Senate Unveils Bill to Boost Jobs, But Who Does it Help?
WASHINGTON - The Senate jobs-creation package that was unveiled
Thursday and hailed by President Barack Obama may do more to help
politicians who want to be seen trying to help the economy than it does
to shrink the nation's unemployment rate.
"This is intended to show government is doing something, but it's hard
for me to believe (that) a lot of this stuff is going to have a big
impact on job creation," said Robert Bixby, the executive director of
the Concord Coalition, a fiscal watchdog group.
measure also faces rough political terrain. Prodded by some Senate
Democrats' concerns, Majority Leader Harry Reid of Nevada plans to hold
votes on only a small part of the package by month's end. Lawmakers in
the House of Representatives passed a more extensive package in
pared down the original $85 billion blueprint that was unveiled
Thursday by Senate Finance Committee Chairman Max Baucus, D-Mont., and
the panel's top Republican, Charles Grassley of Iowa, because of
Democratic concerns that it includes items that aren't directly related
to job creation but are eagerly sought by business and physicians'
Reid said he wanted to move ahead on the most explicit
job-creating parts because, "We feel that the American people need a
message. The message they need is we're doing something about jobs."
The plan has four major job-creating components:
- Taxpayers would be allowed to write off up to $250,000 of certain
capital expenditures this year, instead of depreciating those costs
over time. This could help small businesses grow by letting them write
off equipment purchases and would cost the Treasury $35 million over 10
- Employers who hired workers who've been
unemployed for at least 60 days this year wouldn't have to pay Social
Security taxes, or 6.2 percent of wages up to $106,800, on those new
workers for a year. Employers also could get an extra $1,000 tax credit
for every new worker they retain for a year. This would cost an
estimated $13 billion over 10 years.
- Spending on highway and transit projects would be accelerated by $19.5 billion this year.
State and local governments would be able to issue indefinitely "Build
America Bonds," which get federal aid. The program had been set to
expire soon but would be extended at a cost of $2 billion over 10 years.
House spokesman Robert Gibbs said the president was "gratified to see
the Senate moving forward in a bipartisan manner on steps to help put
Americans back to work."
Will the Senate effort create jobs? Experts say it would help some, but isn't a magic bullet.
can't force companies to create jobs if they don't need them," said
John Challenger, the president of Challenger, Gray & Christmas, a
group that specializes in work force issues.
"I think it's more
about creating demand, getting the economy going, and that does create
jobs," he said. "I think the ones that are effective are things like
changing depreciation so companies can write off equipment purchases
Earlier this month, the National Federation of
Independent Business issued its February survey of members, with a
strong message that hiring can't happen without customers and consumer
In an interview Thursday, William Dunkelburg, the group's
chief economist, said the federation has advocated since January 2009 a
payroll tax holiday that would put more money in the hands of
consumers, who drive 70 percent of U.S. economic activity. A tax
holiday would also leave businesses with more cash to invest in
equipment and technology.
Although many Americans are frustrated
by the deepest recession since the Great Depression and the
government's response to it, economists think last year's federal
stimulus act helped save many public sector jobs at the state and local
levels, which helped things from being even worse.
unemployment rate peaked at 10.2 percent in October, and fell to 9.7
percent in January. It's expected to rise throughout the year as
workers who quit looking for jobs resume looking for them. In a report
released Thursday, the White House Council of Economic Advisers
projected an jobless rate of 9.8 percent late this year and average
monthly net job creation of 95,000.
That's slightly less than the
100,000 new jobs a month that are needed to keep pace with new entrants
to the workforce - not counting the more than 8.4 million Americans
who've lost their jobs since the recession began in December 2007.
proposals in the Baucus-Grassley plan stir more controversy and won't
be part of the initial jobs component. They include renewing the estate
tax, which expired on Dec. 31 but will be back next year at pre-2001
The Senate also may tackle extensions of several tax
credits, as well as a proposed 21 percent cut in Medicare payments to
physicians, and extending intelligence-gathering parts of the USA
Patriot Act for another year.
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