Do Something! Obama's Five Main Proposals for Fixing the Jobs Crisis
If the ideas presented by Obama become the centerpiece of the political debate, policymakers will be talking about the right problem. Finally.
If government can do something to create more jobs, why hasn't it?
The ideological divide shouldn't be the issue, as President Obama implied in his brief, forceful speech to Congress and the country tonight. His proposed American Jobs Act packages together every good idea supported by both conservative and liberal thinkers and politicians: $450 billion of hiring incentives, tax cuts for workers and employers, construction projects, new teachers, and home refinancing designed to have an immediate impact on our economic problems.
“These are real choices that we have to make,” Obama said. “And I’m pretty sure I know what most Americans would choose.” But most Americans are not politicians. The dynamic of obstruction established by Republicans in Congress isn’t likely to change anytime soon, despite Obama's 18 separate pleas that lawmakers pass his jobs bill.
There is one thing to celebrate, though: This is the first time in 2011 that the government has come together to address our most pressing problem—a lack of economic growth and jobs—rather than contrived crises around long-term challenges like the budget deficit or reforming the social safety net.
If the ideas presented by Obama tonight become the centerpiece of the political debate in the next six months, replacing the endless and counter-productive battle over deficit cuts, the country’s leaders will be talking about the right set of issues.
We saw the president, for the first time in awhile, deliver a serious package of proposals to Congress targeting the most relevant issue of the day. Here are the main ideas:
1. Beef up infrastructure. A long-time winner among policy wonks, the idea of founding a National Infrastructure Bank was most recently proposed by senators Kay Bailey Hutchison (R-Tex.) and John Kerry (D-Mass.). It would act like a bank, making loans for projects like roads, bridges, railways and airport renovations, using public money to leverage private funds and choosing projects based on merit, not political connections. This is especially important because the construction industry has been hit hard by the recession, and public works projects could put a lot of unemployed people back to work.
2. Enhance unemployment aid. Extending unemployment insurance is critical to keeping the economy moving forward; if unemployed workers lose the ability to purchase necessities before they get a job—keep in mind there are still far more unemployed workers than jobs in the country—it will prompt a vicious cycle as less spending leads to more lay-offs. Better than traditional unemployment insurance, Obama proposes to support work-sharing (which allows employers to spread less work among existing employees rather than firing them), job training programs, and state-level policies to re-employ older workers and make it easier for the jobless to start new businesses.
3. Invest in schools. The biggest job losses since the economy began growing again have been in the public sector, with some 600,000 government employees losing their jobs. The president proposes aid to schools, with the goal of keeping 280,000 teachers from being laid off and modernizing at least 35,000 public schools around the country—another opportunity to put construction workers back on the job.
4. Provide aid for businesses. To incentivize hiring, Obama is asking Congress to continue a 50 percent reduction, passed last year, in the taxes that businesses pay for their workers’ Social Security and Medicare. He is also proposing a complete payroll tax holiday for new workers or workers who get raises, a $4,000 tax credit for hiring long-term unemployed workers (who face the most challenges securing new employment), and a $5,600 tax credit for companies that hire veterans. If passed, it would be nearly impossible for businesses to bring on new workers and not gain some tax benefits.
5. Cut you a break. Building on last year’s reduction in the Social Security and Medicare taxes that workers pay, Obama would cut those taxes in half next year, providing an additional $1,500 to a family making $50,000 a year. If you own a home, you’ll be able to refinance your mortgage loan to today’s low interest rates, saving you money on your monthly payment to pay down other debts or spend, both of which will make recovery more likely.
None of these ideas is a silver bullet, as Obama acknowledged. But each one would do more to create the kind of economic climate that puts people to work, which is what the country—and the president's electoral prospects—desperately require.
Photo courtesy the White House\n