We remain in a crippling jobs crisis. More than one in six workers is unemployed or underemployed, and nearly half of the unemployed – 5.6 million Americans - have been out of work for 6 months or more. Unemployment is 11.3% among Hispanics, 15.9% among African-Americans, 25% among young workers, and much higher among young minority workers.

The American Jobs Act

On September 8th, President Obama announced his new plan to combat this crisis: the American Jobs Act. The American Jobs Act would stimulate the economy with tax cuts for workers and small businesses; tax incentives to hire unemployed veterans and the long-term unemployed; state and local aid to prevent 280,000 teacher layoffs and keep firefighters and police officers on the job; immediate investments in our roads, railways, airports, and schools; and new and improved job training and job connection services for the unemployed. In total, the plan would amount to $450 billion worth of stimulus. If it were all spent in 2012, it would be bigger, in annual terms, than the Recovery Act of 2009. Mark Zandi, chief economist at Moody’s Analytics and an advisor to John McCain, estimates that the plan would create 1.9 million jobs and cut the unemployment rate by a percentage point.

The Jobs Act floundered in Congress under the weight of Republican obstructionism, but we continue to support any and all efforts to pass any piece of the Jobs Act to provide much-needed relief to the American economy.

Deficit Reduction

To pay for the Jobs Act and reduce the deficit once the economy gets back on its feet, President Obama has proposed a comprehensive deficit reduction plan. It asks the wealthy to pay their fair share and rejects further cuts in key investments for the future and in programs and services that are critical for low-income and vulnerable Americans. Although we oppose the cuts it would make to Medicaid health services for low-income people, the plan overall is a fair, balanced approach and a big step forward in the debate. To visualize the makeup of the deficit plan:

For more detail, see here.

The Payroll Tax Cut and Unemployment Insurance Extension

Before the holidays, Congress passed a two-month extension of both the employee payroll tax cut, which currently provides about $1,000 for the average middle-class family, and the current ceiling on the maximum number of weeks of unemployment insurance benefits. That ceiling had been roughly 99 weeks (varying by state), but in the December extension deal, President Obama and the Republicans agreed to shorten the maximum period of eligibility for unemployment insurance by twenty weeks, to 79 weeks.

When the country is not in a recession, unemployment benefits are normally capped at 26 weeks, but this cap has historically always been extended during periods of very high unemployment. This is because:

• It is the economy that makes it impossible for workers to get jobs at times like this, not worker laziness or lack of effort. Today, for example, there are four unemployed workers for every job opening. That’s not the fault of the workers. If anything, today’s economic woes are the fault of inadequate government regulations on a casino-like financial sector.
• Unemployment benefits, because they are all spent nearly as soon as the workers receive them, are among the most cost-effective ways to stimulate the economy.
• Even if there were slackers among those on extended benefits, all we would accomplish by forcing them off unemployment would be to have them fill a job that would otherwise be filled by someone who really wanted it.

Now, with the extension of the unemployment ceiling and the payroll tax cut scheduled to expire once more, Republicans are demanding more spending cuts beyond the $1 trillion already agreed to in December, additional reductions to the unemployment benefits ceiling, and new requirements that make it harder for unemployed workers to get benefits.

February 2012