With the U.S. economy sluggish at best and unemployment at 9.1 percent, President Barack Obama has proposed a nearly $450 billion package of borrowing, spending and tax breaks that he says will create jobs.
In other words, he wants something that looks a good bit like 2009’s $862 billion federal “stimulus” that has so far added massively to the national debt but not created the jobs that the administration projected.
That may or may not give you confidence in the president’s latest proposal. At any rate, here are a few of the specifics:
• The payroll tax on workers’ income of up to $106,800 would drop from 4.2 percent this year to 3.1 percent next year. That would cost the Treasury about $175 billion, and since payroll taxes raise money for Social Security, this cut could hasten the day when Social Security runs out of money.
• Payroll taxes would be cut in half for businesses whose payrolls are $5 million or less. Businesses would get a full payroll tax “holiday” for wages paid to new hires or for increased payrolls. This would cost the government $65 billion.
• The president wants money for school, road and other infrastructure projects. He wants to create an “infrastructure bank” to partner with private businesses to fund infrastructure projects and a program to improve vacant properties and help stabilize neighborhoods that have lots of those properties. The combined cost of those programs would be $105 billion.
• The president wants Congress to again extend jobless benefits for millions of Americans who are out of work. He also wants money for state training programs for workers who have been unemployed long term. That would cost approximately $49 billion.
• The bill would provide $35 billion to protect a range of government workers from layoffs.
• Businesses would get tax credits of up to $4,000 for hiring workers who have been out of work more than six months. That would cost roughly $8 billion.
So what do you think? Would this new package create lots of jobs or just make our national debt and economic situation worse? Does the fact that the proposal contains many provisions similar to those of the 2009 stimulus give you confidence — or concern?
The administration predicted the last stimulus would keep unemployment under 8 percent — which it plainly did not do. Interestingly, the administration is not putting forth a specific jobs projection with this proposal, offering instead vague assurances that the bill would give a “jolt” to the economy.
That’s undoubtedly true, but it is less clear that the “jolt” would be in a positive direction.
As for the president’s claim that this stimulus bill would be completely “paid for,” fact checkers at The Associated Press raised serious doubts.
Referring to a congressional “super committee” that is tasked with reducing federal deficits, the AP wrote that this latest stimulus “will only be paid for if a committee [that Obama] can’t control does his bidding, if Congress puts that into law and if leaders in the future — the ones who will feel the fiscal pinch of his proposals — don’t roll it back.”
The AP called it “sleight-of-hand accounting,” adding, “Essentially, the jobs plan is an IOU from a president and lawmakers who may not even be in office down the road when the bills come due. Today’s Congress cannot bind a later one for future spending. A future Congress could simply reverse it.”
We don’t know whether Republicans will go along with the president’s insistence that they “pass this jobs bill right away.” But we see little chance it will do much good if they do.