Obama Unveils $447 Billion Jobs Plan to Congress

President Barack Obama proposed a $447 billion jobs package on Thursday to help boost the U.S. economy, challenging Congress to pass legislation made up largely of tax cuts for workers and businesses.

Getty Images U.S. President Obama presents his $447 billion jobs plan to Congress, flanked by Vice President Biden and Speaker of the House John Boehner.

"It will provide a jolt to an economy that has stalled and give companies confidence that if they invest and hire there will be customers for their products and services. You should pass this jobs plan right away," Obama said.

Obama, whose 2012 re-election depends on his ability to bring down the 9.1 percent unemployment rate, proposed extending unemployment insurance at a cost of $49 billion, modernizing schools for $30 billion and investing in transportation infrastructure projects for $50 billion.

But the bulk of his proposal was made up of $240 billion in tax relief by cutting payroll taxes for employees in half next year and trimming employer payroll taxes as well.

The $447 billion is more than the $300 billion initially expected.

"The plan is bigger than what we were looking for, suggesting a real shock and awe strategy. This is almost half a trillion dollars, which isn't an insignificant step," said Michael Yoshikami, president and chief investment strategist at YCMNet Advisors.

Taking aim at Republicans who have consistently opposed his economic initiatives, Obama said it was time to "stop the political circus and actually do something to help the economy."

John Boehner, the Republican speaker of the House of Representatives, said Thursday that President Barack Obama's jobs proposals "merit consideration" and expressed hope both parties could work together.

"It's my hope that we can work together to end the uncertainty facing families and small businesses and create a better environment for long-term economic growth and private-sector job creation," Boehner said.

Obama, who pushed through an $800 billion economic stimulus package in 2009, said his jobs plan would cut taxes for workers and businesses and put more construction workers and teachers on the job through infrastructure projects.

"It will provide a tax break for companies who hire new workers and it will cut payroll taxes in half for every working American and every small business," he said.

Companies will get a $4,000 tax credit if they hire someone who has been looking for a job for more than six months and an extra tax credit for hiring military veterans, the president said.

"We have to do more to help the long-term unemployed in their search for work," he said.

Under this plan, the typical working family would get a tax credit of about $1,500, he said.

In addition, the plan proposes spending $35 billion so that states and local governments can prevent layoffs of teachers and emergency services personnel.

"And to help responsible homeowners, we're going to work with Federal housing agencies to help more people refinance their mortgages at interest rates that are now near 4% — a step that can put more than $2,000 a year in a family's pocket, and give a lift to an economy still burdened by the drop in housing prices," Obama said.

"The changes to mortgage issues — which, let's be clear, will put a greater burden on Freddie Mac — will have a stimulative impact. I think this will be a positive for stocks tomorrow," Yoshikami said.

Obama said he would propose a deficit-reduction plan on Sept. 19 that will cover the cost of his jobs bill and include "modest adjustments" to Medicare and Medicaid and more taxes for the rich and corporations.

"A week from Monday, I'll be releasing a more ambitious deficit plan — a plan that will not only cover the cost of this jobs bill, but stabilize our debt in the long run," he said Thursday to Congress in his speech on job creation.

Obama said the plan would feature additional spending cuts and make "modest adjustments" to the government's Medicare and Medicaid health insurance programs for the elderly and disabled and for the poor.

"In addition to the trillion dollars of spending cuts I've already signed into law, it's a balanced plan that would reduce the deficit by making additional spending cuts; by making modest adjustments to health care programs like Medicare and Medicaid; and by reforming our tax code in a way that asks the wealthiest Americans and biggest corporations to pay their fair share," he said.

He indicated that the spending cuts would not happen quickly.

"The spending cuts wouldn't happen so abruptly that they'd be a drag on our economy, or prevent us from helping small business and middle-class families get back on their feet right away," Obama said.

Obama is seeking to seize the initiative in his bitter ideological battle with Republicans, ease mounting doubts about his economic leadership and turn around his presidency just 14 months before voters decide whether to give him a second term.

Obama wants Congress to pass his "American Jobs Act" by the end of this year. But that may be hard to achieve with politicians already focusing on the presidential and congressional elections in November 2012.

If Obama can push through his plan, it might provide an economic boost quickly enough for him to reap political benefits. If it stalls in a divided Congress, his strategy will be to blame Republicans for obstructing the economic recovery.