Senate To Consider Scaled-Down Jobs Bill
The Senate is likely to turn to a tightly focused jobs bill when it returns from the President's Day break next week. The bill, a much-scaled down version of legislation written by Senate Finance Committee Chairman Max Baucus (D-Mont) and his ranking Republican, Charles Grassley of Iowa, contains provisions that the Congressional Budget Office said earlier this year would indeed help stimulate the economy.
However, the bill no longer contains several stimulus provisions and non-stimulus provisions, as a result of major surgery conducted by Senate Majority Leader Harry Reid (D-Nev.) The scaled-down bill would:
- Offer an exemption from Social Security payroll taxes for every worker hired in 2010 that has been unemployed for at least 60 days. According to a summary of the bill, the maximum value would be equal to 6.2 percent of wages up to the FICA wage cap of $106,800. There also would be an additional $1,000 income tax credit for every new employee retained for 52 weeks to be taken on the employer's 2011 tax return. The provision is estimated to cost $13 billion over years. CBO reported in January that providing tax credits for increases in payroll would increase both output and employment. CBO estimated that reducing payroll taxes would raise output cumulatively between 2010 and 2015 by $0.40 to $1.30 per dollar of budget cost.
- Extend 2008 and 2009 expensing thresholds so that taxpayers may write off up to $250,000 of certain capital expenditures in lieu of depreciating those costs over time. The proposal is estimated to cost $35 million over 10 years. CBO estimated that allowing full or partial expensing would raise output cumulatively between 2010 and 2015 by $0.20 to $1.00 per dollar of budgetary cost.
- Allow issuers of tax credit bonds for school construction and energy projects the option of issuing bonds under current law or by using "Build America Bonds," which provide issuers a direct payment for a portion of the interest paid on the bonds. The subsidy would equal 45 percent of the borrowing cost or 65 percent for small issuers. The proposal is estimated to cost $2 billion over 10 years.
- Extend highway and transit programs through calendar year 2010 and transfer from the General Fund to the Highway Trust Fund $19.5 billion in interest foregone since 1998. It also would halt annual payments the trust fund makes to the General Fund to reimburse it for tax exempt users of the highway program and repeals an $8.7 billion rescission of unobligated balances of contract authority. The proposal is estimated to have no revenue impact.
In scaling down the bill, Reid deleted an extended COBRA subsidies for the unemployed through May 31, at a cost of $3 billion and an extension of unemployment benefits through that same date, at a cost of $22 billion; both these provisions originally appeared in the American Recovery and Reinvestment Act
As with many high-priority popular bills, the measure would have included a variety of non-stimulus provisions, including a short-term extension of two expiring sections of the Patriot Act, $1.5 billion in agriculture disaster relief, a five-year reauthorization of satellite home viewer legislation and a fix to Medicare physician payments to prevent a 21 percent cut in March.
The bill also included several so-called “tax-extenders,” provisions which would temporarily renew a number of tax credits and deductions -- such as the research and development tax credit – which expired at the end of last year. These provisions were offset, in part, with $43 billion from closing several tax loopholes.
Many of the unrelated provisions are likely to return in separate legislation, which is where they should be. We believe that a jobs bill should be for jobs, and that stimulus should stimulate. As such, any jobs legislation should be written based on economic, not political considerations. Unrelated provisions should be left out of the measures, no matter how popular they may be. And any stimulus bill should not contribute further to the soaring debt. Therefore, its provisions should be offset.