The American Jobs Act is a complex proposal that has been subject to a lot of confusing rhetoric about its provisions. The Obama Administration maintains that it will help American companies by boosting the economy; however, many in Congress are concerned it will worsen the economic situation. The proposal has four main provisions:
Jobs: The American Jobs Act would grant businesses tax credits for hiring unemployed veterans and would supply funds to prevent layoffs of teachers, policemen, and firemen. It also gives money for unemployed workers to rehabilitate foreclosed homes and businesses. The Act would fund various projects to modernize schools as well as repairing public infrastructure such as airports, railways, and roads.
Assistance for Small Businesses: Today’s economic crisis has been particularly difficult for small businesses, which are a vital component of the American economy. The Act calls for a 50% reduction in payroll taxes for a business’s first $5 million in payroll. This provision would benefit 98% of U.S. companies. Small businesses that hire new workers could eliminate payroll taxes altogether. It also includes provisions that would improve the accessibility of credit so that small companies can grow.
Payroll Tax Relief: The Act proposes cutting 2012 payroll taxes by 50% for 160 million workers, an extension of the payroll tax cuts from last year. An American family bringing in $50,000 a year would receive a $1,500 tax reduction. However, this tax cut would not have an impact on Social Security funding. The Act also directs the federal government to work with mortgage lenders in lowering barriers for mortgage refinancing and to encourage more people to refinance at today’s low rates.
Returning to Work: The American Jobs Act would make changes to the unemployment insurance system and would prolong benefits for unemployed workers. It would grant states more flexibility in using unemployment insurance for “bridge to work” projects which benefit people who have been unemployed for a long time. These programs might include financing for volunteer programs and on-the-job training. The Act would provide funding for programs to support unemployed workers in starting their own businesses as well as tax credits for businesses that employ long-term unemployed workers. Other programs would assist low-income youth and adults in finding work.
Opposition to the Act: Because Republicans in Congress oppose many components of the American Jobs Act, the Obama Administration probably will not be able to get it passed during this term. Instead, the Administration is concentrating on getting various components through Congress. The Republicans may consent to some aspects of the plan, including the extension of payroll tax cuts and unemployment benefits. However, they already voted down one of the Act’s provisions to provide funding for teachers, policemen, and fireman. Many Democrats are also wary of supporting the bill as a whole – although they may vote for certain aspects – since many provisions could contribute to the federal deficit.