WASHINGTON (CN) – Propelled by a new report of strong economic growth at the end of last year, President Obama detailed his jobs proposal Friday, which invites businesses to hire and give raises at the government’s expense.
His visit to the Chesapeake Machine Company in
Obama said he wants to reward small businesses with a $5,000 tax credit for every employee they hire this year, and to give tax breaks for increases in salary beyond inflation.
“So if you raise wages for employees making under $100,000, we’d refund your payroll taxes for every dollar that you increase those wages,” Obama said.
In a telephone interview, Research Director for the Committee on Economic Development Joe Minarik said the program would likely be too small to directly affect jobs, contrasting the size of the rumored $60 billion that the proposal would involve to the massive $787 billion stimulus program that’s been put in place.
“Its impact is probably going to be more psychological,” he said, but noted that psychological impacts can also be important in spurring growth.
Obama has also proposed that repaid bailout money should be reapplied to provide loans for small businesses.
He predicted that more than 1 million small businesses would take advantage of the tax incentives and painted the plan as one of the most effective ways to stimulate job growth.
Towering unemployment, which continues to hover at 10 percent, has been a thorn in the administration’s side despite other economic gains.
The day before, Obama was in Tampa, Florida to announce that $8 billion has been awarded to develop the first nationwide high-speed rail project, which the administration promoted as a way to create jobs and spur the economy by supplying fast and efficient travel.
The House has already passed a jobs bill, but the legislation is now caught up in the Senate, which traditionally takes longer to act.
Obama has called on the Senate to hurry in getting the bill to his desk and made a jab at the slow pace of the government while discussing his tour or the company.
“It’s nice to see a functioning, well-oiled machine, he said. “That’s a nice change of pace from what we see sometimes up in
Obama mentioned a same-day Bureau of Economic Analysis report that the economy expanded by 5.7 percent during the last quarter of 2009, and said it “affirms our progress.” He compared that to the economic “nosedive” he saw before taking office, when the economy was losing 700,000 jobs each month.
“We’ve stopped the flood of job losses, we’ve stabilized the financial system, and we can safely say that we’ve avoided that looming depression,” he said.