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President Obama sent his proposed jobs legislation to Congress today and as promised, it is fully paid for. From Monday's press briefing with Jay Carney and White House Budget Director Jack Lew:
This is a standalone bill. It has the investments in growth and jobs, and it has some provisions that pay for it. By raising the target of the joint committee what we're saying is Congress should pass the jobs bill now with the pay-fors, and when the joint committee reaches its decisions later in the fall, it can then either put in new offsets to pay for it, and that would trigger the pay-fors in the bill off, or it can do the original target of $1.5 trillion and then the pay-fors that are in the jobs bill will stand.
So how does that work, exactly? Well, the White House is calling for them to "pass this bill right now." They sent the bill to Congress. The bill has all of the jobs provisions he outlined in his speech last Thursday, along with two different pathways to pay for it. The first one is to increase the supercommittee targets. The second is to propose specific pay-fors which will trigger if the supercommittee does not meet the targets. Those are, according to Lew, the following:
First there's a limit on itemized deductions and certain exemptions for individuals who earn over $200,000, and families earning over $250,000. That limitation raises roughly $400 billion over 10 years.
There is a provision that would treat carried interest -- that's the interest earned by investment fund managers -- as ordinary income, rather than taxing it at the capital gains rate. And that would raise $18 billion.
There are a number of oil and gas provisions, which, collectively, raise $40 billion. That would -- with the enactment of these provisions, would treat the oil and gas industry like other industries, taking away the special preference. And finally, the corporate jet depreciation rule is changed. Right now corporate jets are depreciated over five years; commercial over seven. It would treat commercial and corporate jets the same, at five years. That raises $3 billion.
In the aggregate, these provisions actually raise $467 billion. It intentionally overachieves because these are based on our estimates internally. When the Congress estimates tax provisions, and we estimate tax provisions, they rarely are pinpoint-accurate to the same number. Sometimes they're higher; sometimes they're lower. And it just built in a cushion so that as we go through the process of having the scoring done on the Hill, we’ve built in a cushion for the differences that happen. But we do believe we’ve overachieved, which would leave a bit of excess.
I don't know if this bill will pass in any form. There's a systemic problem in the House of Representatives that may kill it. But we have an opportunity here. This bill, with few exceptions, is a progressive model for moving forward. It doesn't touch Medicare or Social Security. It pays for tax preferences and other expenditures with tax hikes on the rich. These are all ideas that an overwhelming majority of people in this country support, regardless of party.
However, Republicans are showing weakness. The conciliatory tone taken after the jobs speech was uncharacteristic, even if it's most likely an act. After three years of just saying no, they're suddenly all teary-eyed over bipartisanship. Awwww. That new love of bipartisanship wouldn't have anything to do with their drop in the polls and hostile town hall meetings over the summer, would it? Yet, their professed new love of bipartisan action hasn't swayed the White House this time around. The President responded to those calls for compromise, love and bipartisanship by saying they should pass the whole bill, right now. Jay Carney repeated that theme in his press conference today:
I'm going to -- before I go straight to questions, I'm going to respond to a couple of things here. Tricia, on yours, the President believes the United States Congress should, upon receiving the American Jobs Act, pass it. He is submitting a bill that, by the estimate of any economist on the outside whose PhD is worth the value of the paper it’s printed on, would say creates jobs and grows the economy by incentivizing the private sector, by putting more money in Americans’ pockets, by putting teachers back to work, putting construction workers back to work, police and firefighters. And he believes the American Jobs Act should be passed by Congress.
There's only one way I see for this battle to be won. It's going to be up to all of us to be out in the street (with correctly spelled signs, please) calling for the bill to be passed right now, as it is. Even then, it's doubtful it will pass, but it will at least draw a sharp distinction between who is acting on behalf of the people and who is acting on behalf of the wealthy people and corporate interests.
Ezra Klein sees it this way:
The GOP might be working to showcase a more conciliatory tone in public, but that new tone does not mean they’re willing to talk taxes. Michael Steel, spokesman for Speaker John Boehner, e-mailed a quick, and negative, reaction to the White House’s announcement: “This tax increase on job creators is the kind of proposal both parties have opposed in the past. We remain eager to work together on ways to support job growth, but this proposal doesn’t appear to have been offered in that bipartisan spirit.”
But perhaps the point of the proposals isn’t to attract GOP support that, in all likelihood, will never come. Perhaps the point is to force the GOP to make a difficult choice: either come back with offsets the White House can accept in place of these policies, or try to explain why keeping taxes low on the rich is more important than helping the jobless.
All in all, these pay-fors make me less optimistic that much of the jobs package will pass, though my guess is they will make a lot of liberals more optimistic that the White House is finally willing to wage a public campaign on behalf of its policy ideas.
Jobs are a universal concern right now. From CEOs to factory workers, jobs are evaporating with nothing to replace them. The President has proposed a good first step. I understand the Progressive Caucus plans to announce augmented proposals to his, which I will be writing on when they are released. As I understand it, they will layer even more opportunities for jobs onto the AJA in a complimentary fashion. Without pressure on these stubborn, selfish Republicans to step up for the people they represent, they'll think it's perfectly fine to behave just as they have so far and cater to their corporate overlords. It's time they heard some other voices in their districts, in their states, and across the country.
I like the White House's approach on this. It would seem they're listening to progressives more carefully. That's not to say that we shouldn't have concerns about the separate deficit reduction package they're sending next week, but this bill, as proposed, would be good for the country and a step toward an improving economy.