American Jobs Act: Stimulus Spending and Tax Increases

Even the casual observer of national politics is aware that the hot-button issue in 2012 is jobs and the economy.  Unemployment refuses to fall below 9% as jobless claims continue to climb, despite hundreds of billions of dollars in stimulus dollars and countless inspirational speeches from the White House.  This has spawned a number of bills, the latest being President Obama’s American Jobs Act of 2011, which he officially unveiled early this week.

The President’s Jobs Act features policy proposals similar to those that he pushed during the recent debt ceiling negotiation.  The bill includes $447 billion in new spending on infrastructure, unemployment benefits, and rehiring laid off state employees.  To pay for this new spending, the Jobs Act will close corporate tax loopholes for oil and gas companies, increase the carried income tax on hedge funds, and increase the marginal tax rate on individuals earning more than $200,000.

Proponents of the President’s proposals are martialing their forces to push the bill through Congress by as early as next week.  On Monday, the President officially sent the text of the Jobs Act to Congress and called on them to pass it during a mid-day address from the Rose Garden.  However, the ultimate success of this measure will not be determined by the President’s speeches, but on the content of the bill, which will face serious scrutiny in the Republican-controlled House of Representatives.

With Congressional approval near an all-time low after the damaging debt ceiling debate, the resistance to the President’s proposals may be less fierce.  Yet the Jobs Act encapsulates many of the same policy propositions that have been consistently rejected by Speaker Boehner and House Republicans.  And while the President has included a reduction in the Payroll Tax as a part of the jobs package, the tax increases on top income earners is unlikely to gather enough Republican support to pass the House.

Yet perhaps the most daunting challenge facing the President’s Jobs Act is that its policies bear many similarities to the much maligned stimulus bill, which has thus far failed to generate substantive economic recovery.  This new $447 billion increase in government spending would be larger than the per annum spending of the American Recovery and Reinvestment Act.  Plus the inclusion of tax increases with stimulus spending is unlikely to attract support from Republican lawmakers, putting the success of the President’s plan in serious jeopardy.

Originally printed in the Collegian, Grove City College Newspaper.