I watched the the presidents speech on thursday night where he unveiled his new plan to create jobs called the American Jobs Act.  Click Here to read the entire text. 

I love to watch the president give a speech.  He is really good at it.  His timing, mannerisms and voice inflections are masterful.  I have seen him give some mediocre deliveries but he was on his game for this one.  I give him high marks on the delivery of this speech.  But when you break the normal protocol and call both houses of Congress together in a forum that is normally reserved for a state of the union address, you better put on a good show. 

It was a good show.  A show to try to sell the American public on the idea that we should borrow another $450 Billion from our future to get him re-elected.   He was selling and selling hard.  In the salesperson vernacular, he asked the closing question, "Pass This Bill Now" a total of 17 times.  That is a harder close than you get in a time share presentation from a doe eyed closer with her shirt unbuttoned after feeding you 3 shots of cheap tequila. 

The truth is that the ideas he laid out were old news wrapped in a different package to try to slip it by us.  Why do I say this?  Here's why…

I'll start with the one that bothered me the most.  

Obama:  And everything in this bill will be paid for.  Everything.

My Opinion:  How can he say that with a straight face.  (Oh, that's right, he's a politician.  They all can do it.)   I believe that our nations debt will ultimately be our undoing.  We have to take serious actions now because we could already be out of time and not even know it.  Our politicians are still acting like the debt is another slush fund that they can tap anytime they want without any future repercussions.

What the president wants to do is to task the super committee (Do they get costumes with a big red "S" on them?) to increase the budget cuts they are supposed to come up with by an additional $450 Billion. (Keep in mind that the US treasury will bring in $2.2 Trillion this year.  This plan is almost 1/4 of our total income for the year.)  The super committee is already looking for $1.5 Trillion to cut. 

Now the President wants them to increase that by one third.  Even if they can do this, it means the president wants to borrow this money from China now and add it to the debt today.  Then pay it back with budget cuts over the next 10 years.  More presidential spin for we'll spend it now and say we'll pay for it later.

This is like your kid telling you that if you buy him this new bicycle right now, you can keep his allowance for the next year to pay for it.  You know how that will work out. 

OBAMA: "It will not add to the deficit."

My Opinion:  A deficit is the accounting from year to year.  The debt is the total of years of deficits we as a nation owe to our creditors.  If you spend $450,000,000,000.00 that we don' have this year and pay it back over the next 10 years, it has to increase the deficit this year.  The Presidents statement is flat out untrue.

Obama:  "Everything in here is the kind of proposal that's been supported by both Democrats and Republicans, including many who sit here tonight."

My Opinion:  He is recommending that we cut social security payroll taxes for both employees and employers.  As a small business owner I would welcome that.  If I were a 25-30 years old.  I would really welcome it because people in that age range don't believe they are ever going to get social security benefits anyway.  This idea will have a hard time gaining much GOP support.  

He wants some changes to Medicare to save money.  The Democrats don't like this one.  They may go along with it until he gets the money he wants.  But you can bet that future democrats will work hard to roll all of that back.  They are politicians, (see comment above) They will blame the Republicans in general and the Tea Party in particular for forcing it.  If it comes up, the Democrats will vote for it, because this tactic will give them cover for changing  course in order to sell it to their constituents.  After all, their only goal in life is to get re-elected. 

He wants to tax the wealthy.  He keeps singing this song and the GOP keeps saying no.  The GOP says no because they know it is symbolic and will have little effect on the actual budget numbers.  Truthfully, I believe the GOP will ultimately agree to raise taxes on the rich over $1 Million a year and close tax loopholes.    They are waiting for the Democrats to shoot all of their spending bullets first.  If they give in before that, it will only make the situation worse from a debt perspective and the GOP knows this.  If they get more revenue from taxes, this administration will take the projected increase in revenue and find some new cause to spend it on to buy more votes in the next election.

OBAMA: "Pass this jobs bill, and we can put people to work rebuilding America."

The President owes his election to the unions.  They donated a ton of money and more importantly they put soldiers out in the streets making sure to get out the vote.  He cannot get re-elected without their help an he knows it.  They are not happy with what he has done since he has been in office.  This is his olive branch to them along with a promise to do better by them if they will help him to get re-elected. 

The jobs he is talking about here are union jobs, construction and public employees.  IN this speech he specifically mentioned hiring more teachers.  These jobs are overwhelmingly union jobs.  In the public sector (government employees) almost 40% are union.  That is more than 4 times the rate of union employees in the private sector which is about 9%.  So does this mean that he is going to borrow money and hire more government workers with it?  I believe it does.  Union workers vote Democrat. 

OBAMA: "The American Jobs Act answers the urgent need to create jobs right away."

For people out of work, right away means, "Can I start tomorrow?"  To Lawyers and Politicians it means something totally different. 

The President wants to set up a national infrastructure bank.  (How much would that cost?)  Experts say that doing this could mean a two year delay in actual job creation.  It would be better to divide the money among existing state infrastructure banks.  They won't do that because it removes much of the power from Washington DC and they don't trust the states to spend it correctly.  

Many times in our history, housing has been the catalyst that has pulled our economy out of a downturn.  This downturn is much worse than in the past and was caused primarily by the drop in housing.  Yet the President dedicated one sentence to housing in his speech.

OBAMA: "And to help responsible homeowners, we're going to work with Federal housing agencies to help more people refinance their mortgages at interest rates that are now near 4 percent."

Here is what he is going to do.  He is going to introduce an expanded version of the Fannie Mae DU REFI PLUS program.  This program currently allows people who are upside down in their mortgages by up to 125% to refinance their homes.  Freddie Mac has a program like this too. 

So far these programs have been dismal failures as an overall solution to the problem of underwater homeowners.  With 20 years experience in the mortgage business, we know that if Fannie and Freddie give anything away in a program, they take it away somewhere else. 

This is totally inadequate for the following reasons.

1. If your loan is not owned by Fannie Mae or Freddie Mac, No Help For You.

2. If your loan is owned by Fannie or Freddie, you have to be perfect in every other area.  Credit, income and other debt or, No Help For You.

3.  If you applied for a loan modification, you had to get behind in your payments.  (Those are the banks rules)  You are no longer a "responsible homeowner" to use the Presidents words.  That means, No Help For You.

4.  If you bought your house in 2006-2009, you are probably more than 25% upside down in your house, No Help For You.

The reason that the President doesn't focus on housing is that most of the jobs in the housing industry are non-union jobs.  Why would he throw the dice one last time, borrow more money than we can pay back and use it to benefit non-union, private industry workers?  The answer is, he didn't and he won't.

Note to Homeowners:  No help is coming for you.  Housing prices will continue to fall by at least 20% over the next few years.  If you are not upside down yet, chances are greater that you will be before this is over.  Protect yourself.  Do your homework and look at all of your options. 

I enjoyed Mr. Obama's speech.  It was an entertaining political campaign speech.  As far as the message goes.  It was the same old rhetoric wrapped in new talking points. 

The bottom line is that this plan is still agenda driven, not the kind of solution we need today. 

He tried hard to convince us, but it still won't work.  They will try hard to sell it but when those efforts fail, they will resort to their old play book.  Name calling.