Companies that hire the unemployed would claim new tax breaks under a jobs—promoting bill that’s slated to pass the Senate in a rare display of bipartisanship.
It’s the first of several jobs bills promised by Democrats and a passage would give President Barack Obama and Majority Leader Harry Reid much—sought victories. But the measure’s impact on hiring is likely to be relatively modest, economists say.
The measure cleared a key hurdle on Monday when the Senate’s newest Republican, Scott Brown of Massachusetts, and four other Republicans broke party ranks to defeat a a procedural manoeuvre by Republicans to block a final vote on the legislation. Republicans said Mr. Reid had used strong—arm tactics in bringing the measure to the floor.
The bill up for a vote on Wednesday 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. It would also extend the federal highway programs through the end of the year and make a $20 billion cash deposit into the highway trust fund to make up for shortfalls from lower—than—hoped gasoline tax revenues.
Mr. Reid’s $35 billion proposal - blending $15 billion in tax cuts and subsidies for infrastructure bonds issued by local governments with the $20 billion in highway money - is a far smaller measure than the $862 billion economic stimulus bill enacted a year ago.
House Democrats passed a far larger $174 billion jobs measure in December and many consider the pending Senate measure too puny. But they may simply adopt the Senate measure in order to get the win.
The new hiring tax credit could spur about 250,000 new jobs, according to economist Mark Zandi of Moody’s Economy.com.
In addition to the hiring tax incentives and highway funding, the bill would extend a tax break for small businesses buying new equipment and modestly expand an initiative that helps state and local governments finance infrastructure projects.
Separately, Mr. Reid announced on Tuesday that he wants upcoming legislation to extend unemployment benefits and health insurance subsidies for the jobless through December and help cash—strapped states with their budgets to pay their share of costs for Medicaid, which covers health care for the poor. Taken together, these proposals would cost about $100 billion.
Republicans and some Democrats were unhappy that Mr. Reid brought the jobs bill to the floor after abruptly dumping about $70 billion worth of tax breaks for businesses and individuals, help for the unemployed and additional Medicare payments to doctors treating the elderly that had been unveiled earlier this month by Democratic Sen. Max Baucus of Montana, and Sen. Charles Grassley of Iowa, the chairman and ranking Republican on the Finance Committee.
Most, if not all, of those ideas are expected to return in subsequent legislation.
