What Does President Obama's Jobs Bill Tell Us About the Federal Budget Deficit?
Last week, Senate Majority Leader Harry Reid used an unusual procedural manuever in order to avoid a vote on President Obama's jobs bill. But tonight, the Senate is expected to vote on the legislation, a $447 billion package of tax cuts and stimulus spending, including the estabishment of an infrastructure bank. The White House has all but admitted that they don't expect the bill to pass with the 60 votes necessary to overcome a filibuster; Obama has already started talking about what he plans to do after the bill fails.
One of the reasons why it's not likely to pass is the financing mechanism. When Obama first announced his jobs bill, he promised that it would be fully paid for. And according to the Congressional Budget Office, it is, through a surtax on households with income over $1 million, which is projected to raise $553 billion. So the bill would fund almost half a trillion dollars in spending now with a tax on high earners over the next 10 years.
Since the bill is unlikely to pass, this doesn't matter all that much. But the scoring of the pay-for does tell us something about the options for dealing with federal budget deficit. As ZeroHedge points out, last year's deficit clocked in just above $1.2 trillion, or a little more than $100 billion each month. Which means that for all the president's talk about taxing millionaires and billionaires and ensuring that they pay their fair share of any deficit reduction proposal, the special millionaire's surtax attached to this bill wouldn't even pay for five months of the last year's deficit, and it would take a full decade to do it. And Obama didn't even want to use that money to pay down the deficit; he wanted to spend it on temporary tax cuts and stimulus spending.
