Q+A-What options does Obama have to boost US hiring?

By Alister Bull

WASHINGTON, Sept 3 (BestGrowthStock) – The U.S. economy needs more
help and President Barack Obama says he will address new ideas
next week to boost hiring.

Obama might push proposed tax measures including breaks for
businesses to help them hire, although the White House is
adamant it will not propose a second giant effort like 2009’s
$814 billion stimulus package.

His administration’s caution reflects the hard political
truth that there are not enough votes in the U.S. Congress to
deliver another government spending bill to rival the package
he signed in 2009.

Opinion polls show voters are worried about the record U.S.
deficit. Republicans have castigated Obama for what they call
reckless spending, sapping support for more action among
Democrats in tight races in November’s U.S. congressional

But voter discontent over unemployment, as well as recent
economic data that the White House calls “unsettling,” means
Obama has got to be seen taking more steps to lift growth.

His fellow Democrats already risk punishment by voters in
November. Failure to make Americans feel significantly more
confident about their own financial well-being also could hurt
Obama’s chances in 2012 for a second presidential term.

Here are some questions and answers about what is likely to
be on the table, what economists say about the various options,
and why more stimulus may be needed.


— Tax cuts to encourage hiring in the United States. This
could include relief for employers to encourage hiring, some
form of payroll tax holiday that would put money into
employees’ pockets, or a combination of both. Tax cuts for
businesses are the kind of measures that might get Republican
support in Congress.

— Extending former President George W. Bush’s tax cuts for
families earning less than $250,000 a year. Experts from the
congressional Joint Committee on Taxation say this costs $1.3
trillion over a decade, and add a further $700 billion if the
tax cuts for richer Americans are also extended, as Republicans
want. But if the cost of extending the alternative minimum tax
is also included, that rises to $2.5 trillion over the next
decade for America’s less-wealthy families.

— Making permanent a tax credit for research and
development. This is already in Obama’s budget and a one-year
extension has been written into legislation currently before
Congress. Obama has linked R&D to investment in clean energy.

— New spending on infrastructure. Obama has talked about
rebuilding the country’s aging bridges, roads and power grid,
as well as the environmental and economic benefits of
high-speed rail and of the desirability of a national
high-speed broadband network.


— Getting Congress to agree to renewing Obama’s Making
Work Pay tax credit of $800 for a married couple or $400 for
individuals. Available for taxpayers who make less than $75,000
a year, it will expire at the end of 2010 unless Congress votes
to extend it.

— Getting Congress to agree to extend long-term
unemployment insurance again. This expires at the end of
November unless Congress backs another extension.

— More bonus depreciation to encourage businesses to
investment in capital equipment, which the revenue service
allows them to write off at a faster pace, helping small
business cash flow without producing a hefty price-tag for the
deficit because the costs are pushed out into the future.


— Top Obama adviser Christina Romer, in her final speech
as chairwoman of the White House Council of Economic Advisers,
on Wednesday urged policymakers to find the will to act to
spare the country the damage of high unemployment.

Growth slowed in the second quarter to 1.6 percent and
other recent data has been mixed, keeping concerns alive that
the economy could be heading toward a double-dip recession.

She estimated the economy faced a shortfall in demand equal
to 6 percent of GDP. Simply using the last dollar measure of
the size of the U.S. economy, adjusted for inflation, that adds
up to $791 billion. Other economists say the amount is really
much greater.

“Given the seriousness of the state of unemployment and the
economy, $1.2 trillion over the next two years would be
reasonable,” said Dean Baker, co-director of the Center for
Economic Policy Research, a Washington think tank.


— Not going to happen:

“The options under consideration build on measures the
president has previously proposed, and we are not considering a
second stimulus package. The president and his team are
discussing several options, as they have been for months, and
no final decisions have been made,” White House spokeswoman Amy
Brundage said.

(Additional reporting by Kim Dixon, editing by Will

Q+A-What options does Obama have to boost US hiring?