Obama Jobs Plan: $447 Billion, More Than Half In Tax Cuts, To Be Paid For By Super Committee
WASHINGTON -- Hoping to stem the tide of poor economic news and boost his falling poll numbers, President Barack Obama proposed a $447 billion jobs plan to Congress on Thursday evening.
Titled the American Jobs Act, the proposal includes more than $250 billion in tax incentives for small businesses and employers, according to administration estimates. The rest of the money would be devoted to infrastructure spending, state aid, unemployment insurance, and neighborhood rehabilitation. The president will pay for the proposal by asking the congressional super committee tasked with finding $1.5 trillion in deficit reduction to offset the cost of the package in their proposal.
Senior administration officials said that the White House plans to introduce the president's proposal next week as a single piece of legislation. The same administration officials did not rule out the idea that the White House would petition the congressional super committee to simply include the jobs bill in the set of recommendations that they reveal later this fall. In his speech to a joint session of Congress, however, the President repeatedly made the case that quicker action is needed.
"I am sending this Congress a plan that you should pass right away," he said. "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."
A White House official said Obama phoned House Speaker John Boehner (R-Ohio) and Senate Minority Leader Mitch McConnell (R-Ky.) earlier in the day to discuss the need for rapid passage of his jobs plan. During his speech, which was peppered with a defiant sometimes combative tone, he pledged to sell his plan outside of the D.C. Beltway as well.
"I intend to take that message to every corner of this country," Obama said. "I also ask every American who agrees to lift your voice and tell the people who are gathered here tonight that you want action now. Tell Washington that doing nothing is not an option." In all, the phrase "pass this jobs bill" was uttered eight times in the president's speech, with several variations of the phrase appearing elsewhere.
There was no mention as to how many jobs the president believed his proposal would create. At a briefing before the speech, senior administration officials declined to make such an estimate as well. But underlying the whole proposal was the promise that, down the road, it would be paid for. And in the latter portion of his speech, Obama called for Congress to close special interest tax loopholes as one way to cover that cost.
"This isn’t political grandstanding," he said. "This isn’t class warfare. This is simple math. These are real choices that we have to make."
At the heart of the president's plan is an extension of the payroll tax cut passed last year, through 2012. The proposal, which would affect an estimated 160 million workers by providing a $1,500 tax cut for the average family, comes in at a cost of $175 billion.
The tax components of the president's plan don't end there. The White House also wants a payroll tax holiday for businesses that add new workers or increase the wages of current employees; a fifty percent reduction of the tax rates businesses pay on the first $5 million in payroll; and a $4,000 tax credit for employers who hire long-term unemployed workers.
On the spending side, the president is calling for $50 billion in infrastructure repairs; $10 billion for an infrastructure bank to help leverage private capital; $30 billion for school modernization and repairs; and $35 billion in aid to states and municipalities for the purposes of rehiring and retaining teachers and first responders. The proposal would also re-authorize federal unemployment benefits for another year, with additional incentives for employers to retain their workers and train new ones without any cost. A national wireless internet initiative and changes to federal refinancing programs are also part of the American Jobs Act.
The most innovative addition may be the $15 billion that the president is proposing for "Project Rebuild" a program that would leverage private capital to finance the refurbishing of vacant or foreclosed homes. According to a senior administration official, the program would focus on "emerging residential and commercial foreclosure problems" in an effort to raise plummeting property values in those areas and avoid "community blight."
The president's suggested spending totals are a drop in the bucket in terms of the economy's actual needs. Obama's top advisers have, in the past, estimated that the country faces a $2 trillion infrastructure deficit. There is an estimated $270 billion to $500 billion in backlogged school maintenance costs. More than 200,000 government jobs have been slashed in the past year, many of them teachers and emergency first responders.
But the outlines were cheered by Democrats as an important start, as well as a much-needed shift in a political conversation that has been dominated by budget cuts.
Even in the face of obvious need, however, it's unclear if Congress as a whole possesses the political will to back the president's requests. Republican lawmakers have made cutting taxes a top priority over the past few years, but even before the president's address, GOP senators were balking at the idea of temporarily extending the payroll tax cut. Even progressives aren't entirely enamored with the idea, with serious concern among Social Security advocates that an extension would drain money from the entitlement program's trust fund -– even though the administration's proposal instructs the Treasury to replenish that fund's coffers.
More problematic could be the amount of spending Obama is proposing and the vague outlines for how it will be paid for. Despite petitioning for infrastructure money for their home districts, Republicans have castigated all proposals for federal stimulus. The idea that the super committee will pick up the tab seems unlikely to quiet GOP criticism that the plan will increase the national debt.
But that may be the trick up the administration's sleeve. The administration officials in the pre-speech briefing left open the door to having the super committee write the president's bill into their final set of recommendations, rather than just offset the cost of a separate proposal. Doing so would mean that the jobs plan wouldn't come up for a vote until late December. But it would also give it a much more likely chance of passage, as components of same triggers that apply to the committee's debt reduction suggestions -- mostly major cuts to defense spending and Medicare -- would suddenly apply to the president's jobs bill.
"Obviously it could be passed as a part of a larger grand bargain, but we don't want to limit our options to that," said a senior administration official. "It would be very positive for this economy for this to pass quickly and for it to pass in a way that people could see we're willing to work together to do something bold on creating demand in the short term, and a context in which we're also creating a confidence in our long term fiscal situation."