rssA Jobs Bill Too Small for the Task
Thursday, February 18, 2010 at 6:15 pm
- 14 Comments
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Democrats promoting their $15 billion jobs bill Thursday were hoping to get a strong endorsement from one of the nation’s most influential financial experts. Instead, Mark Zandi, chief economist at Moody’s Economy.com, said the bill is “too small” to tackle the jobs crisis and ensure that the country doesn’t slip back into recession.
“I don’t think this is enough,” Zandi told reporters during a conference call with Democratic leaders. “It’s too small a step and more needs to be done.”
While House Democrats passed a $154 billion jobs bill in December — a proposal featuring billions for new infrastructure projects, state help and unemployment benefits — Senate leaders are eying a much smaller package focused on business tax cuts. The reason is clear: In a tough election year when 60 votes are needed to pass anything at all through the Senate, there’s little appetite for another huge spending bill — even if another huge spending bill is the best solution to the jobs crisis.
[Congress1]The Senate’s $15 billion proposal is centered around $13 billion in tax breaks to businesses that hire unemployed workers this year, a provision championed by Sens. Charles Schumer (D-N.Y.) and Orrin Hatch (R-Utah). Other components include an extension of highway funding, a bonds provision allowing state and local governments to borrow cash at lower rates, and another business tax break empowering companies to write off more expenses. The bill, Democrats say, is just the first in a series of legislative efforts designed to spur hiring.
Senate leaders defended their plan Thursday, arguing that the provisions share a common trait: each has bipartisan backing. Schumer said the strategy was chosen in recognition of the wide-spread animosity toward the near-constant partisan bickering that’s defined Washington politics in recent years — an anger on display last month in Massachusetts, where voters stunned the country by electing GOP Sen. Scott Brown to replace the late-Sen. Edward Kennedy, a Democratic icon.
“They want us to work on jobs,” Schumer said of voters, “and they want us to work together.”
While Zandi offered tepid praise for the Senate’s $15 billion proposal — calling it “a good first step” — he also warned that it simply isn’t broad enough to address the national employment crisis, which has left more than 17 percent of the country either without work or underemployed. A failure to provide additional funding to struggling states, for example, would lead to job losses that would “overwhelm” all the other job-creating efforts being tried, he said. And while the Schumer-Hatch tax credit would create between 200,000 and 300,000 new jobs, Zandi estimated, that number is a drop in the bucket relative to the roughly 11 million new jobs needed to get the country back to pre-recession jobless levels. A similar tax credit proposed by the White House would be more effective, he said, if only because of its $33 billion price tag.
“If I were king for a day,” Zandi said, “I’d go for the bigger plan.”
He’s not the lone beacon. Analysts at the Center on Budget and Policy Priorities, a liberal policy group, estimated recently that, without federal help, state budget cuts would result in 900,000 lost jobs. And on Thursday, Families USA, a consumer health care advocate, warned of the Medicaid cuts that would follow if Washington doesn’t step in with emergency funding. Arizona, for example, is weighing a proposal to cut more than 310,000 low-income adults from the Medicaid rolls, Families USA says. In California, 250,000 low-income folks — including kids and pregnant women — would lose coverage under the governor’s proposal, the group estimates. The list goes on.
“The only way this immediate crisis can be averted is by enacting an extension of increased federal funding for state Medicaid programs — and doing so right away,” Ron Pollack, Families USA executive director, said in a statement.
The legislation is time-sensitive for other reasons. The filing deadline for emergency unemployment insurance is at the end of February, leaving millions of Americans unsure if they’ll be eligible for the next tier of benefits. The National Employment Law Project estimates that, without a further extension, 1.2 million unemployed workers will exhaust their benefits in March — a figure that grows to 5 million through June. Although the House passed a six-month UI extension in December (cost: $41 billion), the Senate has yet to finalize its plans on the issue. Sen. Jack Reed (D-R.I.) is among one group of Democrats pushing to extend unemployment through the end of the year.
“It’s not just something that provides relief to families,” Reed told reporters Thursday. “It also stimulates the economy.”
Democrats are well aware of the severity of the jobs crisis. Yet, faced with record budget deficits — and a public grown weary of a Congress unable to pay its bills — Senate leaders are avoiding much larger spending proposals that either have no chance of passing the Senate, or could haunt the Democrats on the campaign trail. Instead, they’ve opted for what Schumer on Thursday repeatedly called a “modest” proposal.
“This is not a panacea — I would not try to sell it as that,” Schumer said. “We have to be careful here and thread the needle.”
