CHN: The State of the Union: Jobs, Health Care, and the Deficit

“I don’t quit.”  Those wondering whether the President would hold firm on his domestic agenda in the face of looming difficulties in the Senate were gratified to hear in the State of the Union address President Obama’s resolve to continue the fight for health care reform.  He tied health care and his call for protections against the excesses of the financial industry to his overall plan for economic recovery and long-term growth.
Job creation was central to the President’s concerns.  Although the State of the Union is not the forum for listing out specific policy details or funding, the President has outlined his approach in a number of speeches recently.  He proposes to increase investments in infrastructure and energy efficiency, including tax credits for consumers who purchase high efficiency products and subsidies for manufacturers of efficient energy equipment.  He wants to help small business, by increasing access to credit, ending their capital gains taxes, and providing tax breaks for hiring new workers.   The President would also invest in a better-educated workforce, saying “the best antipoverty program in the 21st century is a world-class education.”  His speech called for increased financial aid for college students, reduced cost of college loans and loan forgiveness for those in public sector careers.

Many economists and job creation advocates question whether the President’s jobs proposals are equal to the seriousness of our economic situation.  They also note the absence of targeted efforts to ensure that people with the highest unemployment rates (youth, people of color, women maintaining households, for example) get into the jobs that will be created.   Advocates have joined in Jobs for America Now, an effort to promote a package of job creation strategies including much of what the President has highlighted, but adding funding for direct creation of temporary public service jobs and for aid to states and localities to prevent massive layoffs and loss of services.  Both the President and advocates have included the extension of unemployment benefits in their plans to combat joblessness.

The President attempted to balance the need to invest now in jobs and economic growth with steps to curb long-term deficits.  He included a three-year freeze on the kinds of domestic spending that need annual appropriations from Congress (aka “discretionary” spending).  In the first year, it was reported that the freeze would result in $15 billion in cuts, but the size of the annual cut would grow in the next years.  The President would exempt from the freeze spending on the military, international programs, homeland security, and veterans’ service.  The freeze would not be achieved through across-the-board cuts, but would result from item-by-item choices, with some programs receiving increases, and other programs cut.  The President will lay out his specific choices when his budget for FY 2011 is released on February 1.  Because some programs are expected to increase (for instance, the President is calling for $3 – $4 billion in new K-12 education funding) there will be pressure within domestic human needs programs either to make outright cuts or to flat-fund programs despite growing need and cuts in funding for these services in many states.

For more commentary on the State of the Union address, see CHN’s Executive Director Deborah Weinstein’s Huffington Post blog.

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