Obama's New Stimulus

President Obama's speech to Congress was impressive. Good to see some leading from the front, for a change. The tone was commanding, confident, and purposeful. Crucially, he took the initiative and presented a detailed plan. No more, "I'm willing to consider this." No more, "I'd like to see that." Instead, again and again, "Pass this bill." They won't, but the point of last night's speech was not to persuade the House that this or any other new jobs plan makes sense. The House isn't listening. The president's goal was to regain public support, and hence make the GOP's fiscal-policy defeatism harder to sustain. Making the case for specific proposals was a vital part of that. Scored with this in mind, I think it was a fine performance.

I am sending this Congress a plan that you should pass right away. It's called the American Jobs Act. There should be nothing controversial about this piece of legislation. 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.

The purpose of the American Jobs Act is simple: to 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 long-term unemployed. 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 if they hire, there will be customers for their products and services. You should pass this jobs plan right away.

On substance, the American Jobs Act has a lot of good ideas. (Short fact-sheet; long fact-sheet.) I especially like the employer and employee payroll tax cuts (with some of the relief tied to payroll expansion), the unemployment insurance changes (with support for work sharing), and the new credit for hiring the long-term unemployed. At just under $450 billion the aggregate fiscal impulse is too small: something twice as big, or more, is called for. But the White House could be right to think the public would have been scared rather than reassured by a larger number. Restoring confidence is part of the task in all this.

And then there's the politics. A moderately-sized plan will hurt the GOP more if they reject it out of hand. Presumably for the same reason, the proposal is tilted towards tax cuts rather than spending increases. You can argue the economics of that both ways, but again it is tactically shrewd.

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