President Obama's $447 billion American Jobs Act is getting mostly solid marks from business experts and economists, who worry that a divided Congress may be unable to pass anything meaningful in time.
The president's plan would eliminate payroll taxes for companies that add workers or increase wages of current workers, but that benefit is capped to the first $50 million in payroll increases. The plan has a $4,000 tax credit for employers who hire long-term unemployed workers, plus a "returning heroes" hiring tax credit of $5,600 to $9,600 for each unemployed vet hired.
Read Text of President Obama's Speech Here
The proposals include reforming the unemployment insurance program, a $50 billion extension in unemployment insurance to prevent 5 million people looking for work from losing benefits and state assistance for wage insurance.
Small businesses would get a 50 percent cut in the first $5 million in payroll taxes. The White House said 98 percent of businesses have payroll below that threshold.
Political analysts say Republicans may be in favor of the tax cuts in the president's proposals, but will oppose the parts of the $447 billion plan that call for new government spending. The spending measures include a $50 billion investment in infrastructure, a bipartisan National Infrastructure Bank and aid to state governments.
Cecilia Rouse, economics professor at Princeton and former member of President Obama's Council of Economic Advisers, said the president is proposing a "sensible" package of strategies while the private sector continues to struggle. Rouse said she was "particularly pleased" to see an extension in unemployment insurance for an additional year.
"They are a critical form of assistance for so many families as well as one of the fastest and most effective ways of helping to increase economic activity during a downturn," she said.
Rouse said the proposed employment tax cuts, for both employers and individuals, are warranted and investments in infrastructure "just make sense" given the numbers of unemployed construction workers and the low rates at which the federal government can borrow. Further state aid will help the economy a great deal given that public sector employment has been unusually hard hit in this downturn.
But she would have liked for Obama to have proposed more innovation for services that help the unemployed find jobs.
"While I understand that investments in these programs will not generate jobs, per se, right away, reforming them will likely prove vital for ensuring that workers can quickly find good jobs once the recovery is underway in earnest," Rouse said.
David Stockman, former director of the Office of Management and Budget under President Ronald Reagan, was skeptical of the plan.