President Obama devoted the biggest portion of his first State of the Union address on Wednesday night to various aspects of job creation. While I appreciate Obama’s aspirational and inspirational speeches — in Cairo on Islamic relations and in Oslo on waging war, to name two standouts — I welcome some nitty-gritty coming from the president.
Even if the speech had not come at the lowest point of his one-year presidency, jobs would have had to be the main focus.
Obama rightfully claimed credit for pulling the nation back from the brink of a depression in his first year in office. Still, the national unemployment rate is hovering at 10 percent — 11.1 percent in Illinois — and no one is predicting the numbers will get better in the months ahead. As long as people are nervous about their jobs — or don’t have one –Obama has a problem.
One of the most intriguing proposals Obama put on the table is taking $30 billion in TARP money and channeling it to community banks. The aim is to take money set aside to bail out the big banks and send it to small banks in order to stimulate small business lending and, in turn, spark hiring.
The Troubled Asset Relief Program was created under former President Bush as the economy was crumbling in 2008. Irresponsible financial institutions that brought on the recession with the subprime mortgage crisis were deemed too big to fail. AIG, Citigroup and Goldman Sachs were rescued, and stories about big bonus checks going to executives infuriated the public — and frustrated the Obama administration.
There were no details offered up on Wednesday night on the TARP proposals. Jason Furman, deputy director of the National Economic Council, said they would be released in the coming days. Another appeal of sending out TARP money — that is, with a mandate to make small-business loans and not stash the cash — is that it can kickstart job creation faster than tax cuts or credits.
Obama is also proposing a series of tax incentives to bolster small business and help middle class families — but most of them would not be effective in 2010.
On the political side, retooling TARP — redirecting the money from Wall Street to Main Street — also has populist appeal that may tamp down the anger that has contributed to Obama’s low favorability ratings and raised questions about his ability to deliver change.