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Obama lays out $447b jobs plan

Challenges Congress to pass bill to aid economy

By Donovan Slack
Globe Staff / September 9, 2011

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WASHINGTON - President Obama, in a prime-time address that was part policy explanation and part political challenge, proposed a sweeping plan last night to invest $447 billion in tax breaks, highway and rail spending, and unemployment benefits to get the nation’s economy back on track.

Speaking before a rare joint session of Congress, the president challenged both Republicans and Democrats to cast off their partisan postures and pass the measures or bear the blame for continued joblessness for some 14 million Americans.

“The question is whether, in the face of an ongoing national crisis, we can stop the political circus and actually do something to help the economy,’’ said Obama, punctuating each description of the plan’s parts with “Pass this jobs bill.’’

In a time when the debate in Washington is dominated by talk of cutting government spending, the president’s plan - called the American Jobs Act - is audacious in scope. The $447 billion price tag is more than half of his much-maligned $787 billion stimulus passed by a Democratic-majority Congress in 2009.

This time, in a recognition of the ascendant GOP in Congress, Obama loaded the plan with about $250 billion in tax cuts, in essence challenging Republicans to support him on policies many had previously exhorted.

“For everyone who speaks so passionately about making life easier for ‘job creators,’ this plan is for you,’’ he said.

The president repeatedly stated that the cost of the plan would be offset, but he provided few details on how he would accomplish that last night, other than asking the 12-member congressional supercommittee charged with reducing the growth of the federal debt by $1.5 trillion to increase its target by at least $447 billion.

Obama did vow to release a detailed long-range plan to trim deficits in the coming weeks, a plan that would include overhauling Medicare.

The decision to separate the introduction of the jobs plan from the deficit plan allowed Democrats to rally almost unanimously around the jobs bid, something they likely would not do if it included cuts to entitlement programs. In a bid to demonstrate backing from Democrats, labor unions, and other allies last night, the White House issued 39 statements of support in the two hours following the speech.

Still, the decision to put the onus on the supercommittee to identify cuts drew some harsh rebukes. Republican Representative Jeb Hensarling, who cochairs the committee, said, “the president is essentially tasking a committee designed to reduce the deficit to pay for yet another round of stimulus.’’

The centerpiece of the jobs plan would be an expansion of a temporary break on payroll taxes. Businesses would join workers in having the tax sliced in half, to 3.1 percent. Workers’ rates, which had been trimmed to 4.2 percent, would also be cut to 3.1 percent, providing $1,500 to the average family earning $50,000 a year, according to the White House.

Because the tax is paid only on income up to $106,800, the cut would primarily benefit low- and middle-income earners.

The president’s plan would also immediately invest some $80 billion in transportation and school construction projects and include an overhaul of the unemployment insurance program.

The speech comes as Obama’s popularity in the polls has reached its lowest level and his presidency has staggered under a sluggish recovery from the largest recession since the Great Depression, with the jobless rate stuck above 9 percent.

The prospects for the American Jobs Act are unclear. While there appear to be areas of agreement with GOP lawmakers, many aspects are sure to draw ire from House Republicans.

GOP leaders had circulated talking points by midday that derided key parts of the plan, including the temporary payroll tax cuts. Republicans said they want more permanent cuts and an overhaul of the tax code.

House Speaker John Boehner, who is scheduled to lay out his jobs plan next week, invited to last night’s speech a dozen chief executives whose businesses he said have been hampered by “excessive regulation.’’

Still, the Ohio Republican said in a statement after the speech that Americans are imploring Congress to work together, and that he intends to do just that.

Senator Scott Brown, a Massachusetts Republican, said he will keep an open mind on the plan.

“If it’s good for Massachusetts and it creates jobs for the country and handles the debt and deficit like he said he was, I look forward to working with him, like I always have,’’ said Brown, who was one of the first Republicans to announce his support of Obama’s payroll tax cuts.

During Obama’s speech, Brown often joined Democrats in applauding, drawing strained smiles from Republicans next to him. At times, he was the sole Republican on his feet.

Senator John F. Kerry, who proposed an infrastructure initiative this year that the president adopted, said each $1 billion investment in rail and highway projects produces a minimum of 18,000 jobs. He said the president threw down the gauntlet last night to the GOP.

“Frankly, it puts a test to the Congress to see whether they will work together in a bipartisan way or if they’re going to play politics,’’ said Kerry, a member of the debt supercommittee.

The infrastructure initiative includes the creation of a national bank that would leverage private investment in public construction with $10 billion in seed investment from the federal government.

The overhaul of the unemployment insurance program would include giving flexibility to states to use federal dollars to pay for job training and for partial benefits for the underemployed. For example, older workers who cannot find a job that pays more than their unemployment benefits would be able to take a lower paying job and receive benefits to make up the difference.

Obama vowed to take his plan to the American people in a barnstorming tour.

Some members of the Massachusetts delegation said they had hoped for an even bolder plan. Some aspects of the proposal, such as a tax break for companies that buy new equipment, may do little to create jobs, they said. They are already in effect, and extending them may only ensure the economy does not get worse.

“I believe that extending existing programs won’t be enough,’’ Representative Niki Tsongas of Lowell said.

Representative Barney Frank of Newton said that overall he was pleased by the plan but skeptical about the tax credit for businesses that hire the longtime unemployed.

“I don’t think people will hire because of that,’’ he said.

Representative Michael Capuano of Somerville also had reservations on whether tax cuts for corporations will create jobs. “That doesn’t stimulate the economy,’’ he said.

But Capuano, noting that the election season already has started, praised the focus on infrastructure spending.

Theo Emery of the Globe staff contributed to this report. Donovan Slack can be reached at Follow her on Twitter @donovanslack.