President Obama’s 2012 State of the Union: Key Federal Issues for the NCSL Labor & Economic Development Committee
On January 24, 2012, President Obama delivered his third State of the Union Address before Congress entitled “An America Built to Last.” In his remarks, the President laid out several priorities for the upcoming year, including proposals intended to create jobs, strengthen American manufacturing, bolster U.S. trade competitiveness, and to stabilize the housing market. While it remains to be seen how the path President seeks to execute this agenda, his remarks do provide an important precursor and barometer of several important policy debates over the next several months, including the upcoming release of the President’s 2013 budget. Most of the provisions would require Congressional approval or action. Below are some of the proposals laid out in the President’s speech and subsequent follow-ups over the last week of particular note to the NCSL Labor & Economic Development Committee.
MANUFACTURING & OFFSHORING
- Establishing a new Manufacturing Communities Tax Credit to provide $6 billion over three years to help finance manufacturing activities in communities that have suffered from the closing or major reductions of a military base or facility that has resulted in mass, permanent layoffs. Financing would coordinate with State Economic Development Agencies.
- Eliminating tax deductions for companies for expenses relating to offshoring (such as moving equipment or cleaning a facility), and using revenue generated to establish a $200,000 income tax credit to incentivize companies to bring jobs back to the U.S.
- Narrowing qualifications for the Domestic Production Activities tax deductions to focus more on manufacturing, and doubling the deduction to 18% from the current 9% for “advanced manufacturing technologies.”
- Extending corporate tax provisions allowing 100% expensing for equipment for 2012.
- Permanently reauthorizing, expanding, and simplifying the Research and Experimentation Tax Credit.
- Closing tax loopholes on foreign profits earned by American companies.
- Establishing a Trade Enforcement Unit, tasked with investigate unfair trade practices by nations that attempt to circumvent international law and agreements; the President specifically cited China as an example of such practices. It is unclear at this point whether this would be an independent office or housed in an existing federal agency. Several of the responsibilities proposed for this unit are currently tasked to the Office of the U.S. Trade Representative and the U.S. Department of Commerce.
- Establishing a partnership between businesses and community colleges to link job training to immediate employer needs.
- Reiterating a previous call for federal legislation to mandate that unemployment benefit recipients undergo job eligibility assessments in order to receive federal unemployment benefits.
- Calling for streamlining workforce training and employment services.
- Reforming regulations that the President contends prevent entrepreneurs from receiving financing. Additionally, The President has proposed to provide tax breaks to entrepreneurs and small to incentivize businesses to hire employees and increase wages.
- The President announced that he intends on signing an Executive Order to remove so-called “red tape” from construction and infrastructure projects. However, it is unclear which specific regulations he referred to for reform/elimination.
- Allowing qualified homeowners the opportunity to refinance their mortgages to save up to $3,000 per year. This program would be funded through a tax levied on large financial institutions and lenders.
- Establishing a Veteran’s Job Corp to assist local communities to hire veteran’s into public sector employment.
For Additional information on how these proposals may effect state legislatures, please contact Michael Reed (DC) or Luke Martel (Denver).
For additional information on the President’s State of the Union, including transcripts, audio and video, please visit the White House’s webpage at http://www.whitehouse.gov/state-of-the-union-2012