Yet Zandi warned that, while the economy is in recovery mode, it hasn’t evolved to a point where job creation is self-sustaining. And that means that lawmakers hoping to spur hiring will also have to be careful not to under-spend, which could pull the economy back into a recession. If that happened, Zandi said, “there’s no coming out.”
Schumer, for his part, vowed that the $15 billion proposal is just the first in a series. But he didn’t offer any hints about the size or makeup of what’s to come. Nor, the New York Democrat conceded, have any Republicans committed to supporting the package.
“The one thing you can be assured of is that there will be more,” he said.
Whether more is enough has yet to be seen.
14 Comments
Comment posted February 18, 2010 @ 7:19 pm
This just goes to show, politicians dont give two cents on the dollar for americans unless it will line their own pockets. They spend 785 billion on banks, but only a measly 15 billion on you and I every day american. Whats even more messed up is that its work which people cant find. Wonder if most of those Congressmen ever did a hard days labor in their lives. Talk talk talk, talk talk talk… They use up resources, tell us what and how to do things to be like them with their f'd up morals and moronic principals.
Here's a jobs bill… Your all fired. All bank CEO's are fired, all Insurance company CEO's are fired. Your all replaced with someone from the middle class, who have spent the past twenty years of their lives getting raped by the upper elitists while dragging along the lazy or inexperienced hoards below…
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Comment posted February 18, 2010 @ 9:44 pm
ZeroHedge.com: The Jobs Plan We'd Get If Leading Innovation Scholars And Growth Economists Weren't Being Volckerized (i.e., Ignored As Volcker Was Until Recently)
http://www.zerohedge.com/article/guest-post-job…
The Jobs Plan we'd get would leverage America's advantages to make America the Silicon Valley of the global market for customized education (CE).
Understanding why we'd get this plan starts with knowing that popular online markets for CE can be expected to catalyze the creation of many jobs.
—-
To learn about Zero Hedge, see this feature story from the September 27, 2009 issue of New York magazine:
http://nymag.com/guides/money/2009/59457/
Comment posted February 19, 2010 @ 8:16 am
What everyone seems to be overlooking is that even WITH the current “extension” being considered, people will have already exhausted Tier 3 – and for some states this is the last one available. For those like myself who live in states that qualify for Tier 4, that's only a 6 week reprieve. We'll exhaust that by the end of March.
What are WE supposed to do?
Pingback posted February 19, 2010 @ 1:01 pm
[...] reports that Zandi downplayed the impact this bill alone is likely to achieve. [Zandi] said the bill is [...]
Comment posted February 20, 2010 @ 9:14 am
The Democrats have the majority so what the hell is the problem? It's as if they are scared of their own shadow. Obama needs to gather the Dem's up and light a fire under his and their butts-if they want passage of this or any other legislation then show some damn fight. Really getting tired of the ineffectiveness with our legislators. Either do your job or get out of the way.
Pingback posted February 23, 2010 @ 11:11 am
[...] bill is too small to have much of an effect, it is, in the words of economist Mark Zandi, a “good first step.” Reid’s idea was to have votes on a succession of job-creation measures that would [...]
Comment posted March 1, 2010 @ 3:30 pm
I realize this is long but it's hard to explain in less words. As a small business owner tax cuts to us for a period of time leaves us with extra cash flow that helps our business grow, keep workers employeed full time, pay for expenses we incur, hire new workers, etc. Tax Credit is different, it is a 1 time credit to lower my year end taxes in 2011, I still have to pay the remaining balance and if I don't hire a new employee in 2010 as I understand it I get zero 0 Tax Credit.
They don't seem to understand that I'm not going to run out to hire a $50,000 worker just to get a $2,583.Tax Credit when I have so many expenses/taxes to pay already. Hiring a new employee is a critical decision as the business must still find the cash to pay that worker with; still needs cash to pay all or part of employees' benefits; still needs cash to pay if there's an increase to Worker's Compensation Insurance (mandatory insurance); still needs cash to pay for FUTA unemployment Tax ( employees don't pay this); cash to pay for State taxes; Local taxes; Sales Taxes; operation expenses; Permits; Licenses,
Plus cash for various insurance policies a business might carry such as General Liabiltiy Insurance; Product Insurance; Business Interruption Insurance, Commercial Auto Insurance, etc…It must be weight in against the incoming monies/sales of the business.
Tax Cuts are different. It can be weekly, monthly, quarterly or yearly taxes – leaves businesses extra money because it is a Permanent reduction of taxes, thus, leaving businesses with a higher Cash Flow to work with. Usually, that extra money is taken to purchase equipment, hire extra employees, raise salaries, advertise more, buy material, it makes paying for benefits easier on the checkbook. We’ll have to read the final Jobs Bill passed for accurate details.
