Stateline Story

Obama Pitches American Jobs Act: What's in It For the States?

  • September 09, 2011
  • By John Gramlich

President Obama on Thursday night (September 8) introduced a $447 billion job-creation plan that is dominated by proposed reductions in federal Social Security taxes, but also calls on the states to become his partners as he tries to drive the 9.1-percent national unemployment rate downward.

It is unknown exactly how much federal money states would stand to gain under the American Jobs Act, as the president's proposal is known. But a White House fact sheet on the proposal makes clear that states could receive a wave of new funding, perhaps more than $100 billion.

The proposal, for instance, includes $18 billion in direct federal aid to states for school modernization and construction efforts, with another $12 billion being sent directly to the neediest districts in the nation. It commits $35 billion to help avert hundreds of thousands of teacher and police officer layoffs - money that, in the past, has flowed through the states. On infrastructure projects, which states often carry out, the president proposed $50 billion to build and improve highways, transit systems, passenger rail networks and other priority projects,  and he called for another $10 billion to create a national infrastructure bank that also could benefit states. In many ways, the jobs plan is reminiscent of the 2009 stimulus act, which sent about a third of its $787 billion funding to the states.

Meanwhile, Obama saved some of his most state-specific proposals for the nation's unemployment system, which he hopes to make considerably more flexible to encourage hiring.

He called on states to use their unemployment systems to come up with innovative new ways to put residents to work, singling out programs in Georgia and North Carolina that allow job seekers to continue receiving unemployment checks while training with companies that may later hire them. ( Stateline examined the Georgia program last week.) He praised work-sharing programs, which allow companies to avoid layoffs by instead reducing worker hours, and called on more states to follow the roughly 20 that already use such programs. He asked that states consider wage-subsidy initiatives that have been successful in Texas and elsewhere and reward private-sector companies for hiring the unemployed. He also called on states to build programs - similar to ones already in place in Delaware, Maine, Maryland, New Jersey, Oregon and Pennsylvania - that encourage unemployed workers to find work by starting their own businesses.

The fate of Obama's plan rests primarily with congressional Republicans, who control the House of Representatives and have battled with the president for most of 2011. But Republican governors, too, will be important to the proposal's chances: Several of them have rejected federal funding for everything from high-speed rail to the Obama health care overhaul, and view more stimulus-style spending as reckless , even if it benefits them. One notable exception on Thursday night was Michigan Governor Rick Snyder, a Republican who praised the Obama plan as building on ideas that Michigan has already used, according to Politico .