas. Before joining the Bush administration, he worked for seven years as a senior consultant at the Performance Consulting Group in Portland, Ore., which had some big-name clients like Walt Disney and Intel. The firm closed in 2000.

Mr. Baruah, 43, also served in the administration of George H. W. Bush, working as a legislative affairs officer in the Labor Department and as a confidential assistant for the Interior secretary.

Several small-business groups said it was beneficial to have an administration-selected agency head because the hurricane season was beginning, and a firm hand was needed to oversee the agency’s disaster loan program. The program was overwhelmed after Hurricane Katrina, and the former administrator, Steven C. Preston, made overhauling the program a top priority.

Karen A. Kerrigan, president and chief executive of the Small Business and Entrepreneurship Council, a small-business association, said Mr. Baruah’s appointment would put the agency on solid footing.

Ms. Kerrigan also said Mr. Baruah’s economic development service gave him experience “working with local communities and local businesses so he understands government interaction with communities.”

The American Small Business League, which has locked horns with the Small Business Administration over the awards of small-business contracts to large corporations, has been critical. Its president, Lloyd Chapman, has publicly worried that Mr. Baruah’s goal is to either eliminate the Small Business Administration or fold it into the Commerce Department.

Mr. Chapman also said Mr. Baruah’s lack of small-business experience meant he was not qualified for the job.

When he took up the post last week, Mr. Baruah said in a statement that he planned to “help S.B.A. carry on its mission as it navigates the height of hurricane season and deals with the current economic challenges and tightening credit opportunities for small business.”

He said, through a spokeswoman, that he was too busy learning his new job for an interview, but the S.B.A.’s announcement emphasized that he “has worked for small businesses, helped small businesses grow, and was raised by a mother who ran her own small business.”

That would be Ranee Baruah, who owned Ranee’s Imported and Domestic Foods, a coffee, tea and spices store in Salem, Ore. It closed in the early 1990s, Mr. Baruah said.

Source:  www.nytimes.com