Photo by Kevin Lamarque/Reuters
En español | Americans suffering through a job drought can't wait until the next election for the nation to solve their problems, President Obama told Congress Thursday night.
"The people who sent us here — the people who hired us to work for them — they don't have the luxury of waiting 14 months," Obama said in urging Congress to act quickly. "Some of them are living week to week, paycheck to paycheck, even day to day. They need help, and they need it now."
See also: Restoring fiscal sanity.
Obama's $447 billion jobs plan includes tax relief for workers and their employers, funds for school and road rebuilding, and extended unemployment benefits. He will lay out specifics of how to pay for the plan a week from Monday. But he said Thursday that part of the tab will be paid by "making modest adjustments to health care programs like Medicare and Medicaid."
The jobless problem has hit older workers as well as younger.
"The question is whether, in the face of an ongoing national crisis, we can stop the political circus and actually do something to help the economy; whether we can restore some of the fairness and security that has defined this nation since our beginning," Obama said.
The national unemployment rate of 9.1 percent compares with a rate of 6.8 percent for workers 50 and older, according to Terry McMenamin of the Bureau of Labor Statistics.
But older people tend to be out of work longer. According to the BLS, 55 percent of the workers who have been searching for jobs for six months or more are 55 or older.
And many older workers are underemployed or have quit looking and aren't included in the unemployment statistics, said Barry Lott and Timothy Hamre, who codirect program operations at the National Council on Aging, which runs a Senior Community Service Employment Program for low-income job seekers 55 and older.
"It's bad for everybody out there, which makes it worse on seniors, because organizations are looking for someone who can give them longevity without having to pay much," Lott said.
House Speaker John Boehner, R-Ohio, said after the speech that both sides need to listen to the other and find common ground.
"The proposals the president outlined tonight merit consideration," Boehner said. "We hope he gives serious consideration to our ideas as well. It's my hope that we can work together to end the uncertainty facing families and small businesses, and create a better environment for long-term economic growth and private-sector job creation."
Democrats have pushed for public infrastructure programs such as building roads, fixing schools and extending unemployment benefits while Republicans say they want to unshackle businesses from onerous regulations and taxes that are a drag on the economy.
"I am glad to see the president is finally shifting his focus to America's economy and helping foster job growth, but I'm disappointed the president's emphasis is just more spending for programs that haven't worked. If spending is the answer to the economy, we should already be in a major boom," said Sen. Michael Enzi, R-Wyo.
The main proposals from both sides include:
Continuing the payroll tax break. This year, workers are paying 2 percentage points less in FICA taxes, but that deal runs out at the end of the year.
That tax break saved an average family with two workers about $1,000 this year. If it expires, "that's a bunch of spending that gets pulled out of the economy," said Chad Stone, chief economist at the Center on Budget and Policy Priorities. "What we're scheduled to do is take our foot off the accelerator. The fragile economic recovery can't afford to have that." Obama proposed temporarily cutting the payroll tax even further — by 3.1 percentage points next year. That would save a family earning $50,000 about $1,500, according to the White House. Economist Alan D. Viard, a resident scholar at the American Enterprise Institute, said Republicans seem to be warming to the payroll tax cut, which could boost consumer demand.
Continuing extended federal unemployment and compensation benefits. They expire at the end of the year. The average length of unemployment for workers 55 and older is 52.4 weeks, according to the BLS, well beyond the 26 weeks of unemployment compensation that many states offer. Workers under 55 were out of work on average 37.4 weeks. Stone said the extra benefits have never been discontinued during a period of such high unemployment.
Tax breaks for businesses. Businesses would see their payroll taxes for current employees cut in half for the first $5 million in payroll next year. The first $5 million in pay for new workers or raises for employees would not be taxed at all next year. Companies would get tax credits for hiring veterans and people who have been unemployed for six months or longer. Viard said the payroll tax breaks wouldn't make a difference for big companies but could spur hiring at small businesses.
Republicans are pushing for a tax holiday for U.S. businesses on their earnings from abroad. But that was not included in Obama's proposal. "When you give businesses tax credits in a weak economy, it just goes in their pockets," Stone said. "It's not that they are burdened by high taxes. They are burdened by low sales."
Funding construction to rebuild schools, highways and bridges and create jobs. Under the Obama plan, about 35,000 schools would be modernized, and roads and public infrastructure would be improved. Viard said infrastructure spending often can't be pumped into the economy fast enough to help in the short term because of the lead time for projects.
Aid to state and local governments. They are already struggling to balance their budgets so they can avoid laying off teachers and police.
Regulatory relief. Specifically, Obama wants to make it easier for homeowners to refinance at the current low interest rates. Republicans have pushed for much broader regulatory relief.
In a letter to Obama this week, Boehner and House Majority Leader Eric Cantor, R-Va., said the nation must tackle "excessive federal regulation that is hampering job growth across our country" and criticized him for proposing 219 new regulatory actions that would cost the economy billions.
Viard said that neither party can fix the economy immediately.
"We shouldn't expect anybody — Republican or Democrat — to come up with a magic cure," Viard said. But "there are ways to mitigate the pain."
Tamara Lytle is a veteran Washington reporter.