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updated: 9/8/2011 10:22 PM

Cut taxes, Obama tells Congress in $450B jobs plan

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  • President Barack Obama arrives Thursday to deliver a speech to a joint session of Congress at the Capitol in Washington. Watching are Vice President Joe Biden and House Speaker John Boehner.

      President Barack Obama arrives Thursday to deliver a speech to a joint session of Congress at the Capitol in Washington. Watching are Vice President Joe Biden and House Speaker John Boehner.
    Associated Press

  • President Barack Obama delivers a speech Thursday to a joint session of Congress at the Capitol in Washington. Watching are Vice President Joe Biden and House Speaker John Boehner.

      President Barack Obama delivers a speech Thursday to a joint session of Congress at the Capitol in Washington. Watching are Vice President Joe Biden and House Speaker John Boehner.
    Associated Press

  • Vice President Joe Biden, left, talks Thursday with House Speaker John Boehner at a joint session of Congress at the Capitol in Washington.

      Vice President Joe Biden, left, talks Thursday with House Speaker John Boehner at a joint session of Congress at the Capitol in Washington.
    Associated Press

  • Video: Cantor on Obama's speech

  • Video: Obama: US faces crisis, pushes jobs plan

 
Associated Press

WASHINGTON -- Attacking a deepening jobs crisis, President Barack Obama challenged a reluctant Congress Thursday night to urgently pass a larger-than-expected $450 billion plan to "jolt an economy that has stalled." He urged lawmakers to slash Social Security taxes for tens of millions of Americans and for almost every business to encourage hiring.

"Stop the political circus," an animated Obama told a joint session of Congress in a nationally televised speech. Over and over he implored lawmakers to "pass this jobs bill."

Open to discussion but making no promises, Republican House Speaker John Boehner said Obama's ideas would be considered but the president should give heed to Republicans' as well. "It's my hope that we can work together," he said.

In announcing a plan heavy on the tax cuts that Republicans traditionally love, Obama sought to achieve multiple goals: offer a plan that could actually get through a deeply divided Congress, speed hiring in a nation where 14 million are out of work, shore up public confidence in his leadership and put Republicans on the spot to take action.

The fate of economy will define Obama's re-election bid, but he sought to dismiss that element as political fodder that means nothing to hurting Americans.

Obama never estimated how many jobs would be created by his plan, which also includes new federal spending for construction, hiring and an extension of jobless benefits for the long-term unemployed. Despite his promise that it would all be paid for, he has not yet released the details on how.

His message was unmistakable to the point of repetition, as he told Congress more than 15 times in one way or another to act quickly. That was meant as direct challenge by a Democratic president to the Republicans running the House to get behind his plan, especially on tax cuts, or be tarred as standing in the way.

The urgency of the jobs crisis is as pronounced as it's been since the early days of Obama's term. Employers added zero jobs last month. A whopping number of Americans -- about eight in 10 -- think the country is headed in the wrong direction and Obama's approval ratings are on the decline.

In the House chamber, Obama received a warm response but then the usual political pattern took hold, Republicans often sitting in silence on the applause lines that had Democrats roaring. Boehner had chummy moments with Vice President Joe Biden at his side before the speech but was somber over Obama's shoulder as the president spoke.

"The people of this country work hard to meet their responsibilities. The question tonight is whether we'll meet ours," Obama said. "The question is whether, in the face of an ongoing national crisis, we can stop the political circus and actually do something to help the economy."

The newest and boldest element of Obama's plan would cut the Social Security payroll tax both for tens of millions of workers and for employers, too.

For individuals, that tax has been shaved from 6.2 percent to 4.2 percent for this year but is to go back up again without action by Congress. Obama wants to deepen the cut to 3.1 percent for workers.

Obama would also apply the payroll tax cut to employers, halving their taxes to 3.1 percent on their first $5 million in payroll. Businesses that hire new workers or give raises to those they already employ would get an even bigger benefit: On payroll increases up to $50 million they would pay no Social Security tax.

Obama proposed spending to fix schools and roads, hire local teachers and police and extend unemployment benefits. He proposed a tax credit for businesses that hire people out of work for six months or longer, plus other tax relief aimed as snaring bipartisan support in a time of divided government.

The White House put the price tag of Obama's plan at $447 billion, with about $253 billion in tax cuts and $194 billion in federal spending.

The president said he would make his case to the public and will waste no time taking his sales pitch on the road. His first stop will be on Friday at the University of Richmond in the Virginia congressional district of House majority Leader Eric Cantor, a frequent critic of the president's policies.

Politics shadowed every element of Obama's speech. He appealed to people watching on TV to lobby lawmakers to act. He did the same thing before his speech in an email to campaign supporters, bringing howls of hypocrisy from Republicans who wondered why Obama was telling them to put party above country.

The American public is weary of talk and wary of promises that help is on the way.

And the window for action is shrinking before the 2012 presidential election swallows up everything.

Under soaring expectations for results, Obama sought to put himself on the side of voters who he said could not care less about the political consequences of his speech. "The next election if 14 months away," Obama said, adding that the people who hired every elected leader in the room need help "and they need it now."

Administration officials bristle whenever critics of their original stimulus plan note that it did not live up to the job creation estimates the White House issued in 2009. As a result, the White House is leaving it to outside economists to render their verdict on the new plan.

Mark Zandi, one of several economists asked by the White House to evaluate the president's proposal ahead of his speech, said that if enacted it would add 1.9 million jobs and reduce the unemployment rate by one percentage point. Zandi, chief economist for Moody's Analytics, said the expanded payroll tax cut would be responsible for the most increase in hiring, adding about 750,000 jobs. The tax cut for employers, he said, would add about 300,000 new jobs

As to paying for it, Obama will ask a special debt panel in Congress to find enough savings to cover the costs of his ideas. He says he'll release specifics a week from Monday along with a proposal to stabilize the country's long-term debt. Among them: raise taxes on the wealthy, an idea Republicans have already rejected.

Most of the $447 billion package would be spent in 2012. The White House says Obama's as-yet-unrevealed plan for payment would spread the cost over the long term, likely over 10 years.

The president said deepening the payroll tax cut would save an average family making $50,000 a year about $1,500 compared to what they would if Congress did not extend the current tax cut.

"I know some of you have sworn oaths to never raise any taxes on anyone for as long as you live," Obama said, a reference to the conservative tea party influence on many House Republicans. "Now is not the time to carve out an exception and raise-middle class taxes, which is why you should pass this bill right away."

No incumbent president in recent history has won re-election with the unemployment rate anywhere near the current 9.1 percent.

Obama's jobs plan put a special emphasis on the long-term unemployed -- those who have been out of work for six months or more. He repeated his calls for a one-year extension of unemployment insurance in order to prevent up to 6 million people from losing their benefits, and he proposed a $4,000 tax credit for businesses that hire workers who have been out of work for more than six months.

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