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Obama plan could boost state’s recovery

President Obama checked out a graphic design classroom yesterday during a visit to a Columbus, Ohio, high school. President Obama checked out a graphic design classroom yesterday during a visit to a Columbus, Ohio, high school. (Mandel Ngan/AFP/Getty Images)
By Erin Ailworth
Globe Staff / September 14, 2011

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President Obama’s jobs plan would provide some $5 billion in payroll tax cuts to Massachusetts workers while providing additional aid to help put thousands of unemployed people back to work, according to an analysis released yesterday by the White House.

If the plan is approved, a Massachusetts household with a median income of about $59,000 would receive a $1,830 payroll tax cut, according to the White House. In addition, more than $850 million would go to highway and transit projects, and another $40 million to renovate foreclosed homes and businesses, supporting at least 11,100 jobs in the state.

Greg Bialecki, the state secretary of Housing and Economic Development, called the president’s jobs plan a “very pragmatic proposal’’ that could help Massachusetts’ economic recovery. Though the state’s 7.6 percent unemployment rate is lower than the national rate of 9.1 percent, Massachusetts still has some 260,000 unemployed workers, nearly half long-term unemployed, according to government data.

The president’s plan focuses heavily on boosting the construction industry, which lost one in four jobs in Massachusetts in the housing market crash and recession. The sector has rebounded slightly in Massachusetts, gaining roughly 4,000 jobs this year, but is still down about 36,000 jobs since 2006.

If Obama’s plan is approved, Bialecki added, the state will target some money to transportation improvements likely to spur additional investment - and jobs - by Massachusetts real estate developers and other businesses.

“Is it enough to make a difference? Sure it is,’’ Bialecki said of the plan. “It’s not going bring us back to full employment single-handedly, but I don’t think that’s the president’s thought here.’’

Obama unveiled the nearly $450 billion plan last week in a prime-time address. The White House has since tried to build popular support to push Congress to act, releasing state-by-state breakdowns of the economic impact if lawmakers approve the proposals.

But few economists believe the plan will pass Congress in its entirety. One of the main concerns is how the government will pay for the plan in the face of burgeoning budget deficits. The Obama administration has promised more details on how it will pay for the new stimulus without adding to the nation’s long-term debt in the coming days.

Gus Faucher, director of macroeconomics at Moody’s Analytics, a forecasting firm in West Chester, Pa., said he thinks the proposed extension of the payroll tax cut is likely to be approved, but doubted spending measures would pass.

Additional spending, he said, “would probably be more effective than the tax cut for employers [and] a dollar increase in spending is the same as a dollar tax cut in terms of the deficit.’’

Alan Clayton-Matthews, an economics professor at Northeastern University, said whatever portions of the president’s plan are passed by Congress, one thing is certain: “We could use all of it.’’

Clayton-Matthews said a combination of tax cuts and spending would probably be the best medicine. Tax cuts can get into the economy faster, but tend to have a limited impact. Public works spending faces the opposite challenge.

“A tax cut doesn’t necessarily lead to expansion if the recipients of the tax cut don’t go out and spend their savings,’’ he said. As far as construction and other projects, he said, “Once the money gets spent, it immediately impacts the economy, but the question there is how long will it take for the money to get spent?’’

Despite the remaining questions, Republican Senator Scott Brown has expressed support for at least some of the president’s plan.

“Extending the payroll tax cut and providing tax credits for companies that hire veterans are policies where we can and should come together,’’ Brown said in a statement after Obama’s speech. “I intend to keep an open mind on the president’s plan and other proposals that are brought forward in the debate.’’

Casey Ross of the Globe staff contributed to this report. Erin Ailworth can be reached at eailworth@globe.com. Follow her on Twitter @ailworth.