Obama jobs plan could cost $300 billion, include tax cuts, new spending

President Obama is planning to propose a jobs program on Thursday that could entail at least $300 billion in tax cuts, local government aid, and spending on infrastructure such as roads and schools as he aims to restore public confidence in his ability to boost the economy.

Obama, whose approval ratings are at record lows, will present his proposals before a joint session of Congress at 7 p.m. in an address that could mark a critical moment in his presidency. Obama will unveil a bill with his proposals--“The American Jobs Act”--which the White House says will be fully paid for. His renewed focus on employment comes as the economic recovery has essentially stalled, with a discouraging government report last week showing that job creation came to a halt in August.

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The White House has been developing a package of jobs proposals since last month, when Obama completed months of negotiations with Republicans over a deficit-reduction deal.

The president’s plan, in large part, will call for continuing current measures to stimulate the economy, including a 2 percentage-point payroll-tax cut and extended unemployment benefits, administration officials say. Obama is also likely to call for an additional tax cut for companies that hire workers. Those measures together could cost about $200 billion next year.

Obama is planning to propose $100 billion or more in spending on infrastructure, state and local aid, and programs that target people who have been unemployed for more than six months, according to officials and other people familiar with the deliberations.

Not only will he pledge new spending to spur hiring, he is also likely to call for overhauling the way the government spends money. This could include an infrastructure bank that would pool tens of billions of federal dollars with state or private money to build roads and commercial buildings and to rehabilitate schools. Obama has suggested that the initiatives could lead to the hiring of 1 million unemployed construction workers.

The president is planning to put a heavy emphasis on providing aid to hard-hit states and localities so they can hire teachers or avoid further layoffs, according to administration officials and other people familiar with the matter. And he is expected to call for a program that provides training and subsidies to get the long-term unemployed back on the job.

These proposals would come as the Federal Reserve, which is independent of the administration, is moving toward new steps of its own to give the economy a boost. With a pivotal meeting two weeks away, Fed officials are considering measures aimed at lowering interest rates on mortgages, business investments and other kinds of long-term loans.

Help for housing

In announcing his jobs program, Obama is planning to mention measures that the administration has undertaken lately to benefit the ailing housing market, including a program that helps reduce payments for jobless homeowners. As part of this housing effort, he is likely to call for a broader refinancing of mortgages in order to put hundreds of dollars back in the pockets of homeowners each month, administration officials said.