Obama Opts for Tax Cuts to Combat Unemployment

For a country like the United States, accustomed to nearly full employment, a 10 percent unemployment rate makes reduction the top political priority. Unemployment is the Obama administration’s true Achilles’ heel.

In order to stop the bleeding, the president of the United States has launched an employment plan with money saved from the bank rescue operation initiated one year ago. His proposal revolves around tax reductions so that small businesses will hire and invest, as well as a new infrastructure program that will include the construction and renovation of highways, railroads and airports, and assistance to renovate homes following sustainability criteria, which also serves to reduce energy bills.

Obviously, this policy has some things, like a commitment to job-creating public investment, in common with the Spanish government’s Economic Sustainability Law. However, there is one substantial difference between the proposals of Obama and Zapatero. While the latter opts for a big tax hike, the American president made the opposite decision. He plans to reduce the tax burden on small- and medium-sized businesses because they are “the real job creators,” in the president’s words. That is to say, he acted like Merkel, Sarkozy, or Berlusconi.