President Obama used his weekly address to the nation to pound the same terse message that he’s been repeating all week — that Congress should act quickly on his recent proposals for job creation.
“It’s a jobs bill that does two simple things: put more people back to work, and more money back in the pockets of people who are working,” Mr. Obama said in his Saturday address. “You can help make it happen by telling your congressperson to pass this jobs bill right away.”
But there’s a lot in this 200-page bill for Congress and the public to chew over.
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The plan’s main features, which Obama sketched in his Saturday remarks, are payroll tax cuts and investments in things like roads and schools.
Less-publicized steps include everything from experiments in job training to a provision designed to prevent discrimination against the unemployed.
Here’s a look at the main points in the American Jobs Act.
• Higher federal deficits. OK, this isn’t the first thing on the White House fact sheet, but it’s important to note that this means a bigger deficit in 2012. In so-called Keynesian models of the economy, it’s not a bad thing. The idea is that by spending money or cutting taxes at a time of economic weakness, government policy can help revive economic growth. Obama’s initial $787 billion Recovery Act – with features similar to his new $447 billion bill – was supported in general by mainstream economists on that theory.
Although many say the initial stimulus program helped, there’s plenty of debate today among economists about whether the economy will benefit from a new round of temporary spending and tax cuts.
• “Fully paid for.” Again, this isn’t the thing Obama mentions first, but with those words he pledges that his plans won’t add to deficits in the long run. Translation: The higher deficit for 2012 will be offset by fiscal tightening starting in 2013 – namely tax hikes on high-income Americans. More details on the White House plans to tame the national debt are scheduled to be released Monday.
Many critics of the president’s plan say the looming tax hike reveals one of the inherent flaws of trying temporary stimulus in a debt-laden economy that needs long-term fixes. Obama’s supporters say he’s not ignoring the need for long-term fixes (though these are largely outside of the jobs bill), and that most Americans support the idea of higher taxes on the rich.
• Payroll tax cuts for workers. Obama wants to extend and expand this tax cut, which is set to expire in December. It would put an extra $1,500 in the pockets of the typical household earning $50,000, the White House says. Failing to extend the tax break would, in effect, be a tax hike on most Americans, Obama argues. The overall cost is $175 billion.
• Business tax cuts. Obama would give a partial payroll tax cut to all employers, with the benefits targeted especially toward small businesses, for next year. He also proposes a complete payroll tax holiday for new jobs or wage increases. The overall cost: $65 billion.
• “100 percent expensing.” This $5 billion proposal would be a one-year spur for businesses to make investments, by allowing them to quickly deduct the full value of spending on facilities or equipment.
Investments and aid to states
• Aid to states. Obama would devote $35 billion to aid designed to prevent layoffs at schools, police stations, and fire departments where local governments face budget shortfalls.
• Infrastructure spending. The bill includes $50 billion for repairing highways, airports, and urban transit systems. About $4 billion of the money would go toward high-speed rail.
• A National Infrastructure Bank. This $10 billion effort would offer loans – up to no more than half a project’s cost – to spur additional investments in transport, water, or energy systems. The money would partner with state or local government and private dollars.
• Public school modernization. Some $30 billion would go toward everything from repair and renovation to computer labs, with 40 percent of the funds “directed toward the 100 largest high-need public school districts,” the White House says.
• “Project Rebuild.” This would be a $15 billion effort to “repair and repurpose” homes and commercial buildings in communities hit hard hit by foreclosures and sagging property values. The goal would be to reduce blight and create construction jobs.
Extra help for the unemployed
• Unemployment insurance changes. Obama calls for $49 billion to prevent 6 million jobless Americans from losing unemployment insurance, and to make the UI system more flexible. Some UI money could go to employers for “work sharing” plans that prevent layoffs. And some money would go to state experiments such as “bridge to work” training programs.
• Tax credit for hiring the long-term unemployed. This credit of up to $4,000 per hire would cost an estimated $8 billion.
• Help for jobless veterans. A new “returning heroes” tax credit of up to $5,600 would encourage hiring of veterans who have been unemployed six months or longer. Obama also seeks to expand a similar “wounded warriors” credit for firms that hire vets who have service-connected disabilities.
• Jobs for teens and low-income workers. Some $5 billion would support summer and year-round jobs through a “pathways back to work fund.”
• A ban on discrimination. Citing “recent reports [of] companies that are increasingly expressing preferences for applicants who already have a job,” the White House proposal would make such a preference unlawful. The bill would prohibit “employers and employment agencies from disqualifying an individual from employment opportunities because of that individual’s status as unemployed.”