Reports: Obama Plans $300 Billion Jobs Package Centered on Tax Cuts, Not Enough to Get the Job Done
President Barack Obama plans to propose sparking job growth by injecting more than $300 billion into the economy next year, mostly through tax cuts, infrastructure spending and direct aid to state and local governments.
Obama will call on Congress to offset the cost of the short-term jobs measures by raising tax revenue in later years. This would be part of a long-term deficit reduction package, including spending and entitlement cuts as well as revenue increases, that he will present next week to the congressional panel charged with finding ways to reduce the nation’s debt.
Almost half the stimulus would come from tax cuts, which include an extension of a two-percentage-point reduction in the payroll tax paid by workers due to expire Dec. 31 and a new decrease in the portion of the tax paid by employers.
According to people familiar with the White House deliberations, two of the biggest measures in the president's proposals for 2012 are expected to be a one-year extension of a payroll tax cut for workers and an extension of expiring jobless benefits. Together those two would total about $170 billion.
The people spoke on the condition of anonymity because the plan was still being finalized and some proposals could still be subject to change.
The White House is also considering a tax credit for businesses that hire the unemployed. That could cost about $30 billion. Obama has also called for public works projects, such as school construction. Advocates of that plan have called for spending of $50 billion, but the White House proposal is expected to be smaller.
Obama also is expected to continue for one year a tax break for businesses that allows them to deduct the full value of new equipment. The president and Congress negotiated that provision into law for 2011 last December.
The $300 billion price tag may sound like a lot, but this is a fairly modest proposal.
Between extending the tax break on deducting the full value of new equipment (which had a $21 billion price tag) and the payroll tax cut and unemployment benefit extension provisions, at least two-thirds of the package is focused on continuing current policy. That leaves just $100 billion in actual new stimulus and it would be split between more tax cuts, infrastructure spending, and aid to states.
Especially in light of the inadequacy of the original stimulus, $100 billion in new spending and tax cuts won't be enough to get the job done, even if it were to pass.