(Alexandria, VA) –President Obama is pushing Congress to immediately pass the American Jobs Actformally introduced in Congress today. But the 362,000-member NationalTaxpayers Union (NTU) warns that despite some tax relief proposals andovertures to free trade and regulatory reform, the President’s plan is filledwith rehashed spending schemes that offer little to warrant optimism on the jobfront.
“Despitesome plans of near-term tax reductions for workers and businesses, thePresident offered far fewer clues of specific long-term relief from whatremains a burdensome tax system,” said NTU Executive Vice President Pete Sepp,“The vast spending proposals in the American Jobs Act, and the President’sveiled threats to hike taxes on selected industries like oil and gas, wouldlead to predictably ugly results for the U.S. economy.”
NTU’s assessment ofPresident Obama’s key proposals:
The Good (or at leastadequate)
- Cutting the payroll tax in half for the first $5 million in wages
- Temporarily eliminating employer payroll taxes on wages for new workersor raises for existing workers up to $50 million
- Extending 100 percent expensing into 2012 (allowing firms toimmediately deduct equipment purchases)
- Passing several pending trade agreements
Much of the tax relief proposed by the President is alreadyin place. While letting the measures expire would quite likely cost the economymore jobs, maintaining the status quo should not be expected to alter theunemployment situation a great deal.
Passage of free trade agreements would indeed benefit theeconomy, but taxpayers will be wary of Trade Adjustment Assistance programsbecoming part of the deal.
The Bad
- Transportation spending costing at least $50billion
- Extending Unemployment Insurance for anotheryear costing $49 billion
- School repair and modernization at a cost of $30billion
- Preventing teacher layoffs a price tag of $30billion
- Project Rebuild, which would cost $15 billion,would oddly fund the refurbishing of foreclosed homes and businesses
- Infrastructure Bank at a minimum cost of $10billion
There were more spending proposals as well, adding up to awhopping $202 billion. The Infrastructure Bank has the potential to be quite abit more expensive than its initial $10 billion price tag estimated by theWhite House. Rosa DeLauro (D-CT), who the President referred to as an“Infrastructure Bank Champion” has legislation for such an institutionestimated to cost $25 billion over five years, according to the NationalTaxpayers Union Foundation BillTally project.
Unemployment insurance, transportation “investments”, andspending on teachers, are all old hat, tried in the stimulus of 2009 or otherefforts over recent years. Combining these proposals into one package isunlikely to suddenly make them more effective.
The Rehashed
The ugly reality of the President’s long awaited speech wasthat it featured mostly rehashed ideas. Whether a provision is in the good orbad column, it is probably not a new idea, and it’s likely to have already beentried in one form or another over the past two years.
Additionally, the President has no control over the JointCommittee that he says he will call on to pay for everything in the bill in aneffort to avoid added debt. So further ballooning of the national debt mayresult.
The President also rehashed his call for tax hikes onpolitically convenient industries and individuals again. Such a move woulddefinitely cost American jobs, diverting the nation from the President’s statedgoal: job creation.
Taxpayers suffering under a weak (some say nonexistent)recovery and a Tax Code in dire need of systemic reform, along with the morethan 9 percent of Americans looking for work, are unlikely to see muchimprovement in an economy that has already failed to respond to past approachesand variations of the proposals the President made last week.
The 362,000-member NTU is a nonpartisan,nonprofit organization working for lower taxes, smaller government, andeconomic freedom at all levels. More information on NTU’s work, is available atwww.ntu.org.