Obama asks $450B to lift economy, mostly tax cuts

Confronting an economy in peril, President Obama unveiled a larger-than-expected $450 billion plan Thursday night to boost jobs and put cash in the pockets of dispirited Americans, urging Republican skeptics to embrace an approach heavy on the tax cuts they traditionally love.

President Barack Obama speaks about exports, jobs, and the economy, Wednesday, July 7, 2010, in the East Room of the White House in Washington. (AP Photo/Pablo Martinez Monsivais)

WASHINGTON (AP) - Confronting an economy in peril, President Obama unveiled a larger-than-expected $450 billion plan Thursday night to boost jobs and put cash in the pockets of dispirited Americans, urging Republican skeptics to embrace an approach heavy on the tax cuts they traditionally love. With millions of voters watching and skeptical of Washington, Obama repeatedly challenged Congress to act swiftly.

The newest and boldest element of Obama's plan would slash the Social Security payroll tax both for tens of millions of workers and for employers, too. For individuals, that tax has been shaved from 6.2 percent to 4.2 percent for this year but is to go back up again without action by Congress. Obama wants to deepen the cut to 3.1 percent for workers.

"This plan is the right thing to do right now," Obama said after a divided body rose in warm unison to greet him. "You should pass it. And I intend to take that message to every corner of this country."

In his televised address to Congress, Obama sought to provide a jolt for the economy, still staggering on his watch, and for his own standing at one of the lowest marks of his presidency. He put forth a jobs plan that he hopes can get bipartisan support and spur hiring in a nation where 14 million people remain out of work and the jobless rate is stuck at 9.1 percent. Public confidence in his stewardship of the economy is eroding.

Obama did not venture an estimate as to how many jobs his plan would create. He promised repeatedly that his plan would be paid for, but never said how, pledging to release those details soon.

The president also would apply the Social Security payroll tax cut to employers, halving their taxes to 3.1 percent on their first $5 million in payroll. Businesses that hire new workers or give raises to those they already employ would get an even bigger benefit: On payroll increases up to $50 million they would pay no Social Security tax.

Obama also proposed spending to fix schools and roads, hire local teachers and police and to extend unemployment benefits. He proposed a tax credit for businesses that hire people out of work for six months or longer, plus other tax relief aimed at winning bipartisan support in a time of divided government.

Under soaring expectations for results, Obama sought to put himself on the side of voters who he said could not care less about the political consequences of his speech.

"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," Obama said.

His aim Thursday night was to put pressure on Congress to act - and to share the responsibility for fixing the economic mess that is sure to figure in next year's elections. For every time he told lawmakers to "pass the bill" - and he said over and over - Democrats cheered while Republicans sat in silence.

Tax cuts amounted to the broadest part of Obama's proposal - in essence, a challenge by the Democratic president to congressional Republicans to get behind him on one of their own cherished economic principles or risk the wrath of voters for inaction. The tax cuts alone would amount to roughly $250 billion.

The president said deepening the payroll tax cut would save an average family making $50,000 a year about $1,500 compared to what they would if Congress did not extend the current tax cut.

"I know some of you have sworn oaths to never raise any taxes on anyone for as long as you live," Obama said, a reference to the conservative tea party influence on many House Republicans. "Now is not the time to carve out an exception and raise-middle class taxes, which is why you should pass this bill right away."

Politics shadowed every element of Obama's speech. He implored people watching on TV to lobby lawmakers to act. He did the same thing before his speech in an email to campaign supporters, bringing howls of hypocrisy Republicans who wondered why Obama was telling them to put party above country.

The American public is weary of talk and wary of promises that help is on the way.

In one striking sign of discontent, nearly 80 percent of people think the country is headed in the wrong direction. That's about the same level of pessimism as when Obama took office. It reflects both persistently high unemployment and disgust with Washington infighting.

No incumbent president in recent history has won re-election with the unemployment rate anywhere near the current 9.1 percent.

