Another $3 billion would come from changing the depreciation schedule for corporate jets to match the longer schedule associated with commercial airliners.
The proposal would have $467 billion worth of savings and higher revenue, more than offsetting the cost of cutting payroll taxes and spending on infrastructure and state aid, White House budget director Jack Lew said. A congressional supercommittee charged with finding long-term deficit reductions can accept Obama's proposal to pay for the package or come up with its own plan later this year, Lew said.
Setting Priorities
"We've got to decide what our priorities are," Obama said as he released the legislative text yesterday. "Do we keep tax loopholes for oil companies -- or do we put teachers back to work? Should we keep tax breaks for millionaires and billionaires -- or should we invest in education and technology and infrastructure, all the things that are going to help us out-innovate and out-educate and out-build other countries in the future?"
Gene Sperling, director of the White House National Economic Council, said the administration wants Congress to pass the proposal "in its entirety" and not separate the offsets, spending and tax cuts.
If only parts of it were passed by Congress, Obama would view that as "partial progress," and that he would "come back and fight and fight to get the other components," Sperling told reporters after defending the jobs program during a speech today at the American Action Forum, a Washington-based research group.
Supercommittee's Role
Obama's jobs plan will likely put the supercommittee in an even deeper hole because it would have to come up with additional money to prevent the administration's proposal from widening the deficit.
The 12-member panel faces an uphill battle to produce a plan to cut at least $1.2 trillion from the federal budget by Nov. 23. If the panel doesn't act, or if its plan is rejected by Congress, an automatic $1.2 trillion in cuts would take effect in 2013.
The centerpiece of Obama's plan to boost hiring and economic growth is a cut in the payroll tax, which covers the first $106,800 in earnings and is evenly split between employers and employees. Obama would reduce the portion paid by workers next year to 3.1 percent from 4.2 percent now. The rate was reduced by two percentage points under the terms of a tax deal reached in December. That cut is set to expire Dec. 31, which would push the tax rate back to 6.2 percent.
Businesses would get a payroll tax cut for their first $5 million in wages and would pay no payroll taxes on the first $50 million of incremental wages in 2012, compared with 2011.