I read an article by Ben Pershing on Schumer-Hatch Plan. As I understand it, it is a 1 time Tax Credit for 2010 (meaning is not Cash, not the same as a Tax Cut), it is a credit towards the year end taxes owed by the business in 2010, is as follows: If you hire a $50,000 employee on March 1, business saves $2,583 in year end taxes; hire an employee on May 1, business saves $2,480. in year end taxes. The plan also proposed businesses not have to pay the 6.2% employer's pay of the employees' Social Security tax for the duration of 2010 which will be paid by the General Fund. If the employee works for a total of 52 weeks, employer receives an additional $1,000 Tax Credit (to be used towards the year end taxes 2011 owed by the business) after 52 weeks but only if the employee's salary is 80% of the pay they received on the first 26 weeks.
Comment posted March 1, 2010 @ 8:30 pm
I realize this is long but it's hard to explain in less words. As a small business owner tax cuts to us for a period of time leaves us with extra cash flow that helps our business grow, keep workers employeed full time, pay for expenses we incur, hire new workers, etc. Tax Credit is different, it is a 1 time credit to lower my year end taxes in 2011, I still have to pay the remaining balance and if I don't hire a new employee in 2010 as I understand it I get zero 0 Tax Credit.
They don't seem to understand that I'm not going to run out to hire a $50,000 worker just to get a $2,583.Tax Credit when I have so many expenses/taxes to pay already. Hiring a new employee is a critical decision as the business must still find the cash to pay that worker with; still needs cash to pay all or part of employees' benefits; still needs cash to pay if there's an increase to Worker's Compensation Insurance (mandatory insurance); still needs cash to pay for FUTA unemployment Tax ( employees don't pay this); cash to pay for State taxes; Local taxes; Sales Taxes; operation expenses; Permits; Licenses,
Plus cash for various insurance policies a business might carry such as General Liabiltiy Insurance; Product Insurance; Business Interruption Insurance, Commercial Auto Insurance, etc…It must be weight in against the incoming monies/sales of the business.
Tax Cuts are different. It can be weekly, monthly, quarterly or yearly taxes – leaves businesses extra money because it is a Permanent reduction of taxes, thus, leaving businesses with a higher Cash Flow to work with. Usually, that extra money is taken to purchase equipment, hire extra employees, raise salaries, advertise more, buy material, it makes paying for benefits easier on the checkbook. We’ll have to read the final Jobs Bill passed for accurate details.
I read an article by Ben Pershing on Schumer-Hatch Plan. As I understand it, it is a 1 time Tax Credit for 2010 (meaning is not Cash, not the same as a Tax Cut), it is a credit towards the year end taxes owed by the business in 2010, is as follows: If you hire a $50,000 employee on March 1, business saves $2,583 in year end taxes; hire an employee on May 1, business saves $2,480. in year end taxes. The plan also proposed businesses not have to pay the 6.2% employer's pay of the employees' Social Security tax for the duration of 2010 which will be paid by the General Fund. If the employee works for a total of 52 weeks, employer receives an additional $1,000 Tax Credit (to be used towards the year end taxes 2011 owed by the business) after 52 weeks but only if the employee's salary is 80% of the pay they received on the first 26 weeks.
Comment posted July 26, 2010 @ 5:26 pm
They don't seem to understand that I'm not going to run out to hire a $50,000 worker just to get a $2,583.Tax Credit when I have so many expenses/taxes to pay already. Hiring a new employee is a critical decision as the business must still find the cash to pay that worker with; still needs cash to pay all or part of employees' benefits; still needs cash to pay if there's an increase to Worker's Compensation Insurance (mandatory insurance); still needs cash to pay for FUTA unemployment Tax ( employees don't pay this); cash to pay for State taxes; Local taxes; Sales Taxes; operation expenses; Permits; Licenses,
Plus cash for various insurance policies a business might carry such as General Liabiltiy Insurance; Product Insurance; Business Interruption Insurance, Commercial Auto Insurance, etc…It must be weight in against the incoming monies/sales of the business.
Comment posted August 2, 2010 @ 4:35 am
Tax Cuts are different. It can be weekly, monthly, quarterly or yearly taxes – leaves businesses extra money because it is a Permanent reduction of taxes, thus, leaving businesses with a higher Cash Flow to work with. Usually, that extra money is taken to purchase equipment, hire extra employees, raise salaries, advertise more, buy material, it makes paying for benefits easier on the checkbook. We’ll have to read the final Jobs Bill passed for accurate details.
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