Obama's jobs plan put a special emphasis on the long-term unemployed - those who have been out of work for six months or more. He repeated his calls for a one-year extension of unemployment insurance in order to prevent up to 6 million people from losing their benefits, and he proposed a $4,000 tax credit for businesses that hire workers who have been out of work for more than six months.

A key part of Obama's approach was to appeal to the lawmakers in front of him to pass a deal, and to position them for blame for inaction should the jobs plan fall short.

"The next election is 14 months away," he said. "And 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. ... They need help, and they need it now."

Response:

House Appropriations Chairman Hal Rogers
“After a rough August that saw turbulence in the stock market with continued economic uncertainty that led to no net job growth, I am glad to see President Obama coming to the table with ideas to get our economy working and give our businesses the confidence to create jobs.

“However, I remain concerned that what we’ve heard from President Obama this evening is an echo of his Administration’s unsuccessful strategy of the last few years, which has resulted in unsustainable spending that has sky-rocketed the budget deficit and pushed our nation further into fiscal crisis.”

“The Appropriations Committee has released 11 bills so far this year that tackle our spending and economic issues head on, without growing government or requiring new tax revenues. As Chairman, I look forward to working in a bipartisan way with the President and my colleagues in to find responsible and sustainable solutions that create jobs, support our nation’s continued recovery, and get our fiscal house in order.”

Sen. Rand Paul
If the President were to ask me my advice on how to deal with the worst recession since the Great Depression, I would politely ask him to turn off the teleprompter. It’s hard to have a conversation with the American people when speaking through scripted words. And besides, the script really isn’t working.

I would tell the President, politely, to turn off the teleprompters. To turn off and maybe to quiet the loudmouths who are calling us – those who oppose some of his plans – “terrorists.” Those who are hurling invective at us as if that is somehow constructive. I would tell him to turn off or disassociate himself with this type of rhetoric.

Leadership means accepting responsibility. Accepting responsibility for where we are after nearly three years of his administration. For the first year or two it was always Bush’s fault. The economy, the recession – it’s all Bush’s fault. But at some point and time leadership means accepting responsibility.

We have unemployment nearly 10 percent. This administration is set to accumulate more debt than all 43 Presidents combined. With the unemployment, 2 million new workers are out of work. Leadership means accepting responsibility. And I would ask at this point that he accept some responsibility for this failed economy and for these failed policies and that we try something new.

Leadership isn’t just attaching blame to the other side and saying it’s just the Republican’s fault. But likewise, it’s not us standing up and saying it’s just the Democrat’s fault. It’s both sides admitting that there’s blame to go around.

The No. 1 problem that fuels our deficit crisis – that has us pushing on toward this deficit problem – is entitlements. And this is not anyone’s fault. It’s not the Democrats fault. It’s not the Republican’s fault.

Entitlements are broken because of two incontrovertible facts: No.1, people are living longer; No. 2 there are less workers than retirees. When Social Security was started there were dozens of workers for every retiree. Now we’re less than three workers for one retiree and we’re headed toward a time where there’s going to be one worker for one retiree. Social Security now pays out more than it brings in. These are just facts.

We can fix these programs but we can’t fix them if we involve ourselves in the rhetoric where each side or one side is calling the other terrorists. Mr. President, we need to get beyond that type of rhetoric. We need to sit down together and try to figure out our nation’s problems.

Likewise, I don’t think it’s good for you to simply say it’s the rich, blame the rich, the rich are not paying their fair share. Well, the facts speak otherwise: We have a progressive income tax in our country. In fact, the top 1 percent of wage earners who earn about 20 percent of the income, pay 38 percent of the income tax. The top 10 percent of wage earners which earn about 50 percent of the income, pay 70 percent of the income tax. So the only thing the facts could tell us about the tax code is that the wealthy are paying their fair share – their fair share and then some.

You point out examples and say, well, this corporation didn’t pay any tax or this individual didn’t pay any tax. Those are anecdotes and anecdotes do not make a trend and do not make the truth. The truth is that the middle class and the rich pay the vast majority of the income tax. In fact, the bottom 50 percent, nearly half of all income tax is paid by those above, nearly have of income tax, nearly half of wage earners don’t pay any income tax.

