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Obama jobs plan: big ideas, but a big hole to fill in hiring

Obama’s jobs plan is an ambitious attempt to spur a pace of hiring that’s far below normal. Small-business tax breaks, infrastructure spending, and energy efficiency are key areas.

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White House officials shied away from providing an overall cost estimate for the new proposals, but $200 billion might be an upper limit. That’s the amount by which the costs of the Troubled Asset Relief Program (TARP) are beating forecasts, according to the Treasury.

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In a briefing for reporters before the speech, a senior administration official said the fact that the TARP costs for bank rescue are less than expected provides fiscal “space to do … a set of jobs proposals and have a lower deficit” in the federal budget. The official said some other factors will add a bit more fiscal wiggle room as well.

Tapping TARP a good idea?

Republican lawmakers, however, question the idea of considering TARP "savings" as a source of funds.

Just because one program has come in with a smaller cost than expected doesn’t magically create money to use in another place, they argue. The TARP program added to the deficit, and the new jobs program will too, they say.

“[Obama is] doubling down on the big-government ‘stimulus’ approach that isn’t working,” House minority leader John Boehner of Ohio said in a statement Tuesday. “Never mind that the implications of having a $12 trillion national debt and red ink as far as the eye can see continue to pile up, the latest being the threat of a downgraded credit rating.”

On Tuesday the debt-rating firm Moody’s warned that the US and Britain could lose their AAA credit ratings, due to a worsening debt outlook.

Critics of White House policies also say that more needs to be done to fix credit markets, and that Obama has dampened hiring by making employers uncertain about the tax and regulatory climate in the years ahead. They also warned that it will be hard to design the new tax credit so that it is both effective at spurring hiring and can’t be gamed by employers.

Within his three-part plan, Obama called for a range of steps, including:

• Extending Recovery Act tax breaks for businesses to depreciate the cost of equipment.

• Increasing Small Business Administration loan guarantees, and continuing Treasury efforts to use the TARP to support small business lending.

• Expanding a Recovery Act program that provides incentives for businesses to invest in the production of renewable energy in the US.

The White House also said it is working with Congress on other expanded stimulus efforts: to extend the Recovery Act provision that helps jobless Americans pay for COBRA health insurance, to provide $250 payments to seniors and veterans, and to grant a new round of aid to state and local governments.

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See also:

Using TARP funds for job creation: creative or reckless?

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