With the September non-farm payrolls printing a better-than-expected figure, I think it’s time for us to revisit the American Jobs Act proposed by Obama that I talked about exactly one month ago. Has the Senate passed it? Or is it back to the drawing board for Obama?
Before I answer, let’s briefly take a look at the three main ways that the Jobs Act could support the labor market:
The Jobs Act proposes to cut taxes for the first 5 million USD in payroll salary. Hopefully, the increased savings will encourage small businesses to add new workers or raise salaries.
Secondly, the Jobs Act plans to give tax credits to companies that hire unemployed veterans. Tax credits will also prevent the layoffs of teachers, cops, and firefighters.
And lastly, Obama’s bill will allow individual states to make use of jobless insurance money for employment programs like voluntary on-the-job training and entrepreneurship opportunities.
Unfortunately, even though the Jobs Act had good intentions, it was still met with a lot of criticism. The Jobs Act was seen as only a short-term fix as it didn’t address the longer-term issues like the weak housing market and the European debt crisis that dampen economic growth.
Additionally, the Jobs Act was very expensive… like 447 billion USD expensive! This isn’t something you want in country whose government just had a huge argument over the debt ceiling!
Fast forward to October 12, the Senate finally came to a decision. The Senate REJECTED the Jobs Act. The final tally was 50 votes supporting the bill and 49 against it.
Apparently, the main reason the Jobs Act wasn’t passed was because the Republicans didn’t like how the bill proposed to add a 5.6% surtax to those with annual incomes over one million USD.
The Senate believed that it would hurt small companies greatly since 80% of the millionaires own the small-to-medium enterprises (SMEs) that employ over 300,000 workers. The bill could prompt “class warfare” and increase the tension between the rich and the average American.
Because of that, President Obama plans to break down the jobs bill into smaller parts and see which components have a better chance of being approved by the lawmakers. Since plenty of Democrats strongly opposed the bill, Obama is preparing to have a talk with them to discuss which specific proposals could win their support.
Aside from that, the President is urging lawmakers to do the right thing and put the country’s well-being ahead of their political parties.
You see, there’s a bit of a conspiracy theory going on regarding the passage of the jobs bill. Rumor has it that, on the one hand, Republicans think that the bill’s approval would help Obama in his re-election campaign. Since they don’t want that to happen, they feel inclined to oppose whatever economic solution Obama puts forth. On the other hand, word through the grapevine is that Democrats purposely designed the bill to fail so that anyone who votes against it will look bad.
At this point in time, U.S. lawmakers can’t afford to play these mind games with each other. The U.S. is currently dealing with above 9% unemployment with over 14 million Americans without jobs.
Although we did see some bright spots in the September NFP report, job creation efforts have still fallen short of what Obama promised. Bear in mind that there are still 1.5 million fewer jobs today than when Obama’s economic package pushed through in 2009.
That being said, the U.S. government better step up its efforts in job creation to boost the ailing economy. As I mentioned before, Obama’s proposed jobs bill might not have far-reaching effects but it’s definitely a good start.