Americans across the country watched President Barack Obama deliver his much-anticipated speech in front of a joint session of Congress on Thursday — some watching with hope, others with skepticism.
Since Obama unveiled the American Jobs Act, University professors have shared mixed responses of hope and caution about the act. They say the plan could prove effective but is perhaps too modest or may not register the country’s desired immediate impact.
University officials lauded Obama’s package of proposals, which includes the extension and expansion of a cut in payroll taxes, investments in infrastructure and schools and aid to states to prevent mass teacher layoffs. However, some worry Obama has pandered to Washington’s political gridlock in suggesting a plan with effects that may not appear until next year.
Don Grimes, senior research associate at the University’s Institute for Research on Labor, Employment and the Economy, said citizens will need to wait until 2012 for an economic uptick.
“I think people are looking for this to turn around the economy in the next month or two, and I think they’re going to be disappointed because it’s not going to have any effect on the economy for the next three or four months, and the real effect will be even longer term,” Grimes said.
He emphasized that many facets of the policy have already been in effect for some time.
“In the end I sort of realized as I was listening (to Obama’s speech) that we’re just going to go forward with what we’ve already got baked in the cake and that this fiscal policy program, whether it’s good (or) bad, is not really going to have much of an effect on the short term.”
Public Policy Dean Susan Collins said she is optimistic Obama’s plan may improve the economy. The act’s “main pillars,” including tax incentives for small businesses and aid to states, are “very sensible,” she said.
“There was a real focus on some of the tax incentive pieces and some of the infrastructure types of expenditures, which have really been supported in a bipartisan way historically,” Collins said.
She added that she is especially hopeful about the bill’s incentives for small businesses. Among other tax measures, the plan will expand cuts in payroll taxes for small businesses and provide a tax holiday for small businesses that hire new employees.
“It’s clear that the small businesses are the ones that are more, kind of constrained, and so trying to focus assistance in that area makes a lot of sense, especially because better job creation does in fact come from small and medium businesses,” Collins said.
She also praised parts of Obama’s plan that offer aid to “hurting” states to prevent teacher layoffs, modernize schools and repair the nation’s infrastructure.
“If you’re trying to do something that’s going to have any impact in the relatively short run, some public expenditures need to be there,” Collins said. “And the idea of assistance to state and localities, for example, for teachers — that’s something that could move pretty quickly and I think is really important to do.
But while Collins noted that the plan could reduce unemployment by as much as 1 percent nationwide within the year, she said some of Obama’s proposals might not be directly linked to job creation.
“I might have liked to see a little more explicit tie-in (with) some of the tax incentives to job creation than is actually there, so I think that creates a little more uncertainty in terms of how much of the incentives will make a difference,” Collins said.
She added that continuing economic uncertainty is among the factors that will affect the impact of the proposals. However, Doug Neal, managing director of the University’s Center for Entrepreneurial Programs, wrote in an e-mail interview that the plan could be key in restoring consumers’ faith in the economy.
“It doesn’t appear to be a long-term fix but may increase consumer confidence, which is key to helping us stimulate the economy,” he wrote.
Neal suggested that even if the plan doesn’t prove to be a long-term solution, it could still stimulate industry in Michigan and lower the state unemployment rate currently at 10.9 percent, according to July 2011 data from the U.S. Bureau of Labor Statistics.
“The American Jobs Act, if approved, should provide at least a temporary increase in employment in Michigan for construction-related jobs and may even allow some small businesses to add some employees more easily as we enter the shopping holiday season,” Neal wrote.
The plan may also be a boon for University students seeking jobs in Michigan’s growing entrepreneurial sector, Neal added.
“The American Jobs Act may make more internship opportunities possible for our students at start-up companies, and that is one way that can help,” he wrote.
Despite his optimism, Neal explained more work would need to be done to make Michigan hospitable again for entrepreneurs and small business owners even if Obama’s proposals spur a recovery for small business.
“Michigan has a tremendous opportunity to rebuild and be a leader in innovation and entrepreneurship,” he wrote. “Making it easier for experienced entrepreneurs who want to relocate back to Michigan, and join a start-up and join the momentum we are building would be an additional way we can continue to accelerate our efforts.”