Last night President Obama gave a speech to a joint session of Congress where he outlined his new jobs proposal, the American Jobs Act. The plan would involved roughly 450 billion dollars worth of tax cuts and stimulus spending. The tax cuts include a 4000 dollar credit for hiring workers unemployed for over six months, an extension of the payroll tax cut, and tax credits for hiring unemployed veterans. The spending portion involves money for infrastructure projects, the creation of an infrastructure bank that would allow for private financing of projects, and around 25 million dollars for refurbishing schools. The bill also provides direct assistance to the states to prevent them from laying off teachers, firefighters, and police officers.
Reaction to the AJA has been mixed, with the left praising it for its boldness and size and the right dismissing it as a “Stimulus II” that they say won’t work.
In a today’s editorial the Wall Street Journal criticized the plan by saying “had Mr. Obama proposed a permanent cut in tax rates, or a major tax reform, or a moratorium on all new regulations for three years, he’d have our support. But you have to really, really believe in hope and change to think that another $300-$400 billion in new deficit spending and temporary tax cuts will do any better than the $4 trillion in debt that the Obama years have already piled up.” The WSJ argued that instead of short term stimulus President Obama should focus on long term tax and entitlement reform that would boost confidence in the business sector.
Economist Paul Krugman was impressed by the AJA and noted that it was “bolder and better” than he expected. But he lamented its prospects for being passed by Congress, saying that “leading Republicans are basically against anything that might help the unemployed.” Krugman also spoke out against the actions (or lack therof) of the Federal Reserve, writing that their job was to keep both the unemployment rate and inflation low yet they seem only to focus on the latter.
So what do you think of President Obama’s plan? Is the plan big enough, or too big or too small? Is more stimulus the way the fix the economy or is the WSJ right in saying that long term reform would work better?
Do you think it will pass Congress? Will the Republicans at least vote for the tax cuts? How will the Democrats react?
Posted by Max Viscio
James Pethokoukis (Reuters)- http://blogs.reuters.com/james-pethokoukis/2011/09/09/obamas-447-billion-reelection-plan/