Last night, President Obama addressed Congress and the nation about unemployment, the economy and what the future holds.
His speech revealed a bleak truth—things aren’t looking so rosy right now—but he also proposed a plan to create more jobs in the future. It’s clear that he hopes to shift the dialogue in Washington away from the budget deficit and onto jobs creation.
He came forward with the American Jobs Act, urging Congress to pass the $447 billion bill "right away." As he noted more than once, it would be paid for by long-term spending cuts rather than adding to our current deficit.
The gist of his speech: If lawmakers don’t act now, they’d be implying that the economy is fine as it is.
Spoiler alert: It’s not.
Lay of Our Land: The Situation
Economists consider an unemployment rate of about 5% to be “healthy”: Anything lower than that can cause wage inflation and anything higher than that can threaten consumer spending.
Currently, unemployment in the U.S. is 9.1% and has shown little change since April. To add insult to injury, newly disappointing unemployment numbers were released yesterday morning. Companies aren’t laying off tons of people, but they aren’t exactly going on hiring sprees, either.
By way of comparison, average unemployment was 4.6% in 2007 and 5.8% in 2008. My, how times have changed.
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What You Need to Know
President Obama addressed Congress about a plan he hopes will spur new job creation. The key points of his proposal include:
- Extending unemployment insurance benefits through 2012 (those that are currently set to expire in December)
- Issuing tax credits to encourage companies to hire people who have been out of work for more than six months
- Funding infrastructure projects to improve roads, bridges, railways and airports, as well as school renovations (to bolster America's competitiveness on the world stage by building new science labs and installing high-speed internet in classrooms)
- Implementing tax cuts for middle-class families (according to the president, the typical working family would receive a $1,500 tax cut next year)
The bill is intended to spur job creation and rejuvenate a country that many fear is in danger of slipping back into a recession, or losing its superpower status. It would, Obama says, champion small businesses, while creating more jobs for construction workers, recent grads, veterans and teachers.
Economists have been reserved in their assessment of the proposal, though, noting that the plan is relatively small and that the payroll tax cuts might not have a lasting impact. To read an entire transcript of the speech, click here.
What Everyone Needs to Agree On
Of course, this speech comes on the heels of a debt ceiling debate that was divisive for politicians and regular people alike. After what was almost universally seen as the embarrassing inability of politicians to work together across the aisle, Republican leaders seem to feel pressure to agree to at least some of the president’s proposal.
House Speaker John Boehner encouraged House Republicans to attend the president's speech even though some had planned not to. Before the speech, he and Majority Leader Eric Cantor wrote a letter to the president outlining areas of possible cooperation (such as creating a program similar to "Georgia Works," which provides the unemployed with on-the-job training to expand their skill sets). We’re hopeful that politicians from both parties have learned from the debt ceiling debacle—and that cooperation and new jobs are on the way.
What can you do? If you feel strongly for or against this proposal, contact your Senator and Congressperson to tell them so. “What happens will be up to you,” Obama wrote in an email to supporters earlier this week. And it's true: Whether you agree, or disagree, with the jobs bill, this is definitely your opportunity to speak up.
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We made a cheat sheet for Bernanke’s last big speech: read this.