US President Barack Obama plans to propose sparking job growth by injecting more than US$300 billion into the economy next year, mostly through tax cuts, infrastructure spending and direct aid to state and local governments.
Obama will call on the US Congress to offset the cost of the short-term jobs measures by raising tax revenues in later years.
DEFICIT REDUCTION
This would be part of a long-term deficit reduction package, including spending and entitlement cuts as well as revenue increases, that he will present next week to the congressional panel charged with finding ways to reduce the nation’s debt.
Almost half the stimulus would come from tax cuts, which include an extension of a 2 percentage point reduction in the payroll tax paid by workers due to expire on Dec. 31 and a new decrease in the portion of the tax paid by employers.
Obama is set to lay out his plans in an address to Congress today as unemployment remains at 9.1 percent more than two years after the official end of the worst recession since the Great Depression. Payroll growth stalled last month.
The unemployment rate and the sluggish recovery will be central issues as Obama runs for re-election next year. The main components of Obama’s jobs plan, though not its scale, have been largely telegraphed by the administration.
For weeks, people familiar with deliberations have said the White House is considering tax incentives, infrastructure and assistance to local governments. Obama has stressed construction and tax cuts in recent public speeches
Obama has pressed Congress throughout the year to renew the payroll tax holiday along with extended unemployment benefits, which also expire on Dec. 31. Backing for a reduction in the employer contribution to the payroll tax has been under consideration since at least June.
White House spokesperson Jay Carney refused to give details of what the president will offer, saying at a briefing on Tuesday that it would include “some new proposals that you have not heard us talk about.”
OPPOSITION
Much of Obama’s plan might have trouble passing the US House of Representatives, where leaders of the Republican majority have signaled opposition to new spending that would add to the US federal budget deficit.
Obama said in speech in Detroit on Monday that he would challenge Republicans to support tax cuts, which a person familiar with administration discussions said would be targeted toward middle-class Americans to spur consumer spending.
“You say you’re the party of tax cuts?” Obama said before the annual Metro Detroit Central Labor Council rally. “Well then, prove you’ll fight just as hard for tax cuts for middle-class families as you do for oil companies and the most affluent Americans.”
HALTING LAYOFFS
The direct aid to local governments would focus on halting layoffs of teachers and first responders. Education will be a theme in Obama’s address and he will also propose as part of his infrastructure program money for school construction.
To address the problem of long-term unemployment, Obama will likely propose a national program, modeled after a Georgia initiative that allows workers who receive unemployment insurance to train for jobs at businesses at no cost to the employer.
Obama also plans to propose measures to make it easier for homeowners to refinance mortgages.
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