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A jobs bill too small for the task
Democrats promoting their $15 billion jobs bill Thursday were hoping to get a strong endorsement from one of the nation’s most influential financial experts. Instead, Mark Zandi, chief economist at Moody’s Economy.com, said the bill is “too small” to tackle the jobs crisis and ensure that the country doesn’t slip back into recession.
“I don’t think this is enough,” Zandi told reporters during a conference call with Democratic leaders. “It’s too small a step and more needs to be done.”
While House Democrats passed a $154 billion jobs bill in December — a proposal featuring billions for new infrastructure projects, state help and unemployment benefits — Senate leaders are eying a much smaller package focused on business tax cuts. The reason is clear: In a tough election year when 60 votes are needed to pass anything at all through the Senate, there’s little appetite for another huge spending bill — even if another huge spending bill is the best solution to the jobs crisis.
The Senate’s $15 billion proposal is centered around $13 billion in tax breaks to businesses that hire unemployed workers this year, a provision championed by Sens. Charles Schumer (D-N.Y.) and Orrin Hatch (R-Utah). Other components include an extension of highway funding, a bonds provision allowing state and local governments to borrow cash at lower rates, and another business tax break empowering companies to write off more expenses. The bill, Democrats say, is just the first in a series of legislative efforts designed to spur hiring.
Senate leaders defended their plan Thursday, arguing that the provisions share a common trait: each has bipartisan backing. Schumer said the strategy was chosen in recognition of the wide-spread animosity toward the near-constant partisan bickering that’s defined Washington politics in recent years — an anger on display last month in Massachusetts, where voters stunned the country by electing GOP Sen. Scott Brown to replace the late-Sen. Edward Kennedy, a Democratic icon.
“They want us to work on jobs,” Schumer said of voters, “and they want us to work together.”
While Zandi offered tepid praise for the Senate’s $15 billion proposal — calling it “a good first step” — he also warned that it simply isn’t broad enough to address the national employment crisis, which has left more than 17 percent of the country either without work or underemployed. A failure to provide additional funding to struggling states, for example, would lead to job losses that would “overwhelm” all the other job-creating efforts being tried, he said. And while the Schumer-Hatch tax credit would create between 200,000 and 300,000 new jobs, Zandi estimated, that number is a drop in the bucket relative to the roughly 11 million new jobs needed to get the country back to pre-recession jobless levels. A similar tax credit proposed by the White House would be more effective, he said, if only because of its $33 billion price tag.
“If I were king for a day,” Zandi said, “I’d go for the bigger plan.”
He’s not the lone beacon. Analysts at the Center on Budget and Policy Priorities, a liberal policy group, estimated recently that, without federal help, state budget cuts would result in 900,000 lost jobs. And on Thursday, Families USA, a consumer health care advocate, warned of the Medicaid cuts that would follow if Washington doesn’t step in with emergency funding. Arizona, for example, is weighing a proposal to cut more than 310,000 low-income adults from the Medicaid rolls, Families USA says. In California, 250,000 low-income folks — including kids and pregnant women — would lose coverage under the governor’s proposal, the group estimates. The list goes on.
“The only way this immediate crisis can be averted is by enacting an extension of increased federal funding for state Medicaid programs — and doing so right away,” Ron Pollack, Families USA executive director, said in a statement.
The legislation is time-sensitive for other reasons. The filing deadline for emergency unemployment insurance is at the end of February, leaving millions of Americans unsure if they’ll be eligible for the next tier of benefits. The National Employment Law Project estimates that, without a further extension, 1.2 million unemployed workers will exhaust their benefits in March — a figure that grows to 5 million through June. Although the House passed a six-month UI extension in December (cost: $41 billion), the Senate has yet to finalize its plans on the issue. Sen. Jack Reed (D-R.I.) is among one group of Democrats pushing to extend unemployment through the end of the year.
“It’s not just something that provides relief to families,” Reed told reporters Thursday. “It also stimulates the economy.”
Democrats are well aware of the severity of the jobs crisis. Yet, faced with record budget deficits — and a public grown weary of a Congress unable to pay its bills — Senate leaders are avoiding much larger spending proposals that either have no chance of passing the Senate, or could haunt the Democrats on the campaign trail. Instead, they’ve opted for what Schumer on Thursday repeatedly called a “modest” proposal.
“This is not a panacea — I would not try to sell it as that,” Schumer said. “We have to be careful here and thread the needle.”
Yet Zandi warned that, while the economy is in recovery mode, it hasn’t evolved to a point where job creation is self-sustaining. And that means that lawmakers hoping to spur hiring will also have to be careful not to under-spend, which could pull the economy back into a recession. If that happened, Zandi said, “there’s no coming out.”
Schumer, for his part, vowed that the $15 billion proposal is just the first in a series. But he didn’t offer any hints about the size or makeup of what’s to come. Nor, the New York Democrat conceded, have any Republicans committed to supporting the package.
“The one thing you can be assured of is that there will be more,” he said.
Whether more is enough has yet to be seen.