Obama to Congress: Americans want action now on jobs

Reporting from Washington —  President Obama urged Congress to end the “political circus” and act to help a nation still facing economic hardship, outlining a $447-billion legislative package that includes tax cuts for working families and small businesses and spending to rebuild infrastructure.

The president, in a Thursday evening address to lawmakers in a special joint session, argued that there “is nothing controversial” about his plan – though the price tag was larger than expected, and, perhaps, more than Republicans in Congress will seriously consider.

Obama acknowledged the political prism through which his speech was being viewed. His approval rating is at or near the low point of his presidency, and the Republican campaign to unseat him is in full swing.

“But the millions of Americans who are watching right now, they don’t care about politics,” Obama said. “They have real-life concerns. Many have spent months looking for work.

“The people of this country work hard to meet their responsibilities. The question tonight is whether we’ll meet ours,” he said.

Obama didn’t outline how he would pay for the package, but promised it “will not add to the deficit.” His advisors said the administration would outline a “dollar for dollar” budget to pay for it.

To a Congress that just emerged from the discordant debt-ceiling debate, the president promised “a more ambitious deficit plan” that he will release on Sept. 19. Obama said that proposal would include measures to trim back Medicare and Medicaid, ideas that have been controversial among many Democrats.

The jobs plan was almost $150 billion larger than administration officials had previously indicated, helping Obama portray the proposal as bold. Economists said a plan of that scope might have a noticeable impact on the economy very soon after enactment.

But the size of the proposal also could create sticker shock in Congress, where even in advance of the address, many GOP lawmakers were wary of spending money to stimulate the economy, while others may prefer to wait to take action for what they hope is a Republican president in 2013.

The White House hopes Americans will rally behind Obama’s plan and spur Congress to pass enough of the measure to have an effect on the 9.1% jobless rate, at least by the time the president’s reelection campaign is in full swing.

Mark Zandi, chief economist of Moody’s Analytics, forecast that if Obama’s plan is implemented in its entirety, the jobless rate would fall to roughly 8% around the time of the election. If no further action is taken, unemployment would be about 9% at end of next year, he said.

Obama did not predict how many jobs the plan would create, a noteworthy omission given the sales job he is about to kick off. But the point, along with the speech itself, is fraught with political risk; the president doesn’t want to be measured against an official set of projections as he is running for reelection in 2012.

At the heart of the president’s plan is about $245 billion in tax relief for individuals and businesses, going well beyond the payroll tax “holiday” that Congress adopted last winter. Obama would expand that cut for workers, providing a $1,500 tax savings to the typical American family that saw a cut of $1,000 in the first round.

Obama would also cut the payroll tax in half for businesses with payrolls of less than $5 million, and declare a complete payroll tax holiday for employers who hire new workers or give wage increases to current employees. All companies would be eligible, but the break would be limited to the first $50 million in new payroll spending.

“Part of the way you increase growth is you increase demand,” said one senior administration official, noting that other elements of the plan create jobs for as little as $30,000 each. “We think this is the right balance of getting money in people’s pockets” and investing directly in job creation, the official said.

The other major chunk of the proposal is $140 billion that would go directly to putting people to work, largely by updating the nation’s roads, bridges and schools. About $35 billion of that would go to states to keep teachers, police and firefighters on the job.

The president also proposes changing the unemployment insurance program to prevent 5 million Americans who are looking for work from losing their benefits. Officials say his “Bridge to Work” program improves upon a controversial Georgia state program that helps pay displaced workers who take temporary or voluntary work. Obama says his plan would make sure the workers earn minimum wage.

GOP leaders in the House and Senate said Obama’s approach on the economy has already failed and were skeptical that his new plan would succeed in putting Americans back to work. New stimulus spending, in particular, drew Republican fire. Anticipating that reaction, Obama made an appeal based on American exceptionalism.

“Our highways are clogged with traffic. Our skies are the most congested in the world,” he said. “Building a world-class transportation system is part of what made us an economic superpower. And now we’re going to sit back and watch China build newer airports and faster railroads? At a time when millions of unemployed construction workers could build them right here in America?”

Sen. Mitch McConnell of Kentucky, the minority leader, dismissed the president’s joint address to Congress before it was given. Several “tea party”-aligned Republicans sat it out.

“This isn’t a jobs plan,” McConnell said on the Senate floor. “It’s a reelection plan.”