FOR ONE THING, IT DOESN’T EXACTLY “COST” $15 BILLION
Bear with me a moment here.
For starters, our Crappy Media has concentrated on the horse race rather than the reality. Shocking, huh? As usual, I had to go digging around for myself to find out what’s going on, and it’s much more of a mixed bag than the Lame-Stream-ers bothered to report.
First, Dirty Harry proposed an $85 billion mixed package of spending and tax breaks. Some Republicans like Sen. Hatch tentatively signed on, for the tax breaks anyway. Then Reid realized he was going to get slammed for Big Spending, so he broke the bill up into smaller packages without telling anybody. Hatch got mad and withdrew his support. But not before penning this op-ed with Chuckie Schumer:
“[A]ny private-sector employer that hires a worker who had been unemployed for at least 60 days will not have to pay its 6.2 percent Social Security payroll tax on that employee for the duration of 2010. The Social Security trust fund will then be made whole with spending cuts elsewhere [Sure you will!-ed.] …this credit is “front-loaded” in that it provides an incentive for businesses to hire workers earlier in the year — because the tax benefit will be greater. …
[N]o business wants to wait until 2011 to receive a tax credit for someone it hires today. Another obvious benefit of this proposal to forgive payroll taxes is that it keeps money in a business’s pockets, since the tax is simply not collected in the first place. …For any eligible employee kept on payroll for a continuous 52 weeks, the employer would receive an additional $1,000 credit on its 2011 tax return.
I guess you could call the $1,000 credit “new spending”, but the 6.2% Social Security tax credit is not new spending, per se. These are tax credits, the weak sister to real tax cuts. It’s not a true tax cut because you still have to do what they say.
Washington prefers credits to tax cuts, because they still get to boss you around with your own money by using tax credits. Still, it lets employers keep some of their own money. And this is a large part of the $15 billion jobs bill Scott Brown just voted for.
But is it really $15 billion? Conservatives should be very careful about calling tax cuts or even meh-tax credits “new spending”. It buys into the liberal argument that you have to “pay” for tax cuts. In other words, according to liberals, letting you keep your own money is a big favor from the Big Gummint, who rightfully has first claim on it.
But as far as creating jobs that wouldn’t have otherwise existed?
Marginal at best, I think. A few thousand bucks isn’t a lot for guaranteeing a job to someone for a year, especially when unemployment insurance and maybe medical and other hidden costs are figured in.
Businesses really need customers. That’s why bold, Bush/JFK/Reagan-style across-the-board tax cuts help everybody.
This bill might help business and new workers at the margins.
But playing the margins got us into this mess.
Update: Heritage Foundation:
The payroll tax suspension would slightly lower the cost of hiring workers. As a result, it would probably cause some companies to hire workers they otherwise would not have.
However, suspending the payroll tax for one year would not create better opportunities to produce valuable goods and services; nor would it increase the earnings a new worker would create for his or her company. Simply reducing the cost of a potential job will not cause an actual job to emerge if consumers fail to signal that such a job should exist. As a result, most companies would not expand and hire permanent new workers.
Instead, most of the tax suspension benefits would be claimed by companies that already planned to hire new workers.
* Agenda-Slowing Job Creation: Congress is continually threatening businesses with new taxes and more regulation. This creates great uncertainty over rising costs for entrepreneurs who want to hire workers or create new enterprises. A small, temporary credit will do nothing to overcome the job-killing agenda coming out of Washington.
* Stop Threatening Growth: Congress should drop its plans for higher taxes and more regulation. If it did so, businesses and individuals would get off the sidelines quickly and start investing again even without short-term tax gimmicks.
* Lower Taxes: Washington can encourage growth by cutting spending so it can further lower taxes in a way that will actually encourage economic growth and spur job creation. A short-term credit will do nothing to get businesses hiring, but reductions of marginal tax rates for businesses, individuals and investing will provide long-term incentives that will pave the way for real job creation.