December 8, 2009 / 11:03 AM / 9 years ago

FACTBOX-Possible elements of U.S. jobs package

Dec 8 (Reuters) - The Obama administration and Democrats in Congress are planning a range of measures aimed at bringing down the United States’ 10 percent unemployment rate before the November 2010 congressional elections.

President Barack Obama will unveil some of his ideas in a speech at 11:15 a.m. EST (1615 GMT) on Tuesday.

An administration official said Obama will highlight fresh spending on highways and other infrastructure, steps to encourage small businesses to hire and new rebates to reward energy efficiency by weatherizing homes.

Here are some details and background on ideas he could put forward or that the U.S. Congress may pursue.

AID TO STATE AND LOCAL GOVERNMENTS

State governments face a $144 billion budget shortfall this year, according to the National Conference of State Legislatures. Unlike the federal government, most are required to balance their budgets.

Congress provided roughly $150 billion to states in the February 2009 stimulus package to help avoid layoffs of police, teachers and other public employees.

This package is likely to include another round of state aid. Economist Mark Zandi, who has advised top lawmakers from both parties, recommends a total of $75 billion.

INFRASTRUCTURE SPENDING

The Interstate 35 bridge collapse in Minneapolis in 2007 highlighted the need to update crumbling infrastructure, from highways to levees and airports. While lawmakers have struggled to get a long-term plan in place, Congress approved $35 billion in February for relatively modest projects that could be completed quickly.

Much of that money has been spent, and state transportation officials say they have another $69 billion worth of “shovel ready” projects that could be ready to go when construction season begins again in April.

Unlike other stimulus measures, infrastructure spending is relatively noncontroversial. House Republican Leader John Boehner says he could support another round, especially if regulatory oversight was eased.

LOANS TO SMALL BUSINESS

Democrats are looking at several options to increase credit for small businesses, which have had trouble getting loans to expand operations as banks have pulled back lending activity.

This could be done by easing restrictions on loans backed by the U.S. Small Business Administration. Loan limits and interest-rate caps could be lifted and the SBA could guarantee a greater portion of the loan, up from its current 90 percent limit. That would cost $5 billion in 2010, Zandi estimates.

Obama has said he would like to steer money left over from last year’s $700 billion Wall Street bailout to community banks, traditionally the primary lenders to small business.

EXTENDING THE SOCIAL SAFETY NET

In normal times, jobless workers are eligible for up to 26 weeks of unemployment benefits to help them cover the bills as they look for work. Congress has extended that limit several times since the recession began, but roughly 1 million workers could exhaust their benefits in January.

Likewise, enhanced subsidies for groceries and health insurance are scheduled to expire at the end of the year if Congress does not act.

Democratic Senator Jack Reed has proposed extending benefits through 2010, which would cost $100 billion. Previous extensions have been funded through a surtax on employers, but it is not clear whether Congress would extend that tax or find the money elsewhere.

WEATHERIZING BUILDINGS

Obama and top Democratic lawmakers have spoken favorably of a “cash for caulkers” program to encourage the weatherization of homes and other buildings. This would reduce energy bills, create jobs and encourage the development of new “green” technologies. Congress included $5 billion for such programs in its February 2009 stimulus bill.

TAX BREAKS FOR JOB CREATION

Some advocate a payroll tax credit for every new job created. But critics say it will be hard to distinguish between firms that would have hired anyway and those specifically motivated by the tax credit. Limiting the program to $50 billion, going to those businesses that hire first, would ensure effectiveness, Zandi says.

PUBLIC-WORKS PROGRAMS

Congress could provide money for new public-sector jobs to clean up parks, along the lines of the Civilian Conservation Corps of the 1930s. Obama told USA Today he would like to keep this approach modest, along the lines of summer-jobs programs for teenagers.

HOW TO PAY FOR IT?

The U.S. government posted a record $1.4 trillion budget deficit in fiscal 2009 and this fiscal year, which ends on Sept. 30, 2010, is not projected to be much better. Obama has said he does not want the jobs bill to add significantly to the deficit, but lawmakers are wary of raising taxes or slashing spending elsewhere for fear of choking off economic recovery.

This leaves a few options:

* Lawmakers are currently eyeing $70 billion left over from the $700 billion Troubled Assets Relief Fund used to bail out banks for possible use to stimulate job creation.

The White House on Friday said it was actively looking at using TARP funds to create jobs, although senior officials had previously made clear they wanted to use the funds to cut the deficit. Republicans want to end the TARP program entirely.

* Congress could impose tax increases or spending cuts that would not kick in until the economy recovers.

* A tax on Wall Street transactions that could raise $150 billion per year. Though this enjoys support among House Democrats, analysts say it is not likely to pass the Senate and the U.S. Treasury has made clear its opposition to the idea. (Reporting by Andy Sullivan in Washington, Editing by Eric Beech and Doina Chiacu)

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