Democrats: Illinois would receive millions under Obama plan

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Barack Obama

Updated: September 12, 2011 5:07PM

Illinois taxpayers and businesses would benefit from billions of dollars in investment and thousands of new jobs under President Barack Obama’s proposed jobs plan, Democratic lawmakers said Friday.

Republicans said they still need to see more details, including how it would be paid for.

The Senate Democratic Steering and Outreach Committee released an analysis saying Obama’s American Jobs Act would invest $4.5 million in Illinois transit and building projects and provide money for teachers, police and firefighters — saving or creating up to 50,000 jobs. It also said 260,000 Illinois businesses would receive a payroll tax cut, while cuts to workers’ payroll taxes would save a typical Illinois household about $1,640.

The head of a tax watchdog group said Illinois could benefit from infrastructure investments based on historical evidence that such spending pays off, but cutting business and worker payroll taxes probably wouldn’t help.

“Spending money in the local economy creates a positive economic multiplier,” said Ralph Martire, executive director of the Chicago-based Center for Tax and Budget Accountability.

But he said the idea that cutting business payroll taxes would spur new hiring was “bogus” because corporate profits already are up — with no corresponding increase in hiring.

“What makes you think letting businesses keep more of their profits going forward is going to create more jobs when it’s not now?” Martire said. “There is no logical basis to make that assumption.”

He also said expanding a payroll cut for workers might help individuals, but it probably wouldn’t generate much new economic activity.

Pat Brady, chairman of the Illinois Republican Party, said he favors the payroll tax cut but the rest of the plan is, in effect, a stimulus bill and there’s no reason to think that this one would work when Obama’s earlier, and bigger, stimulus package failed.

Besides, he said, “Why do we need to wash the money through the government rather than just a direct stimulus through tax cuts?”

The analysis said 260,000 firms in Illinois would see a payroll tax cut under the president’s plan. Brady said he has no idea whether that number is correct or how much it would boost the state’s sluggish economy — but Republicans have long suggested such a step would help.

“Anything we can do policy-wise to reduce the cost of doing business here is a positive and anything we can do directly in the pocket of consumers is a positive,” he said.

Martire said Obama’s jobs numbers do add up, based on historical multipliers and the anticipated investment.

But he said Obama is ambiguous on another part of his plan — “pathways” back to work for the unemployed, including reforming unemployment and extending unemployment benefits.

The Democratic analysis says reforms could help put 330,000 long-term unemployed workers in Illinois back to work and prolonging benefits would help 104,000 residents in the first six weeks. It also says 5,900 low-income adults and 18,900 youths could be placed in jobs through a new fund.

But Obama has not yet said how he would pay for the plan.

“It’s hard to evaluate if it’s not explained,” Martire said.

AP