Obama jobs plan vs. GOP's: Which ideas will yield most jobs soonest?
Obama is unrelenting about touting various parts of his jobs bill. Wednesday's theme: construction jobs. But Republicans have their own job-creation ideas. If Congress eventually takes bits from both sides, where's the biggest bang for the buck?
Jobs, jobs, jobs. That's what opinion polls say Americans want most – and what they most want their representatives in Washington to address. Yet in the seven weeks since President Obama put forward his American Jobs Act – which some independent analysts say would create more than 1 million jobs next year – Congress has not approved one piece of it.Skip to next paragraph
Nor have lawmakers been able to advance any part of the Republican Jobs Through Growth Act counterproposal.
Expectations now are that Congress will pick and choose pieces of both plans that can win bipartisan appeal. Mr. Obama notes that many ideas in his plan have had such support in the past. But Congress has shown little appetite for compromise.
Mr. Obama, however, keeps pitching his job-creation ideas – though he's talking now as much to American voters, as he looks ahead to a reelection bid, as to Congress. He stood Wednesday in front of Washington, D.C.'s Key Bridge to tout the transportation piece of his jobs bill, saying it would make an immediate investment of $50 billion in national transportation infrastructure and a $10 billion investment for a bipartisan National Infrastructure Bank.
“Construction workers have been among the Americans hit hardest over the past few years. And that makes no sense when there's so much of America that needs rebuilding,” Obama said. His plan would put hundreds of thousands of construction workers back to work rebuilding roads, bridges, airports, and transit systems, he said.
Nonpartisan economists, however, lack a clear consensus on whether so-called fiscal stimulus programs like Obama's can make a meaningful impact.
So, if Congress were actually to do something to try to help the 14 million Americans who are out of work – a number that goes higher if you count people too discouraged to seek a job – what parts of the various jobs bills should it undertake first?
Here's an analysis of the job-creation potential of Obama's plan, according to the generally pro-stimulus Moody's Analytics, and of a counterproposal from Republicans.
Temporary tax cuts = total job gains of 1.05 million
Obama would extend payroll-tax cuts for workers for another year and enlarge the scale of the cuts. Giving con-sumers more money to spend – an estimated $1,500 for a household earning $50,000, the White House says – would help spur private-sector job creation. The cost to the government in lost revenue next year, according to Moody's: $175 billion, with job gains as high as 750,000.
Obama would also cut for 2012 the payroll tax that employers pay, including a year-long total payroll-tax holiday for firms that expand their payrolls by hiring or boosting wages. The president also proposes a one-year extension of "100 percent expensing," an incentive for businesses to invest in new equipment now to get a full tax deduction upfront. Cost next year: $70 billion, with job gains as high as 300,000.
Proponents say the business tax cuts offer a new and direct incentive for firms to invest and hire. On the tax cut for employees, former White House economist Jared Bernstein says Congress should extend the current cut for at least another year. The alternative is to see US workers get a tax hike. "That would actively harm the economy," Mr. Bernstein says.
That argument carries enough weight that many policy analysts expect this provision to be extended.
Critics argue that broad tax cuts for consumers are one of the less efficient forms of fiscal stimulus because some of the money goes toward household savings, not immediate spending. On the business side, skeptics say employers don't typically hire because of tax breaks. At best, the tax incentive can spur firms to hire workers a little sooner than they otherwise might have.
Infrastructure spending = job gains of 400,000
The Obama plan would invest in traditional transportation infrastructure: repairing highways, airports, and transit systems. Another aim is to set up a National Infrastructure Bank, which would use federal loans alongside state or private-sector funds. And the White House would help pay for public school modernization across the nation. Total cost: more than $100 billion, with as much as half of that spending in 2012.