A Look At The American Jobs Act

Nowadays the Obama administration's American Jobs Act has been getting a lot of attention and press

, and not all of it positive. While the administration says passage of the act will help American companies by helping the economy, some in Congress and elsewhere are concerned it will hurt companies.

What exactly is in the American Jobs Act and who is it designed to benefit? The provisions of the act are outlined below.

Help for Small Businesses: The current economic woes have been particularly hard on small businesses, an important engine for the U.S. economy. One provision of the act would reduce by 50 percent the payroll taxes for a company's first $5 million in payroll for 2012, a change that will benefit 98 percent of America's businesses. It will also eliminate payroll taxes altogether for small businesses that hire new workers. The act also includes ways to increase access to credit for small companies so they can grow their business.

Job Creation: The act would provide tax credits to businesses that hire unemployed veterans, as well as funding to prevent the layoffs of teachers, policemen and firemen. It would fund a variety of projects to rehabilitate and modernize schools and to repair infrastructure such as roads, airports and railways. It also provides funds to put people to work rehabilitating foreclosed and abandoned homes and businesses.

Return to Work: The act will enact some reforms to the unemployment insurance system by modifying existing laws to extend benefits into 2013.States would also have more flexibility to use unemployment insurance for innovative "bridge-to-work" programs that benefit the long-term unemployed. Such programs could include financing volunteering and on-the-job training. Funds would be provided for programs that make it easier for unemployed workers to start their own businesses and tax credits for companies that hire long-term unemployed workers. Specific programs would be aimed at helping low-income youth and adults find work.

Tax Relief: The act would cut payroll taxes in half for 160 million workers in 2012, extending the payroll tax cut passed last year. This would provide a $1,500 tax cut to the typical American family earning $50,000 a year. The administration is quick to point out, however, that the payroll tax cut will not affect the funding of Social Security. The president also wants the federal government to work with mortgage lenders to reduce barriers to mortgage refinancing and encourage more Americans to refinance their mortgages at today's low rates.

Opposition to the Act: Republicans in Congress are opposed to many aspects of the American Jobs Act and the Obama administration is unlikely to get it passed during this 112th Congressional term. Thus, the White House is focusing on getting parts of the act through Congress in the short term. Republicans may agree to some aspects, such as extending payroll tax cuts and unemployment benefits; however, they have already voted down one measure that was part of the act that provided funding for teachers, policemen and fireman. In addition, many Democrats have refused to support the bill in its entirety, although they may support individual components, because the tax cuts included could contribute to the federal deficit.

by: Liliana DeVita

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