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Senate Finance Committee Chair Max Baucus (D-MT) and senior Republican Chuck Grassley (R-IA) today proposed a big new jobs bill. The centerpiece of the measure would exempt businesses that hire unemployed workers this year from the employer portion of the Social Security payroll tax.
Beyond that proposal, which is a somewhat different version of the hiring tax credit proposed earlier this month by President Obama, the Baucus/Grassley bill would do little more than extend or tinker with a potpourri of expiring tax breaks. The package would cut taxes or increase spending by about $125 billion, partially offset by about $46 billion in targeted business tax hikes and some Medicare savings.
Besides the payroll tax break, whose ability to create many new jobs is itself open to question, it is hard to see how this measure will do a lot for employment. But it does make it look like Democrats and Republicans are working together to boost the economy. And never discount the value of political theater.
Just to prove they read the polls, Baucus and Grassley repeat the word “bipartisan” or “bipartisanship” seven times in their eight paragraph press release. They call it a “first step” but also urge the Senate to work in “deliberate but expeditious” manner to pass a jobs bill. Not sure what “expeditious” means in Senate time, however.
The bill breaks into four parts:
The jobs credit. This version was first proposed by senators Chuck Schumer (D-N.Y.) and Orin Hatch (R-UT). Bipartisanship, it seems, is breaking out all over town. To be eligible, a business would have to hire workers who were unemployed for at least 60 days. Firms would also get an additional $1,000 income tax credit for every new worker they keep on the job for at least a year.
Tax Extenders. The bill would extend (mostly for one year) the raft of tax breaks that expired at the end of 2009. These include the research credit and a bunch of energy tax breaks.
Spending. The bill would continue extra unemployment benefits though the end of May and extend the COBRA health insurance premium subsidy for workers who lost jobs . It would protect physicians from big cuts in Medicare payments (the doctor fix) for another seven months.
Pay-fors. These are mostly tried-and-true ideas that never pass Congress, including efforts to crack down on both offshore tax abuses and tax deals that lack “economic substance,” ideas that also appear in the Obama budget
It may also be worth noting what the bill does not include: an increase in federal Medicaid dollars to the states or any broader financial assistance to the governors. Those ideas may yet appear in future versions, but state officials have been very pessimistic.
In sum, this bill is a bit like pushing a car out of a snowdrift. Baucus and Grassley have at least stopped spinning their wheels, but their jobs-mobile still isn't getting very far down the road.
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