President Obama yesterday sent Congress the American Jobs Act, a set of proposals that he says will provide both a short-term boost for the economy and a basis for bipartisan cooperation that could help restore public confidence in Washington.
The President outlined the $447 billion plan in a speech to Congress Thursday and is urging its approval in appearances around the country. It includes $253 billion in tax credits and reductions, notably a 50 percent cut in workers’ payroll taxes next year. The plan would also extend unemployment benefits, help local government retain employees, and fund infrastructure projects.
“The legislation includes specific offsets to close corporate tax loopholes and asks the wealthiest Americans to pay their fair share that more than cover the cost of the jobs measures,” Obama told Congress yesterday. The legislation would also raise the deficit reduction target for the congressional super committee charged with cutting deficits by $1.5 trillion over ten years.
It is commendable that the President identified specific offsets to go with the legislation rather than simply asking the committee to come up with them later. However, these offsets, which would raise taxes for upper-income earners, have been rejected by Congress in the past and face an uphill fight.
“It is not inconsistent to provide effective short-term support for the economic recovery while laying the groundwork for long-term deficit reduction,” Robert L. Bixby, executive director of The Concord Coalition, says in a recent blog post. But when some deficit spending may be necessary, he writes, it is crucial to ensure that the country gets the most “bang for the buck” in supporting a strong recovery.
At the same time, Bixby says, Washington should press forward with structural reforms: “A credible plan to stabilize the debt over the long term will be essential to making short-term measures more effective.”