Economist: Obama tax plan won't help employment

PHOENIX -- Valley economist Elliott Pollack says President Barack Obama's plan for new tax breaks is a double-edged sword.

The president announced Tuesday that he will urge Congress to pass new tax breaks allowing businesses to write off 100 percent of their new capital investments through 2011.

On the surface, Pollack says it sounds like a good idea, but it will actually hurt employment in the near term.

"Business will make the tradeoff of capital for labor," said Pollack. "In other words, they will essentially put money into making their existing labor force more productive, more so than they otherwise would have, and actually hire less labor than they would have in the near term."

Pollack said Obama's proposal is just a "veiled stimulus plan" on top of the president's $800 billion stimulus.

"The reality is the first one wasn't a stimulus plan -- it was a waste of money," he said.

"Every time the government adds another one, basically throwing something else against the wall to see what will stick, it's more problematic now than it was at the beginning," he said.