Obama, Congress Give New Jobs Package Top Billing

Economic Forecasts

Obama, Congress Give New Jobs Package Top Billing

It’ll be Job No. 1 for Democrats once they complete work on health care.

Democratic leaders and the Obama White House plan a large early push to pass a jobs package after Congress reconvenes later this month. Sustained high unemployment and more home foreclosures in an election year will compel Democrats to show they are doing what they can.

President Obama will press for fast action in his State of the Union address and has already indicated he feels an urgency to move quickly. “The “jobs, jobs, jobs” mantra, in fact, will underscore much of the Democrats’ domestic efforts right through the November midterm elections in hopes of limiting Republican gains.

Democrats don’t want to call it a second stimulus, but that’s what it amounts to. The bill will be much smaller than last year’s $787-billion economic stimulus program, but much of its emphasis will be similar. Governors and local leaders are clamoring for relief, and many incumbent lawmakers want to show they can deliver something. Democrats will push for a $100-billion-plus package, even amid criticism from Republicans that yet more spending will further balloon the deficit, end up going to Democrat-favored spending programs and won’t create enough jobs to make much difference anyhow.

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Republican opposition will slow action but won’t be enough to stop it. Democrats will be largely united, and there will be pressure on some Republicans to back relief for their struggling states. House Democrats passed a version of a jobs package on Dec. 16 on a largely party line vote. The Senate will take up its own version in late January or February, with a push for final passage before the end of March.


The biggest component of the plan will be up to $50 billion in infrastructure spending to complement earlier public works spending for airport construction, light rail projects, highway and bridge work, water projects and the like. Included will be funding for local clean drinking water programs, grants especially for small town road projects and a couple billion in grants for rehabilitation of low-income rental housing and public housing. Several hundred million may also be included for Amtrak train and track repair and maintenance projects.

Another $30 billion or so can be expected for aid to state and local governments struggling with red ink and facing the prospect of significant public worker layoffs and cuts in already strained social services. Funding will be especially targeted to support law enforcement and public safety jobs. Some funding is also expected for supplemental nutrition assistance for low-income families.

Governors may need to come back to Washington for another budget infusion later in the year, they say, warning that state governments, which are required to operate on balanced budgets and have already made many spending cuts, will otherwise need to resort to tax hikes, which could dampen any economic recovery.

A jobs package also will include funding for special job incubator programs, allowing local employment agencies to work with businesses and community colleges to improve training and to identify and fill openings for skilled workers. About $1 billion may be included for direct grants for various local job training programs and college work-study programs.


Also, some energy efficiency tax credits may be included. Obama will press for the inclusion of generous so-called green tax credits and possibly some direct funding grants for home and building weatherization projects.

Almost certain to be included is a further extension of unemployment and COBRA health care benefits.

Not likely to be included are taxpayer rebate checks or temporary payroll tax holidays. Both will be deemed too expensive, and many leading economists express doubt about how stimulating such techniques ultimately are.

Tax credits for firms that hire new workers probably won’t make it in a final bill, either. Obama has favored this approach in the past but credits or rebates for new business hires are considered too hard to administer and too controversial and open to potential abuse. In place of them, Congress may opt to provide generous temporary tax breaks for business equipment expensing and depreciation.


While final details of the jobs package are weeks away from being settled, many Democrats want to pay for the legislation using tens of billions in leftover funds from the Troubled Asset Relief Program used to rescue teetering banks and financial institutions. Budget hawks in both parties are insisting unused and reimbursed TARP funds go only to reducing the deficit. Financing options for the legislation will be debated at length, but the funding issue won’t be enough to derail a jobs bill. There’s enough pressure to move something soon to foster job creation, even if it means figuring out the financing questions afterward.

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