Companies that hire the unemployed would claim new tax breaks under a jobs-promoting bill that's expected to pass the Senate on Wednesday.
It's the first of several jobs bills promised by Democrats, and passage would give President Barack Obama and Majority Leader Harry Reid, D-Nev., a much-sought victory. But the measure's impact on hiring is likely to be relatively modest, economists say.
The bill up for a vote 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 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-anticipated gasoline tax revenues.
The measure cleared a key hurdle Monday when the Senate's newest Republican, Scott Brown of Massachusetts, and four other Republicans broke party ranks to defeat a filibuster. Republican leaders said Reid had used strong-arm tactics in bringing the measure to the floor.
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, Reid announced 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 Medicaid budgets. Taken together, these proposals would cost about $100 billion.
Republicans and some Democrats were unhappy that 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 that had been unveiled earlier this month by Sens. Max Baucus, D-Mont., and Charles Grassley, R-Iowa, the chairman and ranking Republican on the Finance Committee.
Most, if not all, of those ideas are expected to return in subsequent legislation.
While lawmakers in both parties promise to focus on jobs-producing legislation, their options are limited by cost considerations and rules that require new initiatives to "paid for" so they don't increase the deficit. But other measures, such as a passel of expired tax breaks for individual and businesses, are competing for the available dollars.
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