Last night, President Obama finally drowned out the summer’s budget deficit political circus with an impassioned speech and serious proposal to deal with our real American crisis – the jobs deficit. Between the jobs lost in the recession, and the growth of the American population, the National Employment Law Project calculates that we have a deficit of more than 11 million jobs. The President will send Congress a bill called the American Jobs Act, which would pump a half billion dollars into the economy in 2012 through jobs-creating programs, infrastructure investments, and tax credits. The priority of this funding must be strengthening the American middle class, including creating on-ramps for those who have worked hard, but never been able to get there yet. The President’s proposal will enable us to create jobs now by making critical investments in our nation’s future prosperity. You should contact your representative immediately to ensure that Congress passes it right away.
The proposals in American Jobs Act are tried and true strategies, which have had the support of members of both political parties. The bill looks to our nation’s immediate needs but does so with a long-term goal in mind – an American “economy that creates good, middle-class jobs that pay well and offer security.”
President Obama promised that the cost of the bill will be paid through a deficit reduction plan he will introduce in ten days. The outline of the plan represents a balanced approach of increasing revenue and making additional spending cuts on a responsible timeline. These cuts must not harm the most vulnerable among us. It also will include tax reform so that the wealthiest Americans and the most profitable corporations pay their fair share. The President will also propose changes to Medicare and Medicaid. We need to see the specifics of these proposals. They must make smart changes that assure that America’s seniors and low-income individuals and families have access to quality health care for decades to come.
About half the cost of the bill is a relatively modest proposal to extend and expand the payroll tax cut. Currently workers pay 4.2% of their income to fund Social Security, but that will rise back to 6.2% at the end of the year if Congress takes no action. The proposed cut would halve the payroll tax paid by employees through 2012 to 3.1%, saving a worker who makes $50,000 per year about $1,500. The bill also would cut the payroll tax paid by small businesses for the first time. Early estimates suggest these will cause employers to add 50,000 jobs per month. Additionally, all business would get tax credits for hiring workers, especially the long-term unemployed and veterans, for giving raises, and for making capital investments. Payroll taxes go to funding Social Security, and the President indicated that the amount saved by individuals and businesses would have to be paid in through other sources of government revenue. The challenge is that we still have to continue to support Social Security and ensure its long-term viability as one of the most important anti-poverty programs in America.
The American Jobs Act also funds major infrastructure investments, including building and repairing roads, bridges, railroads and airports, and repairing and modernizing 35,000 school buildings, through a public-private fund that picks projects with two criteria: “how badly a construction project is needed and how much good it would do for the economy.” The construction industry is ripe for adding workers, including women and minorities, who have historically been underrepresented. Additionally, it provides funding for critical workers that states have cut – teachers and first responders.
The bill has many other important provisions. There are several key provisions to help the long-term unemployed. First, the bill would extend unemployment insurance another year. Without this extension, millions of Americans who have been out of work for 6 months or more would lose their benefits starting in January, and would stop spending those benefits in their communities, further damaging the economy. Second, it would prohibit employers from discriminating against someone just because they are unemployed. Third, it creates a $4,000 tax credit for businesses that hire someone who’s been looking for work for 6 months or more. However, the proposal to create a work program along the lines of Georgia Works is concerning because recipients of unemployment insurance are placed at work sites where they are supposed to be trained, but may instead just be free labor to a corporation.
The American Jobs Act seeks to create economic opportunity for all. Right now we have a crisis where young people can’t find summer work, or first jobs. This summer, the smallest proportion of youth were working compared to any summer since the Bureau of Labor Statistics started recording this data in 1948. This long-term, early unemployment is doing serious damage to their lifetime economic prospects, and we’ve seen the rioting that youth hopelessness, poverty, and unemployment have caused in England this summer. President Obama’s proposal would create more opportunities for young people and low-income and disadvantaged Americans who want to work by connecting them with training and jobs through the creation of the Pathways Back to Work Fund. We need more details on the size and scope of this program.
The American people expect the politicians in Washington to make real choices to get our economy growing again. The American Jobs Act will create jobs now through smart investments in our future prosperity, and will be funded by fair increases in revenue from big business and the wealthiest Americans. That’s true to our American values of shared sacrifice and equal opportunity.
The circus is over. Congress, go back to work. America needs you to pass the American Jobs Act, so we can get back to work too.