In a plain-spoken speech, Obama repeatedly insisted that lawmakers approve the plan, which is composed slightly more of tax cuts than new spending. The program includes the repackaging of some previous Obama proposals and the extension of other exisiting initiatives, including the temporary payroll tax cuts for employees enacted last year. But he also called for several significant new steps, such as enlarging that tax cut to provide $1,500 in savings for the average family and offering another tax cut for businesses that hire new employees.
“The purpose of the American Jobs Act is simple: to put more people back to work and more money in the pockets of those who are working,” Obama said. “It will provide a jolt to an economy that has stalled, and give companies confidence that if they invest and hire, there will be customers for their products and services. You should pass this jobs plan right away.”
The $447 billion price-tag on the program puts the cost at more than half that of the stimulus package enacted by Congress in 2009 and reflects the severity of the challenge facing the nation’s economy. Last week, the government reported that job creation came to a halt in August and that the unemployment rate was stuck at more than 9 percent, a sign that the economy was at imminent risk of dipping back into recession.
Many economists say that the government needs to pump hundreds of billions of dollars into the economy to avoid another downturn. But with virtually all of the measures requiring congressional approval, there is little in the plan that can make an immediate impact. Some economists also warned that even if major tenets of Obama’s plan were to pass, overcoming deep Republican skepticism, it might do little more than keep the economy growing at a snail’s pace.
The centerpiece of Obama’s plan, at a cost of $175 billion, is an extension of and 50 percent increase in a payroll tax cut that is set to expire at the end of the year. Other major initiatives include an infrastructure program that would invest $140 billion to rehire teachers and first responders, modernize schools and rebuild roads and bridges.
“We have a lot of confidence in the plan,” said a senior White House official, who spoke on condition of anonymity to preview the plan before Obama spoke. “If you look at the design, it’s the right balance, the right mix in getting money into people’s pockets. We have very important initiatives to get people to work. ... We have faith in our program. We think it will have very significant impact on job growth.”
White House aides have described the plan as being composed of programs that Republicans have supported. But Republican leaders have been skeptical, and continued this week to denounce Obama’s economic policies, including the $787 billion stimulus package he pushed through Congress two years ago.
“Many of us have been calling on the president to propose something different tonight. Not because of politics, but because the kind of policies he’s proposed have failed,” Senate Minority Leader Mitch McConnell (R-Ky.) said Thursday in a statement before Obama’s address. “It’s time the president start thinking less about how to describe his policies differently and more time thinking about devising new policies. And he might start by working with Congress, instead of writing in secret, without any consultation with Republicans, a plan that the White House is calling bipartisan.”
Obama’s jobs act also includes a $70 billion proposal to offer tax cuts to small businesses that hire new workers, and $62 billion in unemployment insurance.
White House officials said Obama would offer details next week on how he would pay for the plan when he delivers his recommendations to a congressional “supercommittee” that has been tasked with finding at least $1.5 trillion in deficit reductions. Obama intends to offer his own deficit reduction plan that would save more than $1.5 trillion and pay for the new jobs investments with the savings gained in outlying years, officials said.
White House officials declined to predict how many new jobs the package would create, but stressed that the initiatives are designed to get companies hiring quickly.
“Mere passage [of the bill] would have an immediate positive impact,” one official said.