Last week Senator Reid scrapped a “bipartisan jobs bill,” estimated to cost about $85 billion over 10 years, for a dramatically scaled-down $15 billion bill.
Since the Bush administration’s 2008 jobs bill, referred to at the time as a stimulus bill, didn’t create any jobs, and the Obama administration’s 2009 jobs bill, also referred to as a stimulus package, didn’t create any jobs, we have little hope that the current jobs bill will do any good either.
And if a jobs bill just spends money without creating jobs, then the less money we spend on the jobs bill the better--and no money would probably be best. That’s why Reid gets a cheer.
But Reid loses a cheer because of the way he spends the money.
In order for businesses to start the hiring process, they need to see stability in the economy and in government policy. And they need to face a relatively low long-term tax burden, which means they have more revenue to reinvest in capital goods and innovation, and in people, meaning more jobs.
Temporary and targeted tax breaks, or worse yet, rebate checks, do not promote long term economic growth.
Businesses generally respond like households. An employee may be happy to get a $500 one-time federal rebate check, but it probably won’t spur him to commit to car payments for the next four years. To do that, the employee needs to see sustained additional income—through a raise, a spouse going to work, or a permanent tax reduction.
The Reid bill has none of that.
Reid’s $5,000 payroll tax credit is temporary and targeted to people who have been unemployed more than 60 days. It just will not induce many employers to hire additional workers.
Reid also loses a cheer for keeping the infrastructure provision, the kind of projects that were part of the last jobs, er, stimulus bills.
Yes, there were provisions in the bigger bill that will still have to be addressed: like the temporary fix to scheduled cuts to doctors’ Medicare reimbursements. But better to face those challenges one at a time honestly and transparently, rather than hiding them in a “jobs bill.”