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Jobs bill cuts payroll tax on new hires
Question of the Day
Senate Democrats circulated a jobs bill Tuesday that’s light on new initiatives on boosting hiring and heavy with provisions sought by lobbyists for business groups, doctors and others.
The 362-page measure is still in draft form and has not been officially released.
It has bipartisan backing, but few new ideas for creating jobs, other than a $10 billion plan to exempt companies from paying the employer’s share of Social Security payroll taxes for new hires if they are unemployed and hired this year.
The idea, by Sens. Charles E. Schumer, New York Democrat, and Orrin G. Hatch, Utah Republican, is regarded as more workable than President Obama’s plan for tax credits of up to $5,000 for new hires.
The rest of the measure is mostly made up of last year’s unfinished business, including renewal of business tax breaks that have expired, an extension of unemployment benefits and health insurance subsidies and forestalling a cut in Medicare payments for doctors.
Meanwhile Tuesday, the Labor Department released figures showing that the number of available openings fell by nearly one-quarter, that the unemployed population soared by more than one-third in 2009, and that more people are competing for the few available jobs.
“No business hires into uncertainty, and right now there’s too much uncertainty in the markets,” said Harry Griendling, CEO of DoubleStar Inc., a consulting firm specializing in recruitment.
All told, there were 6.1 jobless workers in December, on average, for every available position, compared with 3.4 unemployed in December 2008 and just 1.7 that same month in 2007.
The jobs bill is politically important for Democrats seeking to respond to public anxiety about the economy. But the measure also has a lot of pull with an assortment of lobbying groups seeking to extend a raft of tax breaks and other benefits that expire at the end of the month.
The measure ignores some of Mr. Obama’s ideas, including the per-job tax credit, a $250 payment to Social Security recipients and $25 billion in help for cash-strapped states.
Instead, the cornerstone of the plan would exempt companies from paying the employer’s share of Social Security payroll taxes for new hires as long as those people had been unemployed at least 60 days.
A recent Congressional Budget Office report estimates that the idea could create up to 18 jobs per $1 million in tax relief, a more efficient way to boost hiring than provisions in last year’s $862 billion economic stimulus bill. The $10 billion plan could create perhaps 50,000 to 90,000 jobs through September and another 80,000 to 180,000 jobs next year.
The overall measure would cost roughly $80 billion, said Senate Minority Leader Mitch McConnell, Kentucky Republican. Many elements would be financed by a variety of provisions closing tax loopholes, such as one enjoyed by paper companies that get a credit from burning a dirty pulp-making byproduct known as “black liquor” as if it were an alternative fuel.
The bill would also raise about $7 billion from a crackdown on international tax cheats, an issue the Internal Revenue Service and the Obama administration have embraced.
“We really need to finish the bill this week, [and] I hope that we can,” Senate Majority Leader Harry Reid, Nevada Democrat, said on the chamber’s floor after he and others met with Mr. Obama at the White House.
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