President Obama Pitches $447 Billion American Jobs Act

In an address to a joint session of Congress, President Barack Obama made an impassioned pitch for a bill designed to boost the languishing jobs market and put money in the pockets of Americans.

The total expenditures proposed in the bill comes to $447 billion, which was much larger than the $300 billion that had been expected by political analysts. If passed the bill would allocate the funds largely as follows:

• $240 billion to cut employee/er payroll taxes
  
• $62 billion to extend unemployment benefits for another year
  
• $50 billion in immediate infrastructure investment (roads, railroad lines, and bridges)
  
• $35 billion for state and local governments to prevent layoffs to teachers and police
  
• $30 billion to modernize schools
  
• $10 billion to create a national infrastructure bank which would “leverage” private and public capital to invest in infrastructure
  
• $5 billion in tax cuts for companies to expense plant and equipment

The President said the plan "…will provide a tax break for companies who hire new workers and it will cut payroll taxes in half for every working American and every small business."

The bulk of the proposal would go toward providing tax relief to both employers and employees. The bill would cut employee payroll tax withholding from the current 4.2% level to 3.1% (employees have already seen their withholding cut from 6.2% to 4.2%). And then employers would see their share of tax withholding cut in half from 6.2% to 3.1%.

Obama said that the plan “will provide a jolt to an economy that has stalled and give companies confidence that if they invest and hire there will be customers for their products and services.”

In an effort to put the political wrangling that dominated the debt/budget deficit debate in the past, Obama challenged members of Congress by saying repeatedly, “You should pass this jobs plan right away.”

Further highlighting the political divisiveness that nearly created a default in Washington, Obama told lawmakers, “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.”

The President addressed the cost issue in an upfront manner. “Everything in here is the kind of proposal that’s been supported by both Democrats and Republicans, including many who sit here tonight. And everything in this bill will be paid for,” Obama said.

How does the President plan on paying for the proposal? Reuters reports that the President’s plan is to cut $1 trillion in government spending by implementing the cuts he agreed to with Congressional leaders over the summer and an additional $1.5 trillion the Super Committee has been tasked with coming up with by Thanksgiving.

What about the plan to help the housing market? While the plan was not made public, the President said that he is working on it.

"And to help responsible homeowners, we're going to work with Federal housing agencies to help more people refinance their mortgages at interest rates that are now near 4% — a step that can put more than $2,000 a year in a family's pocket, and give a lift to an economy still burdened by the drop in housing prices," Obama said.

The President told Congress to pass his “American Jobs Act” by the end of the calendar year 2011. However, given that it is political campaign season, the question is if any part of this bill will ever be passed.

Editor's Note: Tell us what you think about the plan in the comments section below.

 

Our Newest Service: The FashTrading Service Is Now Live! This options trading service is unique in its approach: low capital at risk, frequent market commentary based on the futures markets and real-time options trading, not to mention the options insights you can't help but pick up!

 

 

Remember, you are in control your email alerts! You can receive alerts for more than 25 free research report alerts including: The “10.0” Report, The Insiders Report, ETF Leaders Report, and The Focus List.