CQ TODAY ONLINE NEWS
Sept. 8, 2011 – 11:12 p.m.
Obama Challenges GOP on Jobs
By Joseph J. Schatz, CQ Staff
President Obama’s high-stakes bid to redirect the congressional agenda with an almost $450 billion jobs package presents Republican leaders with a complicated decision: whether to work with the White House on its terms or risk angering a public already fed up with Washington’s lack of economic answers.
Facing a 9.1 percent unemployment rate and declining public confidence in his handling of the economy, Obama attempted to reassert himself after a summer of bitter budget cutting. His address to a joint session of Congress on Thursday night came just as a new, greatly empowered congressional committee begins the daunting challenge over the next three months of finding at least $1 trillion in additional deficit reduction.
Obama’s speech was striking for its brevity and avoidance of overt partisanship, yet it set an assertive tone. The president is pushing spending priorities desired by frustrated liberals and opposed by most GOP lawmakers. At the same time, he proposed tax cuts that many Republicans will find hard to reject out of hand. And he pointedly warned his adversaries that they share in the responsibility for putting the economy back on track.
“I know there’s been a lot of skepticism about whether the politics of the moment will allow us to pass this jobs plan — or any jobs plan,” Obama told the assembled lawmakers. “But know this: The next election is 14 months away. And the people who sent us here — the people who hired us to work for them — they don’t have the luxury of waiting 14 months.”
Although several Republicans immediately criticized the president’s ideas for being tired and too heavily focused on spending, House Speaker
House Majority Leader
The Way Forward
According to White House estimates, the total package would cost about $447 billion, more than half the size of the $787 billion economic stimulus package (PL 111-5) enacted during Obama’s first days in office. The new proposal is much larger than the White House would have anticipated requesting just a few months ago, administration officials said Thursday, illustrating how rapidly the economic outlook has deteriorated.
“There should be nothing controversial about this piece of legislation,” Obama said. “Everything in here is the kind of proposal that’s been supported by both Democrats and Republicans — including many who sit here tonight. And everything in this bill will be paid for. Everything.”
It remained unclear how lawmakers might attempt to move the jobs package. And paying for it at a time when lawmakers are struggling to reduce the government’s red ink will make agreement even more difficult.
“On the surface, it looks like a bigger, taller order,” said Senate Finance Chairman
Republicans including Sen.
Even though the House GOP majority seems unlikely to accept many of Obama’s spending proposals — such as money for road, airport and rail construction — tax cuts account for more than half of the president’s package and might find favor.
Obama Challenges GOP on Jobs
The largest element of the plan would expand a temporary reduction in the Social Security payroll tax, cutting the levy in half through 2012 at a cost of $175 billion.
Some top Republicans, including Cantor, have signaled openness to that idea in recent days. And Sens.
The White House intends to provide legislative language within the next week, and Obama said he would also send Congress specific proposals to offset the cost of the jobs measure. White House officials were careful not to predict by how much the package might boost employment, lest their estimates turn out to be overconfident, as happened with the 2009 stimulus.
Obama indicated that he wants the offsetting spending cuts or tax increases to occur over the longer term to avoid harming the recovery. And once again he said higher taxes on the wealthiest Americans and changes to corporate tax levies might be part of his plan.
As part of that strategy, Obama called on Congress to increase the amount of deficit reduction that the new Joint Select Committee on Deficit Reduction is tasked with finding. The panel, which met for the first time Thursday, must produce legislation reducing the deficit by at least $1.2 trillion over 10 years. If such a bill is not enacted, the government faces automatic, across-the-board spending cuts in 2013.
“Tonight, I’m asking you to increase that amount so that it covers the full cost of the American Jobs Act,” Obama said. “I’ll be releasing a more ambitious deficit plan — a plan that will not only cover the cost of this jobs bill, but stabilize our debt in the long run.”
Broadening the panel’s already politically difficult mandate could be a challenge. It is already getting resistance from defense hawks opposed to cuts in military spending.
Tax Cuts’ Easier Path
Administration officials favor extension and expansion of the employee payroll tax cut because they say it helped blunt the impact of higher gasoline prices over the past nine months and propped up sagging consumer demand.
In a targeted bid to get companies to start hiring workers, Obama is also proposing to cut the employer half of the Social Security payroll tax in half for the first $5 million of a company’s payroll. Employers would get a full payroll tax holiday for hiring new people or raising the pay of current workers.
One administration official said the two tax breaks, which would cost $65 billion, are designed to apply to “small businesses” that “have in many ways faced a perfect storm” of borrowing difficulties and low consumer demand — not big companies that are flush with cash and simply not hiring new workers.
Still, some Republicans question the effectiveness of such short-term measures — and lawmakers from both parties are wary of eroding the fundamental financing mechanism of the Social Security system.
Obama also wants to give companies a tax incentive for hiring jobless veterans and a bigger incentive for veterans with service-related disabilities. The White House did not estimate the cost of those provisions.
Obama Challenges GOP on Jobs
“Ask yourselves — where would we be right now if the people who sat here before us decided not to build our highways and our bridges; our dams and our airports?” Obama said. “Millions of returning heroes, including my grandfather, had the opportunity to go to school because of the GI Bill. Where would we be if they hadn’t had that chance?”
On the spending side, Obama is proposing $35 billion to prevent layoffs of teachers and first-responders, $25 billion to upgrade public school infrastructure and $5 billion to modernize community colleges.
In a move likely to draw cheers from liberals and some business advocates — but opposition from Republicans — Obama is asking for $50 billion for “immediate investments” in transportation infrastructure, and creation of an infrastructure bank capitalized with $10 billion in federal money. He also wants $15 billion to rehabilitate vacant property in neighborhoods with high concentrations of foreclosures.
Obama’s plans to revamp and extend unemployment benefits may also face resistance from conservatives — depending on regional differences in unemployment.
At a cost of $49 billion, the White House wants to extend the extra unemployment benefits that expire soon and overhaul the benefit system. Citing successful programs in Georgia and North Carolina, the administration wants to give states the ability to permit laid-off workers to engage in temporary or volunteer work, or work-based training, while still receiving checks.
Obama is also asking for a tax credit of up to $4,000 for companies that hire workers who have been out of work for more than six months, at a cost of $8 billion, and a $5 billion fund to help low-income youth and adults find jobs and training.
Niels Lesniewski, David Harrison and Alan K. Ota contributed to this story.