Obama Proposes $447 Billion in New Deficit Spending

The president urges Congress to invest in infrastructure and schools and extend unemployment benefits and tax cuts.

President Barack Obama urged legislators to enact a second stimulus package on Thursday to aid the recovery of the American economy. He used a rare address to a joint session of Congress to promote a jobs plan that calls for $447 billion in additional deficit spending.

The American Jobs Act, according to Obama, aims to “restore some of the fairness and security that has defined this nation since our beginning.” He admitted that private business, not government, generates growth and creates jobs. “But we can help,” he said. “We can make a difference. There are steps we can take right now to improve people’s lives.”

Those steps would include $10 billion in new spending to establish a National Infrastructure Bank; $50 billion to build and repair roads and bridges; $30 billion to refurbish and repair school buildings; $35 billion to keep up to 280,000 teachers employed; $5 billion woth of investment in community colleges; $15 billion to rehabilitate vacant property.

The president’s plan also calls for an extension of federal unemployment compensation for another year which will likely cost some $50 billion.

To encourage firms to hire, the president urged an extension of the payroll tax cut he enacted with his 2009 stimulus which would exacerbate the central government’s budget shortfall by up to $175 billion. A proposed cut in the employer payroll tax would likely reduce revenue by $65 billion.

The White House claims that the new spending and reductions in revenue can be offset by “closing corporate tax loopholes and asking the wealthiest Americans to pay their fair share” yet eliminating tax breaks for oil companies, which the president demanded in particular, couldn’t raise revenue by more than several billions of dollars per year.

Total revenue from corporate taxes this year is estimated by the Congressional Budget Office to be $192 billion. Personal income and social insurance taxes provide the bulk of revenue at nearly $2 trillion. Spending is set to reach $3.6 trillion, necessitating almost $1.3 trillion in borrowing.

The president told lawmakers that there was “nothing controversial” about his proposal. Indeed, practically everything in it has been supported “by both Democrats and Republicans,” he said.

Republicans, who control the lower chamber of Congress, should be able to endorse additional infrastructure spending and tax cuts although more conservative members of the opposition insist that school policy is the purview of state governments. With bipartisan support though, the jobs bill could pass Congress.

The purpose of the legislation is simple, said the president — “to put more people back to work and more money in the pockets of those who are working.” Since it hardly includes measures that weren’t part of the first stimulus, he may be hard pressed to explain to lawmakers why this time, while unemployment is worse than it was two years ago, it will accomplish those goals.