Obama's Fixing Unemployment Issue with $447b

vintec · Sep 9, 2011

President Barack Obama called on Congress to pass a jobs plan that would inject $447 billion into the economy through infrastructure spending, subsidies to local governments to stem teacher layoffs and cutting in half the payroll taxes paid by workers and small-business owners.
The package is heavily geared toward tax cuts, which account for more than half the dollar value of the stimulus, and administration officials said they believe that will have the greatest appeal to Republican members of Congress.
"The question is whether, in the face of an ongoing national crisis, we can stop the political circus and actually do something to help the economy," Obama told a joint session of Congress tonight.
A $105 billion infrastructure proposal includes money for school modernization, transportation projects and rehabilitation of vacant properties. Most of the economic impact from the infrastructure spending would be next year, though some of it would come in 2013, an administration official said.
"Ultimately, our recovery will be driven not by Washington, but by our businesses and workers," the president said. "But we can help. We can make a difference."
The administration estimated that $35 billion it's seeking in direct aid to state and local governments to stem layoffs of educators and emergency personnel would save the jobs of 280,000 teachers, according to a White House fact sheet.
Payroll Tax Cuts
The centerpiece of the plan is cuts in payroll taxes, which cover the first $106,800 in earnings and are evenly split between employers and employees. Obama would reduce the portion paid by workers next year to 3.1 percent from 4.2 percent now. The rate was cut 2 percentage points under the terms of a tax deal reached last year. That cut is set to expire Dec. 31, which would push it back to 6.2 percent.
The White House also would use temporary payroll tax cuts next year to offer incentives for new hiring and assist small businesses.
Businesses would get the same 3.1-point reduction on taxes they pay on the first $5 million of their payroll, a limit that skews the benefit toward smaller firms. The full 6.2 percent employer contribution would be waived on the first $50 million net increase in a company's payroll.
The proposal includes additional tax credits for hiring veterans and workers who have been unemployed more than six months. The administration also wants to make it illegal for employers to discriminate against applicants who are unemployed.
Areas of Agreement
House Majority Leader Eric Cantor, a Virginia Republican who's been a frequent critic of Obama, said there may be areas of common ground, such as tax cuts for small businesses.
"That's something we Republicans have been advocating for quite some time now," Cantor said in a Bloomberg Television interview. He also indicated Republicans may support extending the payroll tax for workers.
He wasn't supportive of spending measures, including aid for states. "Some of the rhetoric that I heard in the president's speech sounded a lot like that surrounding the stimulus pitch when we went through that over two years ago," he said. "I'm worried that once again, we would find ourselves in a spending binge."
Boost to Growth
The fiscal boost from the jobs package next year would be larger than in the first year of the 2009 economic stimulus, said Mark Zandi, chief economist at Moody's Analytics Inc.
Zandi, who was briefed on the plan before the president's speech, forecast passage of the entire jobs package would add 2 percentage points to economic growth next year and bring down the unemployment rate by 1 percentage point compared with current policy, under which a temporary payroll tax cut and an extended unemployment benefits both expire Dec. 31.
With his address to a rare joint session of Congress on jobs, the top concern of voters as the 2012 election campaign gets under way, Obama is seeking to frame choices for voters as much as present a plan for lawmakers.
He proposed the stimulus plan in the House chamber, where the Republican majority has signaled opposition to new spending. As job growth has stalled and the unemployment rate hovers above 9 percent, Obama's job-approval ratings are scraping new lows as public doubts about his stewardship of the economy rise.
Urging Action
Six times in the 32-minute speech Obama urged Congress to pass his proposal "right away."
In a direct challenge to Republican law makers, Obama said, "For everyone who speaks so passionately about making life easier for 'job creators,' this plan is for you."
"I know some of you have sworn oaths to never raise any taxes on anyone for as long as you live," he said. "Now is not the time to carve out an exception and raise middle-class taxes, which is why you should pass this bill right away."
He said he intends to take his message "to every corner of this country." Tomorrow he will speak in Richmond, Virginia, in Cantor's district.
Obama said the cost of the initiative will be covered and that on Sept. 19 he will propose almost $2 trillion in deficit reductions, including cutting Medicare costs, to the special 12- member congressional committee charged with coming up a long- term deficit plan.
In another step aimed at the long-term jobless, Obama proposed granting states authority to pay unemployment benefits to people who have been out of work more than six months while they train for jobs at businesses at no cost to the employer for up to eight weeks.
Jobless Aid
States also would be able to use unemployment insurance funds to make up for wages lost by workers whose hours were cut back in lieu of a layoff and for workers 50 and older who took a lower-paying job after a layoff.
The White House wants to incorporate the changes in the unemployment-insurance program along with a one-year continuation of extended unemployment benefits due to expire Dec. 31. The extended benefits cover jobless workers for up to 99 weeks.
The administration considered and rejected a temporary repatriation holiday that would allow companies to return overseas profits without paying corporate income taxes on the proceeds. The White House concluded that it would not have as great an impact on job growth as the hiring incentives it included, said an administration official.

