President Obama yesterday, before a joint session of Congress, demanded that the nation’s lawmakers pass a $447 billion jobs bill “right away.”
“There should be nothing controversial about this piece of legislation. Everything in here is the kind of proposal that’s been supported by both Democrats and republicans – including many who sit here tonight. And everything in this bill will be paid for. Everything.”
“The president has drawn the line,” declared Robert Borasage, chair of Campaign for America’s Future, a national coalition of labor and community groups. “If he fulfills his promise to take this agenda across the country, Americans will begin to understand the choice that only they can make. The president’s Jobs Act is bold enough to draw a stark contrast with conservatives.”
Part of the plan involves a deeper-than-ever tax cut for most working people. Workers normally pay 6.2 percent on their first $106,800 of wages into Social Security, but now, as a result of Obama’s earlier tax cuts for workers, pay only 4.2 percent. That reduction will expire in December. The American Jobs Act would reduce from 6.2 to 3.1 the percent workers would pay on their first $106,800 in wages.
The bill would also cut the payroll tax businesses pay in half – to 3.1 percent – on the first $5 million in wages and, if a business hires a new worker or gives an existing worker a raise, all payroll taxes will be waived.
The total cost of the tax plan part of the bill is $240 billion, more than half the total package.
The bill also calls for $30 billion to upgrade at least 35,000 public schools with emergency repairs, upgrades that are energy efficient and abate asbestos. Economists say this part of the plan alone would put 250,000 people to work. Another $50 billion would fix the nation’s crumbling highways, rail lines and airports with yet another $15 billion to refurbish thousands of foreclosed homes and businesses. A newly created infrastructure bank would get $10 billion for loans and guarantees and, hopefully, leverage several times that amount in private investment.
The Obama plan also proposes $40 billion to prevent the layoff of 280,000 teachers, police and firefighters and $62 billion to extend unemployment insurance. Companies that hire people who have been unemployed for more than six months would get $4,000 tax credits.
Republicans, as expected, are already throwing wrenches into the works, with all of the GOP presidential candidates essentially trashing the proposal.
Administration officials are leaving open the possibility of having the bipartisan “super-committee,” charged with planning for deficit reduction, write his bill into its set of final recommendations. Although this would delay passage of the plan until December, some say it would then have a better chance of passing.
Republicans on the super committee are already complaining, however, that they don’t like the idea of taking a committee charged with reducing the deficit and asking it to pay for yet another round of stimulus.
Signals coming from the GOP-controlled Congress are that they may try to cherry pick the plan. GOP Majority Leader Eric Cantor said he liked some of the president’s proposals, including tax relief for small businesses, but that he would try to “peel off” such elements and pass them separately.
The president’s bill received praise from organized labor. “The President took an important and necessary step tonight,” said AFL-CIO President Richard Trumka. “He started a serious national conversation about how to solve the jobs crisis. He showed working people that he is willing to go to the mat to create new jobs on a substantial scale. Tonight’s speech should energize the nation to come together, work hard and get serious about jobs.”
Moody’s economist, Mark Zandi, said, “It would boost economic growth next year by 2 percentage points and create 2 million additional jobs. Moody warned that, without the president’s tax proposal alone, unemployment numbers would go up by 750,000 next year.
Pulitzer-prize winning economist Paul Krugman, long critical of the president for not being bold enough, approved the plan. “It’s a lot better than nothing,” he said, “and some of the measures, which are specifically aimed providing incentives for hiring, might produce a relatively large employment bang for the buck. Krugman says he likes the fact that the plan will force Republicans, if they want to oppose it, to oppose tax cuts when workers are the ones who are slated for the cuts.
Photo via White House press service.