WASHINGTON (DTN) — Highlighting the political gridlock that has come to define his term in office, President Barack Obama championed a $450 billion infrastructure and tax plan that effectively translates into a second round of stimulus aimed at creating jobs and boosting the economy.
The president told Congress in a fiery speech Thursday that this proposal, which he called the American Jobs Act, will put more people back to work and more money in the pockets of those who are working.
“It will create more jobs for construction workers, more jobs for teachers, more jobs for veterans, and more jobs for the long-term unemployed,” Obama said. “It will provide a tax break for companies who hire new workers, and it will cut payroll taxes in half for every working American and every small business. It will provide a jolt to an economy that has stalled, and give companies confidence that if they invest and hire, there will be customers for their products and services. You should pass this jobs plan right away.”
The president proposed offsetting this spending with additional budget cuts and tax code reforms. “There should be nothing controversial about this piece of legislation,” the president said. “Everything in here is the kind of proposal that’s been supported by both Democrats and Republicans — including many who sit here tonight. And everything in this bill will be paid for. Everything.”
According to a White House fact sheet, the proposal would cost $447 billion, including $70 billion in tax cuts, $140 billion in infrastructure spending, $62 billion in job-extension and unemployment aid and $175 billion in extending the current tax cut on payroll taxes.
Agriculture Secretary Tom Vilsack told DTN in an exclusive interview Thursday that the president believes his proposal could add as many as 1.5 million jobs immediately. Vilsack compared the plan to a shock from a defibrillator meant to help jumpstart a patient’s heart.
“It’s important to emphasize these are short-term measures meant to give the economy a punch or a jolt to get it back on track,” Vilsack said.
The agriculture secretary added that it’s important to separate the president’s long-term vision from this short-term, more urgent proposal.
“The president’s view is that, look, we’ve got to get our fiscal house in order, but we have to make investments now in critical infrastructure that would allow us to grow and become more productive,” Vilsack said. “We have got to get back into the business agriculture is in, which is creating and making things the rest of the world needs and bring their wealth to our shores.”
Key to the president’s proposal is more than $140 billion in infrastructure spending, including specific funds for highways, bridges and airports, as well as an infrastructure bank backed by both business and union groups. That includes rebuilding and repairing up to 35,000 schools across the country.
“Particularly in rural America, there are roads, there are bridges, there are rail lines, there are dams, there are water systems that require investments to rebuild and repair,” Vilsack noted.
The president repeated frequently, “Pass this jobs bill now.” Obama indicated the bill could be paid for by charging Congress to find even more than the $1.5 trillion in spending cuts lawmakers are expected to lay out by Christmas. The president called for tax reform as well. He added that he will release a more ambitious deficit package later this month.
The president also again indicated he would send the three languishing free-trade agreements with Colombia, Panama and South Korea to Congress immediately.
“Now it’s time to clear the way for a series of trade agreements that would make it easier for American companies to sell their products in Panama, Colombia, and South Korea — while also helping the workers whose jobs have been affected by global competition,” the president said. “If Americans can buy Kias and Hyundais, I want to see folks in South Korea driving Fords and Chevys and Chryslers. I want to see more products sold around the world stamped with three proud words: Made in America.”
Vilsack said he expects Congress to act quickly on the FTAs.
“My hope is that gets done this month,” Vilsack said. “There is no reason why it can’t be done this month. And for agriculture, that is nothing but good news.”
Vilsack said he believed the president’s job plan stemmed from ideas gained during Obama’s trip to the Midwest last month, including an understanding of the success now happening in agriculture.
“This is an interesting time for us because farm income, even adjusted for inflation, is at its highest level in probably 40 years,” Vilsack said. “I think what the president is doing is basically taking the formula that agriculture has used and applying it to the rest of the country.”
The president is championing several tax cuts for small businesses.
“The tax cuts are going to be fairly significant.” Vilsack said. “He’s proposing to essentially cut payroll taxes in half for small businesses with the first $5 million of payroll. What that means is small businesses will now have more resources they can use to hire new workers.
“In addition, to the extent that the businesses hire new worker because they now have this flexibility, the president is going to eliminate the payroll tax on those new employees for a period of time.”
The president also wants to extend the 100{e7e4ba4d9a3c939171d79cae1e3a0df1d41e5a91c3c4158fbb92284b490bc9d3} deduction for small businesses buying new equipment, commonly known as the Section 179 deduction. The deduction is currently in place, but set to expire at the end of the year. The administration wants to extend the credit for at least one more year.
“That should really provide small businesses with more cash and more flexibility and perhaps give them greater confidence they can hire additional workers,” Vilsack said.
Another tax credit for hiring veterans, the Returning Heroes Tax Credit, could be extended as well under the plan. That credit can range from $5,600 to $9,600 for every veteran a company hires.
“When you add that to the payroll tax holiday and additional payroll-tax deduction on your existing workforce, you are now generating a substantial amount of additional resources for small businesses so they should feel confident they can hire that extra person or two that they have been thinking about for some time,” he said.
The president emphasized that several of his proposals had, in some way, been supported in a bi-partisan fashion. That includes the infrastructure proposal that would drive low-interest loans for construction projects.
“He’s hoping folks will step up in a bipartisan way and quickly pass this effort and allow it to get to work as quickly as possible,” Vilsack said. “If you are borrowing money for next to nothing, then now is the time to actually get involved and get engaged on these infrastructure projects because if you wait for interest rates to go up it will be much more expensive.”
To champion the plan, Vilsack and other cabinet secretaries will be fanning out across the country. Vilsack starts Friday with a trip to Ohio, then visits to Florida and Pennsylvania in the coming days.
“Everywhere I go from now until whenever will be focused on this,” he said.
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Posted with DTN Permission by Haylie Shipp
