House to Vote on Jobs Bill That Includes Tax Breaks for New Hires
Some Democrats, especially those representing minority districts, feel that the Senate's $35 billion proposal is too puny. The pressure, however, is on Democrats to create jobs and to deliver a badly needed win for Obama and a Democratic Party that's struggling in opinion polls and faces losses in upcoming midterm elections.
But first, the House was expected to amend the measure to conform with so-called pay-as-you-go budget rules that have become an article of faith among moderate Democrats. The minor tweak -- which would tighten income reporting rules for landlords -- would mean that the notoriously balky Senate would have to act again before Obama could sign the measure into law.
At the same time, the Senate is debating a far more costly "extenders" measure that cleans up a lot of unfinished business from last year. The Senate's $100 billion-plus bill would extend unemployment assistance, revive a bevy of popular but expired tax breaks, help states with soaring Medicaid costs and prevent doctors from having to absorb big cuts in Medicare payments. The popular initiatives are traditionally extended on a bipartisan basis for brief periods of time, which hides their long-term costs.
The jobs bill contains two major provisions. First, it would exempt businesses hiring the unemployed from the 6.2 percent Social Security payroll tax through December and give them an additional $1,000 credit if new workers stay on the job a full year. The Social Security trust funds would be reimbursed for the lost revenue.
Second, it would extend highway and mass transit programs through the end of the year and pump in $20 billion for the spring construction season. The money would make up for lower-than-expected gasoline tax revenues.
The $35 billion plan -- blending $15 billion in tax cuts and subsidies for infrastructure bonds issued by local governments with the $20 billion in transportation money -- is far smaller than the economic stimulus bill enacted a year ago, now estimated at $862 billion.
But economists like Mark Zandi of Moody's Economy.com say the new hiring tax credit could spur about 250,000 new jobs. The economy has shed 8.4 million jobs since the recession began in December 2007.