The Specifics of Obama's American Jobs Act

Yesterday evening, President Obama addressed a Joint Session of Congress to propose his newest economic recovery measure -- The American Jobs Act. The President's bill would have a $447 billion ten-year cost, which the President says would be fully paid for in the proposal he will give to the Super Committee a week from Monday recommending the Committee exceed its $1.5 trillion mandate.

The AJA, designed to stimulate economic activity and spur job creation, includes a mix of tax cuts--including various payroll tax holidays and hiring incentives--and spending increases, such as new infrastructure spending and an extension of unemployment insurance. The proposal also includes job-retraining proposals through reform to unemployment insurance.

 

Proposal 10-Year Cost (Billion)
Cut Employer Payroll Taxes from 6.2% to 3.1% and Create Bonus Payroll Tax Cut for New Jobs/Increased Wages $65
Extend 100% Expensing for 2012 $5
Teacher Rehiring and First Responders $35
Modernize Schools $30
Infrastructure Spending $50
Create an Infrastructure Bank $10
Rehabilitate and Repurpose Vacant Property $15
National Wireless Initiative (Paid For Through Spectrum Auction) $0
Veteran's Hiring Initiative N/A
Extend and Reform Unemployment Insurance $49
Tax Credit for Hiring Long-Term Unemployed $8
Create Fund for Low-Income Youth and Adults For Training and Year Round/Summer Jobs for Youth  $5
Cut Employee Side of Payroll Tax from 6.2% to 3.1% for 2012 $175
Total $447

 

It should be noted that the yearly spend out rate for the AJA might be similar, if not higher, than any one year that the 2009 ARRA ever had. According to CBO's analysis in January (Box 1-2), the maximum that the ARRA ever spent in a single year was $395 billion. We have yet to see if the plan is politically viable, and we are still waiting to see Obama's deficit reduction plan which would pay for it (we will release a paper later today with some ideas on why and how the President's jobs bill could be paid for).

As we suggested in a recent paper, one of the benefits if the Super Committee were to go big on deficit reduction and exceed its mandate would be fiscal space for near and long-term growth policies.

I think we need to work on

I think we need to work on getting manufacturing back here in the United States. There are some good things in the jobs act. I knew the Republicans would be against it as there is nothing to do with big business in it and deals with the middle and lower class. Maybe cutting the payroll tax with give smaller business' the initiative to hire long term employees, plus the tax credit will help with this too. Cutting employee payroll taxes will put more money in our pockets to spend or pay off some of our debt. Modernize schools will give work to some and help with the kids in a better learning expierence. The other things I'm not too sure of.....

Thanks for the great post

Thanks for the great post here. I have never thought to look at this act but it looks like it is really interesting one. Of couse I don't understand some thing despite the fact that I took the iq test some time ago and it showed some great results... Of course I am only kidding here. 50 mil looks a little bit too much for Infrastructure Spending to my mind. 30 mil for school modernizing is not enough for sure. Of course it's only my own opinion. Overall it looks quite good.

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