Economists have now had a chance to examine President Obama’s proposals for job creation, and the reviews are, thus far, very positive. The forecasting firm Macroeconomic Advisors projects that the Obama jobs plan would increase growth b 1.3 percent, leading to an addition 1.3 million jobs. Mark Zandi of Moody’s was even more optimistic, projecting a 2.0 percentage point boost to the economy with an addition 1.9 million jobs created. Despite the seal approval from some of the top macroeconomists, there is still a great deal of skepticism about whether the plan can pass through Congress.
The President’s job creation plan includes a diverse mix of proposals in an attempt to gain bipartisan support. The President proposed tax cuts for businesses and individuals in order to create job growth. Republicans generally favor tax cuts, particularly those directed at the employers. The President also proposed an investment in infrastructure projects and an extension of unemployment benefits for the jobless. Those proposals will gain support from the Democrats in Congress.
The problem for the White House is getting the whole package through a House controlled by Republicans and then a Senate controlled by Democrats. If the package does too much to appease one party it will draw the opposition of the other party. If Obama agrees to raise the eligibility age for Medicare in order to pay for the plan he may encounter significant Democratic opposition in the Senate. Republicans have already expressed some opposition to any new spending on infrastructure and an extension of jobless benefits. However, if they cut out those parts of the bill it will make the package even less appealing to Democrats in the Senate.
In addition, the tax cuts proposed by President Obama are not the kind of tax cuts that Republicans prefer. The GOP is most concerned about extending all of the Bush tax cuts beyond 2012, even those for the wealthiest Americans, and lowering the corporate tax rate. The Obama plan focuses more on payroll tax cut that would mostly benefit the middle class. Republicans may choose to not pass any tax cut in hopes they get their own tax cuts passed at a later, possibly in 2013.
Finally, it is worth noting that if the plan really did work in creating of lots of new jobs it would probably help President Obama’s re-election chances in 2012 as the Republicans are trying desperately to take back the White House. If Republicans want to kill the bill they can simply ignore it. The bill will have to pass through Republican-controlled committees in the House of Representatives. The Republicans chairmen of the committees could simply not bring the bill up, or bring it up and significantly change it to make unpalatable to Democrats. Even if the bill passes out of committee it then could die if Speaker Boehner simply refuses to bring it to the floor for a vote.
The White House surely knows about all of these possibilities, which is why President Obama now is on the road try to build public support for the package. If the public is paying attention it will put pressure on Republicans to do something in order to avoid the label of a “do nothing Congress” ahead of the 2012 elections. However, if the public loses focus on the issue it will allow Republicans to kill the legislation silently with little-to-no political consequences.