American Jobs Act

With all eyes on the Super Committee as it finishes determining the fate of the federal budget, Congress has been more quiet than normal. The same cannot be said about the White House, however, as President Barack Obama has taken a series of executive actions to promote his own economic policy agenda. In the past week, the White House has announced plans intended to help veterans, homeowners, teachers and student loan borrowers. But will any of these initiatives move the needle on a stalled economy or provide relief to cash-starved state budgets?

President Barack Obama on Sept. 8 addressed a joint session of Congress to roll out the American Jobs Act. In the wake of a still stagnant recovery, the bill includes a combination of tax breaks and new spending designed to give the economy a booster shot and hopefully put more people back to work.  If passed by Congress, the bill would provide more than $35 billion to state and local governments to retain or rehire teachers and public safety officials. The tax measures used to pay for the bill, however, may ultimately come back to bite the very state and local governments it is designed to support.

States have received over $160 billion in budget relief since the beginning of the Great Recession both through the Recovery Act of 2009 and the Education Jobs and Medicaid Assistance Act of 2010.  The Obama administration is doubling down on this approach in its proposed American Jobs Act which includes $30 billion in direct state budget support and billions more in infrastructure and other program spending that would flow through the states over the next two years.  However, the deficit proposal revealed by the President today calls upon states to shoulder billions in long-term costs as part of a broader effort to set the nation on sounder fiscal footing. 

One week after the President unveiled the American Jobs Act, House Speaker John Boehner delivered an address before the Economic Club of Washington outlining the GOP’s Plan for America’s Job Creators.  While the President’s $450 billion plan relies on a 60/40 mix of tax measures and new spending to stimulate job growth, Speaker Boehner’s proposal rejects short-term spending in favor of a three-pronged agenda of long-term tax reform, deregulation, and reduced government spending. 

President Obama’s 155-page jobs proposal landed on Capitol Hill this week and both parties are rallying their troops for a partisan fight.  Prospects for adoption remain low and support among state leaders will likely divide along party lines.  However, the bill does contain $30 billion in state fiscal relief, in the form of the Teacher Stabilization Fund, which if enacted would have a direct impact on state budget decisions throughout the country.