The recently announced American Jobs Act, revealed in October by President Obama, is an attempt at creating a bi-partisan job-creation solution designed to spur the development of new jobs into 2012. The main thrust of the proposal is contained within its small-business-focused tax cuts, layoff prevention measures, infrastructure investments, and an extension of unemployment benefits. In addition, the entire project is intended to function without adding anything to the national budget deficit.
The President has proposed cutting payroll taxes by 50 percent for the first $5 million in payroll costs. The cuts would affect about 98 percent of businesses but are primarily aimed at small businesses with payrolls below the cutoff. Businesses increasing their payroll by up to $50 million will benefit from the elimination of all payroll taxes up to the established threshold.
In an effort to incentivize the hiring of ex-military members, businesses hiring long-term unemployed war veterans are targeted to receive up to a $9,600 tax credit. By modernizing at least 35,000 schools across the country through the construction of science labs, web-connected classrooms, and other renovations, hundreds of thousands of temporary jobs are expected to be created in order to complete the massive undertaking. Additionally, the Act would work to prevent the laying off of over 300,000 teachers and so-called “first responders” such as firefighters and street cops.
The Act also introduces reforms to the unemployment insurance program; something that hasn’t been done in four decades. For starters, the act seeks to extend benefits to around 5 million people currently at or nearing cutoff for unemployment pay. The formation of a new “Bridge to Work” program will function to place laid off workers into temporary volunteer roles or on-the-job training. In addition, employers hiring the long-term unemployed would qualify for a $4,000 tax credit.
To guarantee that the American Jobs Act would not add to the budget deficit, President Obama has employed the Joint Congressional Committee to make further deficit reduction decisions to pay for the Act.