Obama jobs plan is updated, familiar
WASHINGTON – President Barack Obama’s emphasis on job creation recycles some old ideas and introduces some new ones, many of which face long odds in a divided Congress where Republicans have little appetite for more spending, raised taxes or new burdens on business.
Using his State of the Union address as a policy springboard, Obama launched or relaunched initiatives that aim to increase manufacturing, help communities hard hit by the recession, lower corporate taxes while eliminating corporate tax subsidies, and raise wages for low-income workers.
The ambitious plans bear a liberal imprint, but the increased spending would not add to the deficit if Congress were to also approve Obama’s long-term budget blueprint to stabilize the debt with higher taxes and reductions in some government programs. Obama has proposed $1.5 trillion in deficit reduction over 10 years, with about $600 billion coming from a cap on deductions claimed on individual tax returns and $900 billion from reductions in spending in various government programs including Medicare and Social Security.
Republicans have been steadfast in their opposition to higher taxes.
White House aides say Obama will detail more reductions in his budget next month that will also help pay for his jobs proposals.
Here’s a look at the key job and wage proposals in his plan. Most of the dollar figures cover spending over 10 years, but many of the proposals would spend most of the money in the early years:
• $50 billion for infrastructure. Including a new “Fix it First” program that would identify $40 billion in projects needing the most urgent upgrades. The heavy construction industry and the Chamber of Commerce support infrastructure spending. Obama has proposed this in past budget deals but has not won Republican support. Several economists praised this proposal, while also pointing out that the nation needs more than $50 billion in repairs. Obama has called for this in previous budgets.
• $15 billion to put people to work repairing or tearing down homes in neighborhoods suffering from neglect. Obama first made this proposal in 2011.
• A $6 billion tax credit to help communities that are losing a major plant. Communities could apply for the tax credit to help attract new investment. In addition, Obama would create a $113 million fund that would be divided competitively among five or six communities to help them assemble a strategy for attracting jobs.
• An Energy Security Trust financed by revenue from oil and gas development on federal lands and offshore. The trust would be used to help wean cars and trucks from gasoline by paying for research into vehicles powered by electricity, biofuels or natural gas. The White House has not put a dollar figure on this, but the main advocacy group behind the plan has proposed a $3 billion annual investment.
• $1 billion for manufacturing innovation institutes. Obama is proposing that communities and academic institutions would compete for one of 15 institutes across the country that would work with the departments of defense and energy and with business interests to develop manufacturing technologies. The administration started one pilot program in Youngstown, Ohio, last year that is focused on three-dimensional printing. The institute has attracted assistance from Honeywell, Boeing and Carnegie Mellon University.
• Corporate taxes: Obama wants to reduce corporate taxes to 28 percent, but make them even lower, 25 percent, for manufacturers. He would achieve that by closing a series of corporate tax breaks and loopholes and by putting in place a minimum tax on offshore earning by American companies. Corporations have been asking for a system that would only tax foreign profits in the countries where the profits were earned. Obama also wants to extend and increase a tax credit for research and experimentation by 20 percent. White House officials say an overhaul of corporate taxes would not be designed to generate tax revenue and would be, in budget language, “revenue neutral.” But officials nevertheless say that some corporate tax breaks, such as subsidies for oil and gas companies, could be closed and the resulting revenue used to avoid automatic spending cuts scheduled to kick in March 1.
• Increase the minimum wage from $7.25 to $9 an hour by the end of 2015. Obama also would index future increases to inflation. This is new. The proposal is less than the $9.50 hourly wage he campaigned on in 2008. But White House aides say that refundable tax credits that Obama secured in 2009 are worth 75 cents an hour for a person who works full-time and has two children. They count that benefit in addition to the new proposed wage. Adjusted for inflation, the $9 minimum wage would be at the highest level since 1981, the White House says.
• Help more Americans refinance their mortgages at lower interest rates. With mortgage rates at historically low levels of about 3.5 percent, economists have urged the government to help people to take advantage by refinancing or qualifying for a new mortgage. Obama has previously taken steps to help those with mortgage loans insured by government-sponsored mortgage giants Fannie Mae and Freddie Mac. His newest proposal would apply to those without Fannie or Freddie-backed mortgages. Mark Zandi, chief economist at Moody’s Analytics, said the additional steps would help, but are “not a game changer for the housing market or economy.”
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