source: Bloomberg - Obama Offers $447B Spending, Tax-Cut Plan to Spur Jobs
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I wonder where the $447b comes from???

hawkeye · Sep 9, 2011

[youtube]http://www.youtube.com/watch?v=J6TcpfBHlbs[/youtube]

jpanggy · Sep 9, 2011

credit card.

A5ano · Sep 9, 2011

QE 3 Under different name?

Big A.D. · Sep 9, 2011

It actually says in the article that the funds will come from cuts in other areas of government spending.

Agauholic · Sep 9, 2011

this is traditionally very good news

Clawhammer · Sep 9, 2011

The advantage of this scheme over Quantative Easing is it puts money into Main Street (as opposed to Wall St. ) through the wages of these workers.

The problem is there'll be a screaming rush of people into construction industry at the expense of all other areas of the economy. (And the shysters will cause problems too, starting up overnight, hiring unqualified staff and then disappearing just as fast, leaving problems (often life threatening risks) behind them).

I'd like to say the best stimulus method is Rudd's approach of putting cash directly into the hands of tax payers to spend where THEY need it most. This way it can go to mechanics, doctors, dentists, clothes, food..and yes big-screen tv's. As I started though, I'd like to say that, but the best cure is prevention ...and not needing stimulus in the first place and minimise the boom/bust cycle!

P.S.
It was a scrappy, speech by Obama, strained by desperation and anger.
P.P.S
The smarmy looks on the faces of the congressmen in the audience made me cringe, just disgusting.

Agauholic · Sep 9, 2011

I'm not one for encouraging mal-investment.

Reduce the size of the state, and let the market do it's thang.

renovator · Sep 9, 2011

hawkeye said:

[youtube]http://www.youtube.com/watch?v=J6TcpfBHlbs[/youtube]
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Good clip hawkeye I like the line..... Budget ceiling ...credit score ...dont worry about that i'l just print some more

lucky luke · Sep 9, 2011

When one has a cup to bail out water coming in by the bucketload, its just a matter of time. Doesn't matter whether you throuw your cup of water out the front, the back or the side. Doesn't matter if you rename your cup, a "fluid reduction enabler" to give assurance to all the other passengers on the boat. Just a matter of time before things sink.

Big A.D. · Sep 9, 2011

luckylukeonline said:

When one has a cup to bail out water coming in by the bucketload, its just a matter of time. Doesn't matter whether you throuw your cup of water out the front, the back or the side. Doesn't matter if you rename your cup, a "fluid reduction enabler" to give assurance to all the other passengers on the boat. Just a matter of time before things sink.
Click to expand...

You're obviously a fluid reduction enabler half empty kind of person when it comes to the U.S. economy then.

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Obama's Fixing Unemployment Issue with $447b

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Obama's Fixing Unemployment Issue with $447b

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