When it comes to jobs, the White House and Washington have managed to plug the leak, but they haven't yet found a way to jumpstart hiring. And that's a problem, as 15 million unemployed Americans continue to search for work, nearly 7 million of whom have been hunting for more than six months. The newest jobs bill, currently being tweaked in the Senate, would extend unemployment benefits again, but faces a spending-wary Congress.
Here are five things to know about the newest jobs bill:
The House already passed a version: Late last month, the House just barely passed a $90 billion package that was stripped of Medicaid relief to states and health insurance subsidies for the unemployed. Even the pared-down package was a tough vote for a House that's particularly concerned about the deficit.
The House bill would extend the stimulus program that eliminated fees on Small Business Association loans and increased guarantees. It also directs funds toward infrastructure projects, includes tax credits for businesses, and provides pension plan funding relief. The bill includes $1 billion for teen summer job programs and, perhaps most importantly, extends unemployment benefits again through November.
The Senate version will look different: For one thing, Senate Democrats are interested in restoring the $24 billion in Medicaid support to states that was cut from the House bill. The Senate's pricier bill failed a test vote Wednesday, when Senators balked at the price tag: an additional $80 billion to the deficit over 10 years. A quickly revised version of the Democratic bill shortens the delay in Medicare physician repayment reductions and drops the $25 per week increase in unemployment benefits enacted last year in order to cut its cost.
The bill increases taxes on investment fund managers: One element in the bills, meant to offset their cost, is a tax on private equity and hedge fund managers, who generally pay just 15 percent tax on the portion of the fund's profits that they receive as income. That income has generally been categorized as capital gains. The new law would tax much of that partnership or fund income as "ordinary income" at a traditional rate of 35 percent. Opponents of the provision argue that capital gains should never be treated the same as traditional income because fund managers face such a substantial downside risk, while proponents of the new legislation tend to refer to the existing carried interest law as a "tax loophole." The Senate version is tamer than the House's—taxing a smaller portion of a manager's income at the ordinary income rate.
It's the old deficit vs. jobs argument: The biggest issue for Washington lawmakers at the moment is a spiraling national debt paired with a very lackluster job market. Many groups, particularly labor unions and left-leaning economists, argue that the money spent on jobs shouldn't be weighed against the deficit. Robert Reich, former labor secretary under President Clinton, still holds that the government needs to be stoking the economy until consumers have fully returned. "Without consumers opening their wallets, and without government making up the difference, we're careening toward a double-dip recession," Reich recently opined. "The long-term deficit (i.e. Medicare as boomers become seniors) needs attention, but right now it's critical for government to spend."
Republicans are feeling more abstemious. Senate Minority leader Mitch McConnell argued on the Senate floor last week that Democrats were proving "unserious" about the debt. "Americans see what's happening in Europe, and they're begging us to bring the debt under control, to cut it down before we face a similar fate," McConnell said. "Instead, Democrats in Washington just keep piling on, as if they're oblivious to the consequences." For his part, the president aims to have it both ways. "While some people say you have to spend and some people say you have to cut, the president wants to talk about both cuts and investing," White House chief of staff Rahm Emanuel told the Washington Post.
Jobs bills work—sometimes: The phrase "jobs bill" has been slapped on several pieces of legislation during this recession: the American Recovery and Reinvestment Act of 2009; the Hiring Incentives to Restore Employment Act; the Worker, Homeownership and Business Assistance Act. Many economists would defend the efficacy of some of these efforts—particularly the stimulus and any and all extensions of unemployment benefits—as having preserved or created jobs in the face of a scorching recession. When the government supports the unemployed with insurance extensions, the unemployed immediately spend their benefit dollars and prop up consumer spending, which helps preserve or add jobs. To that end, reducing unemployment benefit payments—both a stimulus and a short-term program—seems particularly unwise, says Larry Mishel, president of the Economic Policy Institute. "The fruitlessness of cutting $25 a week out of unemployment benefits in order to feel fiscally conservative … is to hurt the unemployed almost for symbolic purposes,"Mishel says.