Who Would Win Under Obama's Jobs Plan

Congress may not help teachers and construction workers as much as the president wants.

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If it were 2009, and President Obama enjoyed a comfortable margin of support in both houses of Congress, his latest jobs plan would probably sail into law, with the freshly minted stimulus money headed out of Washington tomorrow, or maybe the next day.

This time, after all, he proposed a little something for everybody. His plan includes traditional Keynesian spending on roads and bridges that engineers insist are in urgent need of repair. There are generous tax cuts for small businesses, many other companies and most ordinary workers, which seem sure to appeal to conservatives. The unemployed would get a lift, and Obama would likely keep tapping Main Street voters on the shoulder to remind them how he'd put teachers back to work and make sure cops and firefighters continue to man their posts.

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It's obviously not 2009, however, and the $447 billion price tag associated with Obama's latest plan to boost the economy is probably far too rich for Congress to stomach. Obama says that every dollar of new stimulus he proposes will be offset by deficit-cutting measures to be specified soon. And he wants a final bill by November, so his plan will make a tangible impact in 2012. But Congressional Republicans, who want sizeable cuts in all government spending, will probably balk at efforts to simply shift money from one place to another. So here's a cheat sheet handicapping who might gain from Obama's jobs plan, along with the odds that Congress will go along:

Teachers. Obama wants to spend $30 billion to hire back laid-off teachers and prevent new layoffs. A lot of schools could use the money. The 2009 stimulus plan sent about $44 billion to states for spending on education, which kept employments levels up for awhile. But since late 2009, budget cuts have forced the loss of about 277,000 local education jobs. Obama says his plan would save the jobs of 280,000 teachers, while "supporting the hiring of tens of thousands more."

Prospects: Fair at best. Despite the Main Street appeal, this is the kind of spending Congressional Republicans have soured on, since it is similar to parts of the 2009 stimulus plan, which they feel has been discredited.

Cops and firefighters. The Obama plan would spend $5 billion on public safety jobs that are threatened by budget cuts in states and cities.

Prospect: Fair, just as for teachers. Republicans love cops and firefighters, but will have a hard time adding $5 billion to the national debt on their behalf.

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Construction workers. No industry has suffered more than construction, with nearly two million workers losing their jobs since the recession began at the end of 2007. Obama wants to hire back some of them, by spending $15 billion to refurbish foreclosed homes, $25 billion to modernize 35,000 schools, $5 billion to upgrade community colleges and $50 billion to improve roads, railways, airports bridges and other parts of the nation's infrastructure. He'd also use $10 billion in federal money to seed an "infrastructure bank" that would draw private funds used to invest in more rebuilding projects. Economists generally applaud this kind of spending, because it fixes problems that would go unaddressed if the government didn't tackle them, while boosting the economy and helping improve the backbone of business.

Prospects: Weak. When Republicans complain that Obama's plan contains "more of the same," this is what they're talking about. The 2009 stimulus plan that they routinely deride contained about $100 billion in transportation and infrastructure spending, which Republicans contend did nothing to help the economy. It probably did help some, but the difficulty of being able to point to tangible results makes this kind of spending unpopular among many in Congress.

The unemployed. Obama would spend $49 billion to prolong federal extensions of unemployment insurance, which are set to expire at the end of this year. He'd also spend $8 billion on tax credits for companies that hire people who have been out of work for more than six months. And there would be new efforts to guide the unemployed back to work, through retraining, unpaid work, and other experimental methods.

Prospects: Good. The government is already spending billions on jobless aid, an expense that many economists feel is necessary to keep the long-term unemployed from falling into poverty. The reforms Obama is proposing would address concerns about unemployment insurance motivating some people to stay out of the workforce. And Obama is likely to make an extension of jobless aid one of his conditions for passing tax cuts Republicans are more comfortable with.

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Small businesses. They haven't gotten much help from Washington up till now, but Obama aims to fix that by halving the payroll taxes paid by companies on the first $5 million of taxable wages they pay, which would amount to "a sizable albeit temporary boost in cashflow" for small businesses, according to Mark Zandi of Moody's Analytics. Another subsidy would temporarily eliminate taxes on any amount of 2012 wages that's higher than the year before, as an incentive to boost hiring and give more raises. The price tag for those benefits: $65 billion.

Prospects: Good. Republicans have been clamoring for tax relief for businesses of all sizes, and Obama has made them an offer that will be hard to refuse. If they do, Obama would be able to campaign next year by touting his own friendliness to small business, compared with the Republicans' hostility to them. Congressional Republicans are unlikely to let that happen.

Big businesses. Obama wants to structure his payroll tax cuts to help small businesses, but big companies would benefit from his proposal to extend the full expensing of business investment through 2012.

Prospects: Good. This is a business-friendly idea that Republicans like and economists say provides a meaningful incentive for companies to invest in the short term. The $5 billion price tag is also relatively small.

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Most taxpayers. The costliest part of Obama's plan is an extension and expansion of payroll tax cuts that are already in place, which Obama says will cut the typical family's tax burden by $1,500 in 2012. Paychecks would simply get a bit bigger, since the federal bite would decline for one year. Since many consumers would have more money to spend, these tax cuts would indirectly boost hiring, in theory, since companies would be producing more stuff. Moody's Analytics estimates that this measure alone, if it passes, would help create 750,000 jobs.

Prospects: Good. Republicans love tax cuts to start with, and with a weak economy they'd have a hard time saying no to a plan that would put more money straight into voters' pockets. Since the $175 billion price tag is steep—and Obama says all of this new measures must be paid for by cuts elsewhere—the real challenge will be coming up with $175 billion in offsetting cuts, without harming the same people who are getting the tax break. That means there will be plenty of fireworks on Capitol Hill this fall.

Twitter: @rickjnewman

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