THE SPEECH – AT 8:54 P.M. ET: The president delivered his jobs speech tonight. It contained pretty much what had been expected. From Bloomberg:
President Barack Obama called on Congress to pass a jobs plan that would inject $447 billion into the economy through infrastructure spending, subsidies to local governments to stem teacher layoffs and cutting in half the payroll taxes paid by workers and small-business owners.
The package is heavily geared toward tax cuts, which account for more than half the dollar value of the stimulus, and administration officials said they believe that will have the greatest appeal to Republican members of Congress.
“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,” Obama told a joint session of Congress tonight.
A $105 billion infrastructure proposal includes money for school modernization, transportation projects and rehabilitation of vacant properties. Most of the economic impact from the infrastructure spending would be next year, though some of it would come in 2013, an administration official said.
“Ultimately, our recovery will be driven not by Washington, but by our businesses and workers,” the president said. “But we can help. We can make a difference.”
The administration estimated that $35 billion it’s seeking in direct aid to state and local governments to stem layoffs of educators and emergency personnel would save the jobs of 280,000 teachers, according to a White House fact sheet.
The centerpiece of the plan is cuts in payroll taxes, which cover the first $106,800 in earnings and are evenly split between employers and employees. Obama would reduce the portion paid by workers next year to 3.1 percent from 4.2 percent now. The rate was cut 2 percentage points under the terms of a tax deal reached last year. That cut is set to expire Dec. 31, which would push it back to 6.2 percent.
The White House also would use temporary payroll tax cuts next year to offer incentives for new hiring and assist small businesses.
Businesses would get the same 3.1-point reduction on taxes they pay on the first $5 million of their payroll, a limit that skews the benefit toward smaller firms. The full 6.2 percent employer contribution would be waived on the first $50 million net increase in a company’s payroll.
COMMENT: The reaction to the speech thus far has been muted. Democrats expressed mild enthusiasm, Republicans mild disapproval. There will be more reaction, including opinions of economists, tomorrow. The GOP plan apparently is to take individual parts of the president's program that they can accept, and add ideas of their own. Mr. Obama presented his program as a complete package. However, no one seriously believes it will go forward that way.
The administration will have other proposals in coming weeks. It is difficult to see, though, how the plan the president announced tonight can make much of a difference. Our problems are very deep, have developed over decades, and will require a rebirth in many sectors of the economy.
September 8, 2011