Illinois would get billions under Obama plan, Democrats say

Illinois taxpayers and businesses would benefit from billions of dollars in investment and thousands of new jobs under President Barack Obama’s proposed jobs plan, Democratic lawmakers said Friday. Republicans said they still need to see more details, including how it will be paid for.

The Senate Democratic Steering and Outreach Committee released an analysis saying Obama’s American Jobs Act would invest $4.5 billion in Illinois transit and building projects and provide money for teachers, police and firefighters — saving or creating up to 50,000 jobs. It also said 260,000 Illinois businesses would receive a payroll tax cut, while cuts to workers’ payroll taxes would save a typical Illinois household about $1,640.

The head of a tax watchdog group said Illinois could benefit from infrastructure investments based on historical evidence that such spending pays off, but cutting business and worker payroll taxes probably wouldn’t help.

“Spending money in the local economy creates a positive economic multiplier,” said Ralph Martire, executive director of the Chicago-based Center for Tax and Budget Accountability. But he said the idea that cutting business payroll taxes would spur new hiring is “bogus” because corporate profits already are up without a corresponding increase in hiring.

“What makes you think letting businesses keep more of their profits going forward is going to create more jobs when it’s not now?” Martire said. “There is no logical basis to make that assumption.”

He also said expanding a payroll cut for workers might help individuals, but it probably wouldn’t generate much new economic activity.

Gov. Pat Quinn issued a statement late Thursday praising Obama’s “vision for American innovation, infrastructure, fiscal responsibility and bipartisanship.” But his office wouldn’t respond to questions Friday about the economic analysis.

Pat Brady, chairman of the Illinois Republican Party, said he favors the payroll tax cut but the rest of the plan is, in effect, a stimulus bill and there’s no reason to believe that this one would work when Obama’s earlier, and bigger, stimulus package failed.

Besides, he said, “Why do we need to wash the money through the government rather than just a direct stimulus through tax cuts?”

The analysis said 260,000 firms in Illinois would see a payroll tax under the president’s plan. Brady said he has no idea if that number is correct or how much it would boost the state’s sluggish economy — but Republicans have long suggested such a step would help.

“Anything we can do policy-wise to reduce the cost of doing business here is a positive and anything we can do directly in the pocket of consumers is a positive,” he said.

Martire said Obama’s jobs numbers do add up, based on historical multipliers and the anticipated investment.

But he said Obama is ambiguous on another part of his plan — “pathways” back to work for the unemployed, including reforming unemployment and extending unemployment benefits. The Democratic analysis says reforms could help put 330,000 long-term unemployed workers in Illinois back to work and prolonging benefits would help 104,000 residents in the first six weeks. It also says 5,900 low-income adults and 18,900 youths could be placed in jobs through a new fund.

But Obama has not yet said how he would pay for the plan.

“It’s hard to evaluate if it’s not explained,” Martire said.

That was the point of a spokesman for Republican Rep. Judy Biggert.

“For Senate Democrats to make these massive promises based on a speech defies credibility, especially when the White House has yet to send a bill to Congress,” Zachary Cikanek said in an e-mail.

He pointed to the Obama administration’s contention when the $821 billion stimulus package passed in 2009 that it would halt rising unemployment at about 8 percent. The unemployment rate, however, peaked at 10.1 percent in October 2009 and is now 9.1 percent.

Overall, Martire said, Obama’s plan “is what it is: a federal initiative that’s part public policy and part politics.”

“I think the (business payroll cuts) are pure politics but it blunts the arguments that conservatives could make,” Martire said. “The second part, those have positive short- and long-term impacts on the economy and are the best policy piece in here.”

Republican Sen. Mark Kirk said Obama’s proposals to cut the payroll tax and approve trade agreements with South Korea, Colombia and Panama should receive quick, bipartisan action. But he said he wants more details on how to pay for new spending.

Sen. Dick Durbin, a Democrat, said the plan is fair “and is fully paid for.”