Go Big... Or Go Home?
President Obama threw down the gauntlet to Congress today, releasing his plan for the American Jobs Act, a $447 billion legislative proposal to jumpstart the economy that creates a number incentives for employers to start—and keep—hiring. The plan includes a payroll tax holiday for small business that hire new employees as well as for those who raise salaries. Other incentives include cutting payroll taxes on the first $5 million in payroll and extending “100% expensing” that allows firms to take an immediate deduction on investments in new plants and equipment.
Another interesting idea put forward in the AJA is the “Bridge to Work” program—modeled off a similar program in Georgia that offers unemployment benefits to those who take unpaid positions with companies designed to give them an opportunity to re-enter the workforce and build new skills. The program would provide a boost in productivity to companies that had been forced to down-size, while helping the under- and unemployed to acquire critical skills for newer industries.
So where does the money come from?
The answer, not surprisingly, is from those who have a lot of it (or at least that is the idea). Obama proposed $467 billion worth of savings to “pay” for the package. The lion’s share—approximately $400 billion according to OMB director Jack Lew—would come from limiting itemized deductions for individuals making $200,000 or more ($250,000 for families). The savings measures must be approved by a congressional super committee of six Republicans and six Democrats who already were charged with finding ideas to trim at least $1.2 trillion from federal budgets over 10 years. If the Joint Select Committee on Deficit Reduction can’t get its recommendations approved by Congress, automatic cuts would be made.