Schools and teachers stand to benefit from an ambitious, $450 billion plan to boost jobs and put cash in the pockets of dispirited Americans, as President Obama responded to an economy in peril by unveiling his larger-than-expected jobs plan before a joint session of Congress Sept. 8.
Obama said his new plan would put thousands of teachers in every state back to work, and repair and modernize tens of thousands of schools.
The president said it’s not fair to American students that, while places such as South Korea are adding teachers, in the U.S. they’re being laid off. “This has to stop,” he said.
Obama’s plan would spend $25 billion on school construction to modernize at least 35,000 public schools, including spending on high-tech science labs, high-speed internet infrastructure, and emergency repairs. He would spend an additional $35 billion to prevent layoffs of up to 280,000 teachers and support the hiring of thousands more.
“There are schools throughout this country that desperately need renovating,” Obama said. “How can we expect our kids to do their best in places that are literally falling apart? This is America. Every child deserves a great school—and we can give it to them, if we act now.”
The renovations would help put unemployed construction workers back to work, Obama said. According to his plan, these and other infrastructure projects would be eligible for federal loans distributed by an independent fund based on two criteria: how badly a construction project is needed, and how much good it would do for the economy.
“This idea came from a bill written by a Texas Republican and a Massachusetts Democrat,” Obama noted in his speech. “The idea for a big boost in construction is supported by America’s largest business organization and America’s largest labor organization. It’s the kind of proposal that’s been supported in the past by Democrats and Republicans alike. You should pass it right away.”
Construction and education jobs were a small fraction of the president’s plan. Most of it focused on tax cuts for individuals and small businesses.
The boldest element of Obama’s plan would slash the Social Security payroll tax for tens of millions of workers and for employers, too. For individuals, that tax has been shaved from 6.2 percent to 4.2 percent for this year, but it will go back up again without action by Congress. Obama wants to deepen the cut to 3.1 percent for workers.
The president also would apply the Social Security payroll tax cut to employers, halving their taxes to 3.1 percent on their first $5 million in payroll. Businesses that hire new workers or give raises to those they already employ would get an even bigger benefit: On payroll increases up to $50 million, they would pay no Social Security tax.
Obama also proposed a $4,000 tax credit for businesses that hire people who’ve been out of work for six months or longer, as well as extra tax credits to companies that hire veterans. And he repeated his calls for a one-year extension of unemployment insurance to prevent up to 6 million people from losing their benefits.
The president hopes to spur hiring in a nation where 14 million people remain out of work and the jobless rate is stuck at 9.1 percent.
Under soaring expectations for results, Obama sought to put himself on the side of voters who he said could not care less about the political consequences of his speech.
“The question is whether, in the face of an ongoing national crisis, we can stop the political circus and actually do something to help the economy,” Obama said.
His aim was to put pressure on Congress to act—and to share the responsibility for fixing the economic mess that is sure to figure in next year’s elections. For every time he told lawmakers to “pass this bill,” which he said repeatedly, Democrats cheered while Republicans sat in silence.
Tax cuts amounted to the broadest part of Obama’s proposal—in essence, a challenge by the Democratic president to congressional Republicans to get behind him on one of their own cherished economic principles or risk the wrath of voters for inaction. The tax cuts alone would amount to roughly $250 billion.
The president said deepening the payroll tax cut would save an average family making $50,000 a year about $1,500, compared to what they would get if Congress did not extend the current tax cut.
“I know some of you have sworn oaths to never raise any taxes on anyone for as long as you live,” Obama said, a reference to the conservative tea party influence on many House Republicans. “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.”
Obama did not venture an estimate as to how many jobs his plan would create. He promised repeatedly that his plan would be paid for, through additional cuts to the federal budget, adjustments to health care programs like Medicare and Medicaid, and changes to the U.S. tax code. He said more details would follow soon.
But short-term job creation wasn’t the only focus of his speech. He repeated a theme he has said many times before—that education is a key to long-term economic prosperity.
“The American Jobs Act answers the urgent need to create jobs right away. But we can’t stop there,” Obama said. “As I’ve argued since I ran for this office, we have to look beyond the immediate crisis and start building an economy that lasts into the future—an economy that creates good, middle-class jobs that pay well and offer security. … We have to be able to out-build and out-educate and out-innovate every other country on Earth.”
To provide long-term economic stability, the president said he again would propose raising taxes on the very wealthiest Americans who can afford it, as well as closing loopholes in the corporate tax code that “give an advantage to companies that can afford the best-connected lobbyists.”
“We have to decide what our priorities are,” Obama said. “Should we keep tax breaks for millionaires and billionaires? Or should we put teachers back to work so our kids can graduate ready for college and good jobs? Right now, we can’t afford to do both.”
He added: “This isn’t class warfare. This is simple math.”
Obama also slammed recent efforts by Republican-controlled state legislatures in Wisconsin, Ohio, and elsewhere to roll back collective bargaining rights for teachers and other public employees.
“I reject the idea that we have to strip away collective bargaining rights to compete in a global economy,” he said. “We shouldn’t be in a race to the bottom, where we try to offer the cheapest labor and the worst pollution standards. America should be in a race to the top. And I believe we can win that race.”