Obama unveiling $447-billion plan to jolt economy

President Obama this evening rolls out a plan to inject $447 billion into the ailing economy through tax cuts aimed at working families and small businesses and spending to rebuild infrastructure, proposing a larger cash infusion than expected – and, perhaps, more than Congress will seriously consider.

In an evening address to lawmakers in a special joint session, Obama will argue that his plans should be supported by Republicans and Democrats alike and he will urge them to set aside the politics that might get in the way.

“There is nothing controversial about this piece of legislation,” Obama said in excerpts released in advance of his speech. “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.”

But Obama won’t outline how he would pay for the package, putting that off until next week when the White House plans to release legislation detailing the plan. The administration said he would outline a “dollar for dollar” budget to pay for his jobs package.

The plan was almost $150 billion larger than administration officials had previously indicated, helping Obama portray the proposal as bold. Economists said a plan of that scope might have a noticeable impact on the economy very soon after enactment.

But the size of the proposal also could create sticker shock in Congress, where even in advance of the address, many GOP lawmakers were wary of spending money to stimulate the economy, while others may prefer to wait to take action should a Republican become president in 2013.

The White House hopes Americans will rally behind Obama’s plan and spur Congress to pass enough of the measure to have an effect on the 9.1% jobless rate, at least by the time the president’s reelection campaign is in full swing.

Mark Zandi, chief economist of Moody’s Analytics, forecast that if Obama’s plan is implemented in its entirety, the jobless rate would fall to roughly 8% around the time of the election. If no further action is taken, unemployment would be about 9% at end of next year, he said.

Advisors said Obama would not predict how many jobs the plan would create, a noteworthy omission given the sales job he is about to kick off. But the point, along with the speech itself, is fraught with political risk; the president doesn’t want to be measured against an official set of projections as he is running for reelection in 2012.

At the heart of the president’s plan is about $245 billion in tax relief for individuals and businesses, going well beyond the payroll tax “holiday” that Congress adopted last winter. Obama would expand that cut for workers, providing a $1,500 tax cut to the typical American family, up from a $1,000 cut in the first round.

Obama would also cut the payroll tax in half for businesses with payrolls of less than $5 million and declare a complete payroll tax holiday for newly hired workers or wage increases at firms of any size.

“Part of the way you increase growth is you increase demand,” said one senior administration official, noting that other elements of the plan create jobs for as little as $30,000 each. “We think this is the right balance of getting money in people’s pockets” and investing directly in job creation, the official said.

The other major chunk of the proposal is $140 billion that would go directly to putting people to work, largely by updating the nation’s roads, bridges and schools. About $35 billion of that would go to states to keep teachers, police and firefighters on the job.

The president also proposes reforming the unemployment insurance program to prevent 5 million Americans who are looking for work from losing their benefits. Officials say his “Bridge to Work” program improves upon a controversial Georgia state program that helps pay displaced workers who take temporary or voluntary work. Obama says his plan would make sure the workers earn minimum wage.

In his remarks to Congress, Obama will issue a call to move beyond politics and respond to the economic emergency.

“Those of us here tonight cannot solve all of our nation’s woes,” Obama said. “Ultimately, our recovery will be driven not by Washington, but by our businesses and our workers. But we can help. We can make a difference. There are steps we can take right now to improve people’s lives.”