Obama sends jobs plan to Congress

Last updated: September 12, 2011 4:12 pm

Obama sends jobs plan to Congress

By Stephanie Kirchgaessner in Washington

Barack Obama kept the pressure on Republicans on Monday as he announced that his $450bn jobs plan is ready to be taken up by Congress, reiterating his call for lawmakers to pass the bill quickly.

The US president used an appearance in the Rose Garden, surrounded by teachers, police officers and firefighters, to announce that his proposal would be sent to Congress on Monday evening.

Republican leaders have offered the plan a lukewarm reception and have repeatedly said aspects of the plan would be considered, including proposals to boost infrastructure projects. On Friday, John Boehner, the Republican House speaker, and other leaders requested a copy of the legislation and said they intended to have the proposal scored by the non-partisan Congressional Budget Office.

The US president’s ability to push Republicans into action represents a big test for Mr Obama, who is facing record low poll numbers and increasingly difficult re-election prospects. While some rank-and-file Republicans have criticised the plan for being too similar to an earlier $825bn stimulus package that they claim failed to fix the country’s economic woes or significantly boost the beleaguered jobs market, the party is also under pressure to appear to be more open to compromise and responsive to the economic struggles of average Americans.

Mr Obama has not yet spelt out how he hopes to pay for the plan, but those details are expected to be announced a week on Monday, when the White House unveils a proposal to the new congressional super committee that has been tasked with finding at least $1,200bn in future savings. That plan is likely to include calls to end billions of dollars in subsidies to the oil and gas sector and tax increases on the wealthy and some corporations. He is also expected to call for long-term reform to expensive US programmes such as Medicare, the healthy insurance programme for the elderly.

If passed, the jobs plan would reduce tax paid by workers to fund Social Security, the national retirement scheme, to 3.1 per cent in 2012 from the 4.2 per cent level temporarily introduced this year. If the White House proposal fails to pass, this tax would revert to its traditional rate of 6.2 per cent.

The White House plan also includes a reduction in the contributions to this so-called payroll tax paid by businesses from 6.2 per cent to 3.1 per cent, with a limit set at the first $5m of wages. Companies that can show they have hired new workers or increased salaries will win a complete exemption from payroll taxes on the higher payrolls, though this benefit is also capped. Combined, the payroll tax measures would cost about $240bn.

Mr Obama’s plan also calls for the establishment of an infrastructure bank and $80bn in spending on new building projects, from school modernisation to roads and bridges. In addition, the White House is requesting that Congress approve aid for states to rehire teachers and firefighters, an extension of unemployment insurance worth $49bn and a tax credit for Americans who have been jobless for a long period.