Illustration by Louise Ma
What Do You Call a Jobs Bill That Begets No Jobs?: Caroline Baum
When President Barack Obama “pivoted” to jobs a few months back (from what, the White House didn’t say), he said he was going to take his plan to rebuild the U.S. economy directly to the American people.
It’s a good thing, too, because Congress isn’t interested. Obama’s $447 billion American Jobs Act of 2011 was never going to see the light of day in the Republican-controlled House. The Senate gave it the thumbs-down this week, voting 50-49 to block the bill, well shy of the 60 votes needed to end a filibuster. Even some of the Democrats who voted to bring the bill to the floor said they would have voted no on the bill itself.
That doesn’t mean it’s dead. Obama has vowed to continue pushing his jobs package, with its temporary tax cuts and hiring incentives for small business, extended unemployment benefits and money for public works projects. The Senate now plans to take up selected provisions of the bill.
We can only hope they pick and choose wisely. Some measures, such as the “bridge to work” program, seem reasonable. People receiving unemployment benefits could spend up to eight weeks as unpaid trainees working for eligible employers, learning new skills and enhancing their job prospects.
But the bill includes a lot of short-term incentives that wouldn’t encourage hiring, anti-discrimination protections for unemployed workers that wouldn’t get them rehired, trade restrictions that would raise the cost of infrastructure projects, and a decade of new taxes to pay for all the new spending.
As for the president’s contention that his bill is “fully paid for,” with the spending front-loaded and the tax increases deferred until after 2013, it sure sounds like another case of government betting on the come.
What do you call a jobs bill that professes to create jobs when in fact it wouldn’t have much of a real-world effect? Here are some adjectives that come to mind.
It’s naive to think that small business would take advantage of a one-time $4,000 tax credit to hire an employee at a salary of, say, $30,000 a year, not including training or benefits, said Bill Rys, tax counsel for the National Federation of Independent Business, which represents small and independent businesses.
What’s more, businesses would assume the risk up front and receive the benefit (the tax credit) a year later.
Like many of the tax incentives enacted over the past few years, those proposed in the jobs bill are set on such short time frames as to negate their effect, Rys said.
The president proposed spending $80 billion to put tens of thousands of residential construction workers, casualties of the housing bust, back to work rebuilding crumbling roads, bridges and schools. But that’s unlikely, according to NFIB chief economist Bill Dunkelberg.
“The skill sets aren’t well matched; government programs generally require union workers, so most small construction firms won’t qualify; and home builders don’t have the equipment for roads and bridges,” Dunkelberg said.
Aside from that, Mrs. Lincoln, great idea.
Many Democrats, including Obama, define stimulus as “putting money in the pockets of those who will spend it.” How, then, does the president justify taking money out of those same pockets?
Section 4 of the jobs bill, titled “Buy American,” would do just that. It specifies that government funds would be available only to infrastructure projects that use manufactured goods (iron and steel, for example) produced in the U.S. It doesn’t specify that such a provision would raise the cost of those projects.
Every legislative proviso has exceptions. In the case of “Buy American,” the rules wouldn’t apply if complying was “not in the public interest” (who decides?); if there was an insufficient amount of American-produced iron and steel available (who’s counting?); or if it would “increase the cost of the project by more than 25 percent” (23 percent is OK?). One can only imagine the time and opportunity cost for small business to stay abreast of the relevant provisions.
Obama wants to protect the unemployed from discrimination in the workplace. A noble goal, to be sure, but his bill would have the opposite effect by making it illegal to use a candidate’s employment status as a qualification for work.
How would the crafters of the jobs bill expect a reasonable businessman to behave when confronted with the prospect of a discrimination suit for failing to hire an unemployed applicant? He wouldn’t even grant that candidate an interview, according to Kenneth Langone, the founder of Home Depot Inc.
Look at the bright side: This provision is certain to provide enough billable hours for law firms to justify hiring new lawyers.
Obama has vowed to forge ahead with his jobs plan, fulfilling that well-known definition of insanity: doing the same thing over and over and expecting a different result. In February 2009, Congress enacted the $825 billion American Reinvestment and Recovery Act. Since then, the U.S. economy has lost an additional 1.5 million workers.
The Obama administration can argue that the stimulus “created or saved” 3.5 million jobs, and that the economy would have been in worse shape without it, but those assertions can’t be tested or proved. Only in model-land can econometricians pinpoint outcomes to the nearest 10th of a percentage point.
If the stimulus had been successful, Obama wouldn’t be hawking version 2.0, with many of the same short-term incentives that didn’t fool those it was designed to help.
That means we have to rely on Congress, not a reliable source of salvation, to nix the anti-job measures in the jobs- wanting bill.
(Caroline Baum, author of “Just What I Said,” is a Bloomberg News columnist. The opinions expressed are her own.)
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