What type of policy as president obama referring to when he says more people spending more money means more business will be able to hire more workers in the entire economy

I believe President Obawa was talking about the policy to cut the Tax for the middle-class.
By cutting the tax rate, the middle class will have more money at their disposals. This means that small business will be able to hire more employees and reduce the unemployment rate to fix the Economy.

Every statement this is because of the same law