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McCain: Obama Jobs Bill a Dud

By    |   Friday, 29 January 2010 06:46 AM

Passing a jobs bill featured prominently in President Barack Obama’s State of the Union address Wednesday, but some analysts say getting Republican support could be difficult if the Senate bill looks anything like the one the House passed in December.

The House bill, which passed 217-212, would allocate $75 billion in bailout funds for infrastructure and other job programs. It also includes $79 billion for a six-month extension of unemployment benefits, Medicaid money for the states, and a child-care tax credit.

Sen. John McCain predicted following failure in the wake of the speech.
“It’s a stimulus bill again. It’s failed,” McCain told CBS’ “Early Show” Thursday. “They said when we passed the last stimulus bill that we’d have 8 percent unemployment. That was their commitment.

“Most Americans don’t believe that mortgaging our children’s futures is the way to go about it, particularly with the kind of stimulus package that failed in the past.”

Senate Minority Leader Mitch McConnell’s office told Newsmax the senator is taking more of a wait-and-see approach to the jobs bill because the Democrats have not unveiled their unilaterally drafted bill.

Senate Democrats told reporters Thursday they plan to introduce their jobs bill next week in their effort to trim the 10-percent unemployment rate but hinted it would be similar to the House bill. The Democrats have lingered over their jobs bill in the Senate fot the past several weeks because of concerns they would not have the 60 votes needed to beat a filibuster.

"We're going to have a jobs agenda; we're going to do more than one thing. It will look at a broad view of what we need to do with jobs, and it will look at a more narrow view, and I think it will give Republicans an opportunity to work with us," Senate Majority Leader Harry Reid told reporters.

He also warned that Republicans would be to blame if the bill fails.

Sen. Lamar Alexander told reporters during a news conference Tuesday that he and other Republicans want a jobs bill that would include significant tax cuts to stimulate economic growth.

Competitive Enterprise Institute analyst John Berlau said the House bill relies on “pork barrel spending” and make work jobs that likely would have little or no impact on the private sector. The Democratic jobs bill relies on the supposition that government spending on projects will trigger the creation of large numbers of related jobs.

But Berlau said this idea relies the fallacy that a business has to use resources it otherwise would have used for other products to hire additional employees to work on government-related projects.

“When government spends money for make-work programs, it takes money from the private sector that the private sector would be using to create long-term sustainable jobs,” Berlau said.

Government crowds out private borrowers and credit when it borrows or raises interest rates, which Berlau said means less private-sector jobs. This factor caused the protracted unemployment the nation faced throughout the Great Depression, he said.

“The spending here is make work that will crowd out the private sector,” he said.

Berlau likewise dismissed the House bill’s affordable housing aspect as a “slush fund” for ACORN and other groups aligned with the Obama administration.

Republicans could back those parts of the bill that would cut capital gains taxes for small business and extend depreciation for new factories or equipment, he said, but that would be contingent on whether the Democrats pass punitive taxes against banks. Otherwise, the GOP might have a difficult time supporting it.

The job creation effectiveness of these tax code changes, however, would be contingent on whether or not the Democrats pass punitive taxes such as those being proposed for banks.

Such taxes could have the effect of reducing available credit, which in turn could hamper private-sector job growth.

Not all economists, however, believe the jobs bill will not improve the jobs outlook.

Liberal economists say Republican efforts to latch onto pre-stimulus projections the U.S. economy would experience an 8 percent unemployment rate following the $787 billion measure’s passage only underscores the inaccuracy of the initial projection.

The initial projection failed to take into account the severity of the recession, said Michael Ettinger, vice president for economics at the Center for American Progress.

“It was assuming the recession wasn’t as bad as it was, and the Recovery Act was aimed at fighting a six-alarm fire when it turns out it was fighting an 11-alarm fire,” Ettinger said. “Investment feeds itself. A year ago we were in a debilitating downward spiral and we lost 700,000 jobs, but last month we lost 85,000 jobs.

Conservative economists make a mistake exclusively looking at jobs directly created by government spending, he said, because such spending creates demand in the economy that goes far beyond the initial point of entry of government dollars and helps create jobs.

The result of last year’s stimulus bill, which was intended to last two years, has been to reduce the number of jobs that would have been lost otherwise each month and to stabilize the financial sector, Ettinger says.

Ettinger expects a steady improvement in the unemployment rate by year’s end.

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Passing a jobs bill featured prominently in President Barack Obama s State of the Union address Wednesday, but some analysts say getting Republican support could be difficult if the Senate bill looks anything like the one the House passed in December. The House bill, which...
Friday, 29 January 2010 06:46 AM
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