Surprise, Surprise…The President’s Newest Stimulus Plan Includes Billions ofDollars in Tax Increases, Government Spending
September 14, 2011
After almost three years in office and afluctuating unemployment rate which now hovers at 9%, President Obama hasdecided to solely focus on job creation. For those with short memories, themonth after he was inaugurated with the help of a Democrat controlled Congress,the President passed a trillion dollar stimulus bill. This bill was alsosupposed to create jobs and “keep the unemployment rate below 8%” according toWhite House economists. Now comes a second pass, this time being branded as a “jobs”(not “stimulus”) bill at a price tag of $447 billion.
The question is how to pay for it. TheWhite House said Monday that President Obama wants to pay for his latest jobsbill by raising taxes on the wealthy and businesses. The chief provisionannounced by the Office of Management and Budget Director, Jack Lew, would beto limit itemized deductions for individuals who make more than $200,000 a yearand families that make more than $250,000. This is something the Obamaadministration has previously pushed to do through its budget proposals. Lewtold reporters at a White House press briefing that this would raise about $400billion in new revenue.
On Monday,the President sent his bill to Congress for consideration. The House has sincereferred it to the 11 committees which have jurisdiction over the bill’s numerousprovisions. Formally titled the "American Jobs Act of 2011," the billwas referred to the Committees on Education and the Workforce, Energy andCommerce, Financial Services, House Administration, Judiciary, Oversight andGovernment Reform, Rules, Science, Space, and Technology, Small Business, Transportationand Infrastructure and Ways and Means.
Here's exactlywhat the President’s bill would do according to a section-by-section analysisby POLITICO. Note many of the same policies such as spending on “shovel readyprojects” and raising taxes on those who own small businesses, are major tenantsof this proposed legislation:
Spending Tax Dollars:
- Expand the president's payroll tax cut so that employeeswould pay 3.1 percent in 2012, down from 4.2 percent now and 6.2 percent at theoriginal rate. It would also drop the portion paid by employers from 6.2percent to 3.1 percent on the first $5 million in wages.
- Provide a series of other tax breaks to business,including establishing a 100 percent bonus depreciation rate for 2012, doublingthe existing tax credit for businesses that employ veterans who have been outof work for more than 6 months and creating two new tax credits for those whohire previously unemployed veterans.
- Spend $55 billion on schools for construction and"teacher stabilization." Almost all of the $30 billion in teacherstabilization money would essentially be block-granted to the states. However,states would have to go through an application process to get their money -- agood way for the White House to pin conservative governors into either askingfor federal aid or denying extra money to their schools. States that don'tsubmit "approvable" applications could still get money, but theEducation Department would decide where to distribute it within the state.
- Spend $6 billion on grants from the Justice and HomelandSecurity departments to hire and rehire first responders.
- Spend $50 billion on various transportation projects, ofwhich $27 billion would be for highways and rail projects.
- Create an infrastructure bank, called the AmericanInfrastructure Financing Authority that would, according to the White House,"provide direct loans and loan guarantees to facilitate investment ineconomically-viable infrastructure projects of regional or nationalsignificance." The up-front cost would be $10 billion, with the bank giventhe authority to establish and collect fees to pay for its futureadministrative costs.
- Pump $15 billion into a new program that would putconstruction companies to work refurbishing abandoned homes.
- Facilitate the auction and licensing of some government-heldspectrum.
- Transfer "D block" spectrum from the auctionblock to public safety entities and create the Public Safety Broadband Corporation.
- Extend unemployment benefits into 2013.
- Create a "Bridge to Work" program through whichemployers could hire folks who would continue to receive unemployment benefitsas compensation.
- Spend $4 billion on aid to states for hiring programs.
- Give the Labor Department $5 billion to subsidizeemployment and training of low-income workers and summer jobs programs.
RaisingRevenue and Taxes:
- Limit itemized deductions to 28 percent for marriedcouples who earn $250,000 or more and single filers who earn $200,000 or more.In the past, the White House has estimated this proposal to raise revenue by$321 billion over 10 years, according to the Tax Policy Center.
- Eliminate tax advantages for corporate jets, breaks foroil and gas companies, and the carried-interest rule that allows hedge fundmanagers to pay the capital gains and dividends rate rather than the ordinaryincome tax rate on their earnings.
- Increases the target of the supercommittee'sdeficit-reduction plan to match any increase in spending after the plan is"scored" by the Congressional Budget Office.