So really we need to get our facts straight and get beyond sort of this blame-the-rich game. This class war-fare, this class envy. We need to remember that this is America; where the American dream is open to all. You, Mr. President, are a product of the American Dream. You should be proud of those who gain wealth. You should be proud of those who make a profit. We should extol the successes of American businesses, of American individuals. That would help us to move forward.

Now we do face a problem, we do have great joblessness in our country. How would we fix it? I would have five different things we would do. I think if we did these then our economy would begin to rebound. We would see a recovery almost immediately.

No. 1: We need a balance budget amendment to the Constitution. For too long we have been running these massive debts and debt has a face. Some economists are saying that our debt causes a million people to be out of work each year. Debt also causes our prices to go up. Gas prices have doubled. That’s because we are financing our debt by printing new money, that’s what the rising price is. These rising prices hurt seniors; these rising prices hurt those who are on the lower end of the socioeconomic ladder. So the first thing we need to do is get rid of our debt problem: a balanced budget amendment to the Constitution.

Now in order to do that you also have to have a spending plan. The second thing I would say is that we need a spending plan. You did propose a budget, but everyone voted against it. All 100 Senators; all the Republicans and all the Democrats voted against your plan. So obviously it wasn’t a plan that was acceptable to representatives on either sides of the aisle.

But I think there is a spending plan that America would accept and I call it the Penny Plan. The Penny Plan would cut the spending by one percent each year for six years. Cut one penny of every dollar of federal spending. Families have to do across America when times are tight, is there any reason why government couldn’t cut one percent of spending? If you cut one percent of spending for six years, and then free spending for two more years, your budget will balance in eight years. So it’s not enough just to have a balanced budget amendment, we have to have a spending plan that tells us and shows us how we could get to a balanced budget.

No. 3: I think we should immediately cut in half the corporate income tax, we should eliminate the capital gains taxes and we should make the tax rates that are out there now, give them some permanence, so businesses could have some predictability.

No. 4: I think we need a regulatory moratorium; we need to add no new regulations. In fact, I think it would be a good idea to repeal one regulation every week until the economy starts recovering. The regulatory burden is adding $2 trillion to the economic woes that we have in our country. And if we could get a business-friendly, regulatory-friendly government that acknowledges that we need some regulations, but that we’ve gone way overboard. I think that you would see an enormous recovery to economy.

And No. 5: We have to have an entitlement reform. Like I say this is no one’s fault. We are living longer; they’re folks-there’s just not as many workers to pay taxes anymore. So we have to fix entitlements and we can fix them. I’ve mentioned these to you and to others in your Administration. We could allow the age to gradually rise for social security over a 20- or 30-year period and we could allow means testing. Which would mean the rich would bear more of the burden for paying for their benefits and their entitlements. These are things that both sides of the aisle could come together on and I think if we did you would see an economic boom like we haven’t seen in a long time.

In order to get there though, many people say “Oh we have to compromise.” Well compromise goes both ways. You’ve put forward your ideas tonight. You need to come talk to us about how we could work with you, but that means you need to entertain some of our ideas.

Thank you and God bless America.

Senate President & Gubernatorial Candidate David Williams

"President Barack Obama’s idea of economic stimulus reminds me of Governor Beshear’s idea of balancing the state budget—borrow deeply and send future generations the bill. Although I won’t hold my breath, I call on Governor Beshear to send a message on behalf of all Kentuckians to his close ally in the White House that the keys to job creation are controlling spending, reducing taxes, eliminating unnecessary regulations, repealing Obamacare, and ending the war on Kentucky coal.

My view is that low taxes, cheap electricity and stopping the bureaucratic stranglehold on American small businesses are keys to promoting growth and prosperity. Unfortunately those ideas will never see the light of day under a second term for President Obama or Governor Beshear. The Obama-Beshear agenda will only lead to unacceptably high levels of unemployment, robbing families and future generations of their chance to live the American dream."


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