President Obama’s nearly $450 billion jobs package is just beginning a long and potentially difficult journey through Congress, but examining the outlines of what he proposed and GOP presidential hopeful Mitt Romney’s vision, it appears they are counting on different parts of the country to fuel job creation.
President Obama’s plan, with far more specifics and an actual price tag, focuses on tax breaks for small businesses and tax credits for hiring long-term unemployed people and veterans as two of the chief planks of his effort. Along with this, he will send billions to the states to keep them from laying off teachers and emergency workers as well as fund $50 billion in infrastructure investments.
Servicing the Service Workers
How the White House plan would play out across Patchwork Nation is a little fuzzy as Congress begins to tackle the specifics, but a few key trends emerge.
By halving the payroll taxes on businesses’ first $5 million in payroll, the plan would work to stimulate job growth among smaller companies, according to small business leaders.
“The impact of payroll tax cuts is fairly substantial,” Todd McCracken, president and CEO of the National Small Business Association, told U.S. News & World Report. “It gives [small businesses] the cash flow that they need to think about expanding. If they’re thinking about hiring, it’s going to make it more affordable for them in the near term.”
This stimulus could have a real impact across Patchwork Nation, but in particular it could help some of the areas that have been struggling such as the Service Worker Center counties.
These 650 small-town counties rely on tourism or simply exist with people earning their money in service jobs and spending it in other small businesses. Early in the recession, these counties felt the brunt of economic collapse and only recently did we report that they felt they were “no longer in free-fall.” but the economy has remained tenuous.
These counties have trended Republican in recent elections, backing Sen. John McCain by 4 points in 2008 and President Bush by 12 points in 2004. But considering several of the proposed tax cuts for small business and a reduction in the amount workers must pay into Social Security, the plan would likely have a real impact in these communities.
Romney Rockin’ the Monied Suburbs
Ahead of the president’s speech, former Massachusetts Gov. Mitt Romney, who has been struggling to stop the surging campaign of Texas Gov. Rick Perry, put forward his own plan for job creation.
Romney, rather than proposing specific investments in business and training, argued a more conceptual plan to stimulate job creation.
“Only the individual initiative of entrepreneurs, workers, investors and inventors enables companies, and our economy as a whole, to flourish,” Romney wrote in USA Today to unveil his proposal.
Specifically, he proposed limiting the regulatory costs created by the federal government and stressed the need to eliminate the capital gains taxes on “middle-income” taxpayers.
Such a move could help bolster the sagging economy of the Monied Burbs in Patchwork Nation. As we have reported before, residents in these 285 counties are most likely to own a significant number of stocks. Romney’s pledge to limit or eliminate taxes on those dividends could help the calculus of the Republican’s campaign effort for the fall.
President Bush narrowly lost these counties in 2004 by less than 2 points, but President Obama, fueled by the economic turmoil and Sen. John McCain’s changing economic message, expanded the Democratic edge in these counties to more than 10 points.
Now Romney’s counting on his tax cut pledge and regulatory rollback to help him even the playing field in these counties. The move also seems smart based on his areas of support around the country. As we reported this month, the Monied Burbs have been Romney’s primary source of cash, donating $6.5 million to his campaign, $2 million more than his nearest rival has raised from the entire country.
The one area in where both the president’s job bill and Romney’s more conceptual plan could compete for attention is in the sparsely populated agricultural communities of Tractor Country.
These solidly Republican counties have weathered the recession fairly well — although they never saw the boom, so never suffered the bust — and so neither Romney nor Mr. Obama specifically targeted them in their speeches, but these counties stand to benefit from key components of both plans.
From President Obama, rural areas would see an infusion of cash aimed at rebuilding rural schools as part of his $60 billion for education.
He also endorsed the funding of a new infrastructure bank and a series of transportation projects. Historically, rural America has benefited more than other parts of the country from road projects and the same would be expected from this latest round of construction projects.
But Romney is not ceding a single rural vote to the president. His plan would likely affect rural voters in a couple of ways. First, by increasing the domestic growth of energy these communities will likely see an increase in development in the Northern Plains and potentially a continuation or expansion of ethanol subsidies for corn farmers.
A Patchwork Vision of Job Creation
Comparing these two approaches side-by-side is a bit tricky as President Obama’s plan is a piece of legislation and Mitt Romney’s speech amounts to more of a philosophical statement, but still we can see two approaches to getting Patchwork Nation back on track.
Mr. Obama hopes by infusing money into the system at the small business and worker levels, spending will pick back up and the economy will, once kick-started, start running more normally. Romney hopes by creating more wealth and less regulation for the wealthier parts of the country, a more stable and sustainable set of jobs will emerge.
Republicans would like to stick to much of the ideological vision described by Romney, but with President Obama pressing them hard with his “pass this bill” mantra, how the GOP responds will play out long before the first primary voters head to the polls next year.
Lee Banville is an assistant professor of journalism at The University of Montana, a contributing editor to Patchwork Nation and former editor-in-chief of the Online NewsHour.