The American Jobs Act of 2011
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The American Jobs Act of 2011
Since the beginning of the recession in 2007, Congress has made several, only modestly successful attempts to end the recession and support a recovery through tax cuts, spending increases, and interest rate cuts. On September 8th, 2011, President Obama introduced another stimulus plan, The American Jobs Act of 2011, to Congress with an urge to pass the bill immediately. The Jobs Act proposed tax relief for workers and small businesses, extended unemployment benefits, implement training programs, and job creation for Veterans, Government employees, construction workers, and other disadvantaged groups while rebuilding and modernizing America. Funding for the proposed measures would come from closing tax loopholes and increasing taxes for the wealthiest Americans, therefore the measure would not add to the deficit (Obama, 2011). Members of a Congressional committee disagreed over deficit reduction measures and senators rejected several proposed versions of the plan. Most Republicans disputed the bill because they believe that any form of tax increases would hurt job creation, and the President faced opposition even from his own democratic party (Condon, 2011). Despite disagreements over the methods to boost the economy, our leaders have to find a solution to the crisis because not only are we at risk for a double dip recession, but also in this global economy, other markets are in danger of collapsing as a result of a global economic slowdown.
Pros of American Jobs Act of 2011
In describing The American Jobs Act, the White House writes, “To create jobs, the President unveiled the American Jobs Act – nearly all of which is made up of ideas that have been supported by both Democrats and Republicans, and that Congress should pass right away to get the economy moving now. The purpose of the American Jobs Act is simple: put more people back to work and put more money in the pockets of working Americans. And it would do so without adding a dime to the deficit.” (WhiteHouse, 2011)
The American Jobs Act has several basic benefits: cutting payroll taxes in half for the first $5 million in payroll costs for almost all small businesses. Eliminating payroll taxes for new hires and provides raises for existing employees, for the first $50 million of payroll costs. The bill also includes tax credits from $5,600 to $9,600 to be used as incentives for hiring unemployed veterans. It also calls for immediate modernization of “science labs, internet-ready classrooms” and other renovations at 35,000 public schools in low income areas across the country and rehabilitating homes, businesses, and communities using public-private partnered funds. Modernizing and repairing roads, rail, airports, and waterways” across the nation, is also included in the bill.
The American Jobs Act of 2011 has even more small business benefits in addition to the aforementioned information. A $4,000 tax credit provides inducement to employers to hire workers who have been unemployed for more than six months. It also legally outlaws employers from discriminating against currently unemployed worker-candidates. Implementation of a new unemployment insurance program that has features to encourage training, job-sharing, and small business startup assistance for entrepreneurs is also part of the bill. Furthermore, the government plans through the bill to subsidize job opportunity expansion for low-income youth and adults.
Another set of pros contained in the American Jobs act of 2011 is the extension of the 2011 payroll tax cut for working Americans to remain effective throughout 2012. The White House estimates that this cut extension will provide “a $1,500 tax cut to the typical American family, without negatively affecting the Social Security Trust Fund.” (WhiteHouse, 2011) Moreover, the stimulus bill would put into practice a program allowing more homeowners to qualify to refinance their homes at todays prevailing low rates. The White House estimates that this provision will “put more than $2,000 a year in a familys pocket.” (WhiteHouse, 2011) Regarding the current deficit, “The President will call on the Joint Committee to come up with additional deficit reduction necessary to pay for the Act and still meet its deficit target.” (WhiteHouse, 2011)
Cons of American Jobs Act of 2011
There are two major reasons the job act will not have such a positive effect on our economy as some would have it. Many people fear that the job act will not only be a bad thing for our country but also because we are one of the worlds super powers, it will have a negative impact on countries in Europe and other parts of the world. Because we live in a global economy, the financial well-being of other countries is essential to our economic growth.
One of the biggest concerns about the Job Act from economist is that it is just not worth putting our country in that much more debt without a guarantee that this will work. President Obama wants to use 447 billion dollars to spark more jobs, but because of the amount of debt our Country is in, it does not present a good solution. Another reason people are very pessimistic about the job act would be because in 2009 President Obama proposed a stimulus package that had a 787 billion dollar price tag and to this day has had little or no positive effects on the economy.
Increasing taxes on successful business will make matters worse. A part of the job act will be for the successful business to pay more taxes to generate more money, but on the level that the Obama Administration plans presents a problem. If we raise the taxes on such companies like most banks, Coke, Ford, GMC, and others they will