President Obama will need a home run when he rolls out his new, long-awaited jobs plan next week. His approval rating has plunged – it’s currently at 40%, according to Gallup – and some economists say it’s too late for the White House to make a dent in the 9.2% national unemployment rate before November 2012, especially if the economy slips back into recession.
Lakshman Achuthan, co-founder of the Economic Cycle Research Institute, told the Daily Ticker that it appears we are heading in the direction of double-digit unemployment. The job market is “going to continue to weaken at least through the end of this year,” Achuthan said.
(GALLERY: 5 Ways to Repair a Trashed Credit Score)
So with that grim backdrop in place, what is the president planning in his jobs release? Investors, consumers, and especially the unemployed would love to know – so here’s an educated guess.
No more big numbers – The federal government has emptied it six-shooter in stimulus terms, so don’t expect anything like the $800 billion package that Congress passed in 2009. Even a relatively modest $200 billion or $300 billion would face stiff opposition in Congress, and if enacted, would inch Uncle Sam closer to that new debt ceiling before the 2012 election.
An extension of the one-year payroll tax cut – The Social Security payroll tax cut ends in January, but expect the White House to push to keep it rolling. Higher gas prices have curbed the benefit this year, but the current payroll tax cut does, on average, increase workers’ disposable income by 0.7%, and should boost spending. Like stimulus spending programs, extending the Social Security tax cut would boost the deficit. But Republicans, who generally don’t like taxes or Social Security, will probably back the measure anyway.
A public school renovation program – President Obama is likely to push for a widespread program to fix and renovate U.S. public schools. No dollars signs are attached yet, but the White House would love a program that used federal dollars to spruce up community schools. Such locally based “high visibility” projects might play well with middle class voters, and make Republicans nervous about casting their vote against.
A “bridges and roads” public works initiative – This one hearkens back to President Franklin D. Roosevelt’s New Deal back in the 1930s at the height of the Great Depression, and it is probably the least likely to actually materialize. Still, expect President Obama to advocate for the funding of public works programs to repair the nation’s bridges, tunnels and roadways. The president has been floating the idea for an “infrastructure bank” for well over a year. The problem is the original stimulus bill was supposed to tackle the problem of America’s ailing infrastructure, but the vast majority of the $800 billion in the bill went directly to states or to tax cuts. Infrastructure spending was mostly spent on smaller “shovel-ready” projects. Expect a sharper pitch this time, but with so many in Washington skeptical about the benefits of the first stimulus package, and weary of new spending programs, this proposal probably won’t go too far.
(GALLERY: 12 Things You Should Stop Buying)
Job training for the long-term unemployed – Career training has long been a favored by the White House as a solution to unemployment. Increasingly, more and more economists, too, are signing on to the idea that the nation’s jobless problem is a structural one – i.e. not just a function of the weak recovery, but a product of a mismatch of the skills of workers and the positions that companies are looking to fill. So expect the White House to propose programs to help transition those who used to build houses, and workers in other industries that are unlikely to rebound anytime soon, to other careers. A component that would aid the nation’s military veterans may also be weaved into the mix.
Mortgage help for Americans – The White House will likely tout a federal government-backed initiative to offer refinancing deals to struggling and underwater homeowners that could reduce their monthly mortgage payments and help keep them in their homes. What does this have to do with jobs? Economists are mixed on that one. But many believe we won’t be able to turn around the economy until we fix the sector that put us in the recession in the first place. What’s more, if you lower homeowner’s debt burden that might give them more money to spend on other things, boosting the economy.
A tax cut for business hiring – President Obama is expected to reach out to businesses, especially small ones, with a tax cut for companies that hire more more workers. Businesses have been looking for more signs of clarity from the federal government, and a tax break for businesses is a good start.