WASHINGTON — The Senate jobs-creation package that was unveiled Thursday and hailed by President Barack Obama may do more to help politicians who want to be seen trying to help the economy than it does to shrink the nation's unemployment rate.
"This is intended to show government is doing something, but it's hard for me to believe (that) a lot of this stuff is going to have a big impact on job creation," said Robert Bixby, the executive director of the Concord Coalition, a fiscal watchdog group.
The measure also faces rough political terrain. Prodded by some Senate Democrats' concerns, Majority Leader Harry Reid of Nevada plans to hold votes on only a small part of the package by month's end. Lawmakers in the House of Representatives passed a more extensive package in December.
Reid pared down the original $85 billion blueprint that was unveiled Thursday by Senate Finance Committee Chairman Max Baucus, D-Mont., and the panel's top Republican, Charles Grassley of Iowa, because of Democratic concerns that it includes items that aren't directly related to job creation but are eagerly sought by business and physicians' groups.
Reid said he wanted to move ahead on the most explicit job-creating parts because, "We feel that the American people need a message. The message they need is we're doing something about jobs."
The plan has four major job-creating components:
- Taxpayers would be allowed to write off up to $250,000 of certain capital expenditures this year, instead of depreciating those costs over time. This could help small businesses grow by letting them write off equipment purchases and would cost the Treasury $35 million over 10 years.
- Employers who hired workers who've been unemployed for at least 60 days this year wouldn't have to pay Social Security taxes, or 6.2 percent of wages up to $106,800, on those new workers for a year. Employers also could get an extra $1,000 tax credit for every new worker they retain for a year. This would cost an estimated $13 billion over 10 years.
- Spending on highway and transit projects would be accelerated by $19.5 billion this year.
- State and local governments would be able to issue indefinitely "Build America Bonds," which get federal aid. The program had been set to expire soon but would be extended at a cost of $2 billion over 10 years.
White House spokesman Robert Gibbs said the president was "gratified to see the Senate moving forward in a bipartisan manner on steps to help put Americans back to work."
Will the Senate effort create jobs? Experts say it would help some, but isn't a magic bullet.
"You can't force companies to create jobs if they don't need them," said John Challenger, the president of Challenger, Gray & Christmas, a group that specializes in work force issues.
"I think it's more about creating demand, getting the economy going, and that does create jobs," he said. "I think the ones that are effective are things like changing depreciation so companies can write off equipment purchases more quickly."
Earlier this month, the National Federation of Independent Business issued its February survey of members, with a strong message that hiring can't happen without customers and consumer demand.
In an interview Thursday, William Dunkelburg, the group's chief economist, said the federation has advocated since January 2009 a payroll tax holiday that would put more money in the hands of consumers, who drive 70 percent of U.S. economic activity. A tax holiday would also leave businesses with more cash to invest in equipment and technology.
Although many Americans are frustrated by the deepest recession since the Great Depression and the government's response to it, economists think last year's federal stimulus act helped save many public sector jobs at the state and local levels, which helped things from being even worse.
The U.S. unemployment rate peaked at 10.2 percent in October, and fell to 9.7 percent in January. It's expected to rise throughout the year as workers who quit looking for jobs resume looking for them. In a report released Thursday, the White House Council of Economic Advisers projected an jobless rate of 9.8 percent late this year and average monthly net job creation of 95,000.
That's slightly less than the 100,000 new jobs a month that are needed to keep pace with new entrants to the workforce — not counting the more than 8.4 million Americans who've lost their jobs since the recession began in December 2007.
Other proposals in the Baucus-Grassley plan stir more controversy and won't be part of the initial jobs component. They include renewing the estate tax, which expired on Dec. 31 but will be back next year at pre-2001 rates.
The Senate also may tackle extensions of several tax credits, as well as a proposed 21 percent cut in Medicare payments to physicians, and extending intelligence-gathering parts of the USA Patriot Act for another year.
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