During their first week back after being away for a month, the House and Senate welcomed President Obama before a joint session of Congress on Thursday, September 8. During his speech the President implored Members to enact a package of tax cuts and stimulus spending that he said was necessary to instigate job growth and bolster the nation’s struggling economy.
Reaction from House Republican Leadership was mild. Speaker John Boehner (R-OH) released a statement saying that the President’s plan “merits consideration,” and House Majority Leader Eric Cantor (R-VA) reacted to the speech by writing “There are certainly goals the president outlined that we can work with him on. We should work quickly to pass the areas where we agree.” This week the President will be in Ohio and North Carolina touting the benefits of the plan and pushing Congress to enact it quickly.
Noteworthy is that, as the President said in his speech, the cost of his economic package will be fully paid for based on offsets. Below is a summary of the President’s proposal as well as other news of the week.
President Obama Proposes $447 American Jobs Act
The Obama Administration estimates the Act will cost a total of $447 billion through a combination of tax breaks and direct government spending. Details include:
- Extending and expanding the two percent payroll tax cut for workers which began at the beginning of 2011. The plan would reduce the tax another 1.1 percent to 3.1 percent in 2012. (Projected cost: $175 billion);
- Cutting the tax employers pay to 3.1 percent, half of the current rate, for the first $5 million in payroll. Reducing to zero the employer payroll tax for the first $50 million in expanded payroll. (Projected cost: $65 billion);
- Putting people back to work with $140 billion in spending with most directed toward the building of highways, roads, railways and aviation facilities, as well as modernizing public schools and community colleges, and rehiring of teachers and first responders; and
- Extending unemployment insurance benefits so that the jobless could continue to receive benefits while in job training. Offering tax credits of up to $4,000 for companies that hire people who have been unemployed for more than six months. (Projected cost: $57 billion);
- Creation of an American Infrastructure Finance Authority with direct and guarantee loan authority of $10 billion for each of the first two years rising to $20 billion per year from year three through nine ending at $50 billion per year after year nine. The loans would be used to finance infrastructure projects including transportation, energy and water infrastructure of national or regional significance;
- Establishment of auction authority of spectrum and reserves the D block for use by first responders. The Administration hopes that auctioning unused television spectrum will raise revenue while also making wireless broadband services available to more Americans;
During Monday’s White House Press Briefing, Office of Management and Budget (OMB) Director Jack Lew detailed the package of offsetting tax reform proposals that include:
- A limit on itemized deductions for individuals who earn over $200,000 and families earning over $250,000 (Projected revenue: $400 billion);
- Taxing carried interest as ordinary income rather than taxing it at the capital gains rate (Projected revenue: $18 billion);
- Eliminating tax preferences for certain oil and gas companies (Projected revenue $40 billion); and
- Changing the depreciation schedule for corporate jets to five years down from seven years.
On Tuesday, Senate Majority Leader Mitch McConnell (R-KY) announced that he would not support the American Jobs Act, saying it would not create jobs or promote long-term economic growth.
Below is a list of the significant legislative actions taken by Congress since reconvening last week:
- By an overwhelming vote last week, the Senate approved House-passed legislation that will effect the most substantial changes to the nation's patent system in decades. The bill passed by a vote of 89-9 and was presented to the President for his signature. As we reported to you in June, the Leahy-Smith America Invents Act changes the U.S. patent system by eliminating a time-consuming process used to determine who discovered an idea first and instead grants patents to the first inventor to file an application.
- House Republicans began their campaign to overturn regulations they view as being bad for the economy. Later this week, the House is scheduled to vote on H.R. 2587, the Protecting Jobs From Government Interference Act, which would limit the authority of the National Labor Relations Board. Next week, the House is expected to consider legislation that would delay the Environmental Protection Agency’s (EPA) proposed regulation of emissions from power plants.
- With funding for the government set to expire at the end of the month, the House is expected to consider a short term continuing resolution next week. The short-term spending bill will reportedly give both chambers until mid-November to complete work on appropriations bills for fiscal year 2012. Currently, the House has passed six of twelve appropriations bills, while the Senate has only passed one (Military Construction).
Super Committee Meets
The new Joint Select Deficit Reduction Committee held its inaugural meeting last Thursday. While the meeting was civil, opening statements by the panel’s members gave a good indication of the divide that exists between the parties. Several Democrats used their time to call for tax increases, while many Republican members spoke of their desire to curb the costs of entitlement programs like Social Security and Medicare. One Member, Senator Jon Kyl (R-AZ), went so far as to say he would leave the Committee if more cuts in the Department of Defense budget were considered. Earlier today, the Committee received testimony from Congressional Budget Office Director Douglas W. Elmendorf.