Well the leak of a $300B proposal earlier in the week was quite inaccurate, to the tune of over 50% wrong. While we are not allowed to call it a stimulus because after all stimulus is a bad word, this “don’t call it a stimulus” is actually probably a bit bigger on an annual basis than the $862B plan launched in early 2009 that ran essentially over 2 years. Almost all of this $447B stimulus friendly help is for 2012.
The fiscal boost from the jobs package next year would be larger than in the first year of the 2009 economic stimulus, said Mark Zandi, chief economist at Moody’s Analytics Inc.
The economy on steroids continues.
And as expected how will it be paid for? By some vague notion of revenue enhancements and cuts over the NEXT DECADE. Which we know never happens – a decade is 5 political cycles in the U.S.
Obama stressed that he would pay for the entire jobs package with offsetting spending cuts and increases in tax revenue over the next decade. He said he would announce the offsets by Sept. 19.
Anyhow this is a starting point – although a much larger one than expected – so I’d assume by the time its said and done something along the lines of $200-$250B might get passed. Especially since its tax cut heavy, so the GOP can buy off on it. So a great negotiating ploy to start at nearly half a trillion.
I do continue to giggle that we take money out of the already empty social security trust fund.
One thing that totally awed me was Obama used what I thought would be the GOP’s line on the payroll tax cut. I literally said a year ago that the 2% payroll tax cut would be extended a year from now because (a) the economy would stink and (b) the GOP would yell that Obama is raising taxes in a time the economy can’t handle it. Instead Obama used that line last night!
“I know some of you have sworn oaths to never raise any taxes on anyone for as long as you live,” he said. “Now is not the time to carve out an exception and raise middle-class taxes, which is why you should pass this bill right away.”
If you want details, Bloomberg has a decent story on it.
- Tax cuts account for more than half the dollar value of the president’s latest plan to turn the economy around, and administration officials said they believe that will have the greatest appeal to Republicans in Congress.
- The centerpiece of the plan is the cuts in payroll taxes, which cover the first $106,800 in earnings and are evenly split between employers and employees. Obama would reduce the portion paid by workers next year to 3.1 percent from 6.2 percent. The rate had been cut 2 percentage points under the terms of a tax deal reached last year, and that reduction is set to expire Dec. 31.
- Businesses would get the same 3.1-point reduction on taxes they pay on the first $5 million of their payroll, a limit that skews the benefit toward smaller firms. The full 6.2 percent employer contribution would be waived on the first $50 million net increase in a company’s payroll.
- The proposal includes additional tax credits for hiring veterans and workers who have been unemployed more than six months.
- The package includes spending favored by Democratic constituencies. It would include a $105 billion infrastructure proposal for school modernization, transportation projects and rehabilitation of vacant properties. Most of the economic impact from the infrastructure spending would be next year.