A jobs generator?
The much-anticipated jobs plan President Obama laid out Thursday evening borrows a page from the tax package he negotiated with GOP leaders in December. In order to get the stimulus spending he wants, Obama proposed to give Republicans tax breaks they’ve supported in the past -- with a promise not to increase the deficit. The $447-billion plan isn’t particularly novel, relying on familiar tax breaks, infrastructure projects and grants to state and local governments. The details, though, may not matter as much as how lawmakers respond to them. The bitterly partisan brinkmanship in Washington over the debt ceiling weakened the public’s already shaky confidence; reaching bipartisan agreement on even a modest jobs plan could help undo that damage. It’s a rare moment of political convergence for the president and his critics.
The collapse of the financial industry not only sent the economy into a deep hole; its lingering aftershocks continue to slow the recovery. Nevertheless, there are signs of vigor in corporate America, including high profits and healthy cash reserves. That vigor hasn’t translated into investment and new jobs here, largely because businesses worry that there won’t be enough demand for their products and services. Consumers, meanwhile, are saving more and paring their debts because they’re anxious about where the economy is heading.
Obama’s plan tries to prod companies to hire more by slashing the payroll tax for most businesses, and by offering larger breaks for those that hire more workers and that hire unemployed veterans or applicants who have been out of work for more than six months. It also includes several initiatives to put more money into consumers’ hands, including extending and increasing the payroll tax break for workers, funding more than $100 billion worth of infrastructure projects and letting more homeowners refinance mortgages that are larger than the value of their homes. The cost would be offset by having Congress enact almost $2 trillion worth of spending cuts and tax increases over the coming decade, instead of the $1.5 trillion called for by the agreement to raise the debt ceiling.
The president is right to call for his plan to be paid for, and right to suggest that it be done over time. But his speech offered no new thoughts on how to do so; instead, Obama simply repeated his call for modest reforms in entitlements and more taxes on the wealthy. That message was a sharp contrast to the plan’s middle-of-the-road combination of tax cuts and spending increases.
The president’s plan provides a good starting point for talks. Lawmakers now have a duty to respond -- and to respond quickly.