New York Times, March 17, 2010

New York Times

March 17, 2010

New York Times

Job Bill Passes in Senate With 11 Republican Votes

WASHINGTON — In a rare bipartisan vote, the Senate approved and sent to President Obama on Wednesday a bill intended to spur employment by providing businesses with incentives to hire new workers — an approach that Congressional Democrats hope to repeat.

The legislation, approved 68 to 29, would give employers an exemption from payroll taxes through the end of 2010 on workers they hire who have been unemployed for at least 60 days. It also extends the federal highway construction program, shifts $20 billion to road and bridge building and takes other steps to bolster public improvement projects.

Democrats hope to follow up with legislation by extending more than $30 billion in corporate tax breaks and aid to small business.

At a St. Patrick’s Day luncheon on Capitol Hill after the vote, Mr. Obama thanked the 11 Republicans who backed the measure and said he would like to see that trend continue on emerging economic initiatives.

“I hope that on a series of future steps that we take to help small businesses get financing, to help improve our infrastructure around the country, to put people back to work, that we’re going to see more progress on that front,” Mr. Obama said.

Senator Charles E. Schumer of New York, the No. 3 Democrat in the Senate and a co-author of the payroll tax break, said Congressional Democrats were trying to show the public that lawmakers understand how critical it is to provide more job opportunities.

“The American people sent us a message in Massachusetts and elsewhere,” said Mr. Schumer, referring to the loss of a Democratic Senate seat there in January. “It was focus on jobs, the economy, helping the middle class stretch its paycheck. Our answer today: We heard you.”

In a sign of the significance Democrats place on the bill, the House leadership held a ceremony sending the legislation to the White House, where Mr. Obama is scheduled to sign it on Thursday.

While lawmakers have said the law will result in significant hiring, several economists said it will have only a modest impact on unemployment.

The law provides an exemption from the 6.2 percent Social Security payroll tax for every worker who has been unemployed at least 60 days and is hired after Feb. 3 through the end of this year. Employers will get an additional $1,000 income tax credit for new employees retained for at least a year. The Senate estimated the measure will cost $13 billion over 10 years, though most of the cost will be in the first two years.

While employers are expected to claim the credit for as many as five million workers, Timothy J. Bartik, senior economist at the W. E. Upjohn Institute for Employment Research, estimated that the new law would create no more than 200,000 jobs that would not otherwise have existed.

“The design of the Senate bill passed today is particularly beneficial to high-turnover companies, like restaurants, which in a typical year might replace fully half of their work forces,” said John H. Bishop, an economist in the School of Industrial and Labor Relations at Cornell. “To get the hiring subsidy, it doesn’t require that a company actually grow.”

While the measure won support from some Republicans, others in the party were skeptical that it would help create jobs, or said they were distressed at its cost. “This isn’t so much a jobs bill as it is a debt bill,” said Senator Judd Gregg, a New Hampshire Republican.

The measure is partly paid for by tightening rules on offshore tax havens, but some costs would be added to the deficit.

The bill was the first in some time to draw a sizable bloc of Republicans in the polarized Senate, an indication that some Republicans acknowledge they cannot stand in blanket opposition to Democrats on economic matters. Some Republican support was due to the push for more road and bridge building, which creates good-paying jobs for idle construction workers.

“The funding in this bill sends the message to struggling states like Ohio that they can move forward with shovel-ready transportation projects — projects that will put people back to work quickly and contribute to economic growth,” said Senator George V. Voinovich, Republican of Ohio.

While they have wrapped up the initial jobs measure, Democrats were uncertain how quickly they could forge ahead on the larger effort to renew corporate tax breaks while extending added unemployment benefits and subsidies for health insurance for the unemployed through the end of the year.

At the same time, the House Ways and Means Committee on Wednesday began advancing a third measure that would try to spur investment in small businesses by temporarily easing any capital gains taxes on income from such enterprises.

Democrats said they would continue to press those initiatives. “We have more to do on jobs,” said Representative Steny H. Hoyer, Democrat of Maryland and the House majority leader.


Sewell Chan and Janie Lorber contributed reporting.