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1. President Obama's jobs plan faces tough obstacles
If you are unemployed and hope President Obama's jobs program will create a position for you, don't hold your breath.
The part of the proposal most likely to result in new jobs - spending on transportation, schools and other infrastructure projects - is among the least likely to gain enough Republican support to pass Congress. Even if it does pass, most of the jobs won't be created until 2012 and will be mainly in the construction trades. Everyone else will have to wait until those newly employed construction workers spend enough of their paychecks to create jobs in other sectors.
The parts most likely to pass - payroll tax cuts for businesses and employees - is the least likely to create jobs.
Most of the business tax cuts would go to employers whether they hire new people or not. Some of them target businesses that expand their workforce or hire the long-term unemployed, but the track record of hiring tax incentives is not encouraging.
"The economists who have studied it have not come back with any ringing endorsements," says Joseph Thorndike, a contributing editor for Tax Analysts. "It's not that they don't work. There is no clear evidence that they work or work particularly well. They are hard to target effectively."
It's very difficult to design a tax credit that will create new jobs and not simply reward employers who replace workers who were fired or quit, or create new positions they would have created anyway.
Many business owners agree that tax credits play little or no role in their hiring decisions.
"It's responsible for 0.0 percent of our decision to add people," says Jon Fisher, a serial entrepreneur who sold his last company to Oracle in 2007 and now runs CrowdOptic.com, a San Francisco mobile technology company with about 20 employees.
"You think someone is making a hiring decision based on saving 2 to 3 percent in payroll taxes?" Fisher said, adding that he wonders "why this survives in politics and academia when it is so absolutely meaningless."
Obama's proposal would cut in half the payroll tax that businesses pay on all workers - to 3.1 percent from 6.2 percent - on their first $5 million in payroll for 2012.
Cut tax to zero
It would cut this tax to zero for employers that increase the size of their workforce or increase the pay of current workers. This zero rate would apply only to the first $50 million in year-over-year payroll increase.
It also would give companies a $4,000 tax credit for hiring a person who has been unemployed six months or longer and a tax credit of $5,600 to $9,600 for hiring a veteran.
The proposal would halve the employee's share of the payroll tax to 3.1 percent from 6.2 percent next year. This year, employees have been paying only 4.2 percent instead of 6.2 percent, but that tax break is scheduled to expire at the end of this year.
The payroll tax cuts are designed to put more money in the hands of employees and business owners. Even if business owners don't use it to hire more people, the hope is that people will spend a lot of this money, increasing demand and ultimately spurring job creation.
"It will put a little more money in peoples' pockets, it won't change the world," says Paul Secunda, a visiting professor at the University of Wisconsin Law School.
The problem with tax cuts is that people will save some of the money and use some to pay down debt. "Those don't actually support spending throughout the economy to boost demand for goods and services," says Lawrence Mishel, president of the Economic Policy Institute. And a lot of the money that does get spent goes to imports.
When the government spends money on infrastructure, it spends all of it. "There is no savings or paying down debt. And most of it is spent domestically.
Greg Rosston, deputy director at the Stanford Institute for Economic Policy Research, agrees that infrastructure spending would create more jobs than tax cuts, but that the tax cuts are far more likely to be enacted and will create some jobs.
2. Cantor says parts of Obama jobs plan OK
House Majority Leader Eric Cantor says there are indeed some proposals in President Barack Obama's jobs plan that Republicans can like.
But he also characterized the president's proposals as coming from a different viewpoint than that of Republicans. Cantor said Republicans believe anyone can succeed if given the opportunity; the president, he suggested, believes government should guarantee not just the opportunity but the success.
"The best way for us to address the jobs crisis is to make sure everyone does have that fair shot," Cantor said yesterday. "Some people believe Washington and the federal government are there to guarantee success."
That seems to be behind a recent House Republican pushback against a wide array of regulations from the Obama administration, which the Republicans say hurt businesses and jobs.
Cantor cited a couple of them yesterday, such as a proposed new regulation about fly ash that, if passed, would make things more expensive for the concrete industry.
Cantor was speaking at an event at Titan America in Henrico, a concrete company. There, company leaders and workers told Cantor they're worried about federal regulations that could hurt the concrete business, which is already hurting from the recession.
Obama visited Cantor's district yesterday to start selling his jobs plan, giving a speech to more than 8,000 people at the University of Richmond.
Cantor said he was invited to the event but stayed in Washington for votes. He was at Obama's speech to Congress on Thursday night when the president first announced his proposal.
Cantor said there are things in the plan that Republicans may approve. They agree on the need to improve infrastructure and extend a payroll-tax cut for workers, as well as new free-trade agreements with countries such as South Korea.
"A payroll tax for a working person right now in this economy is not a good idea," Cantor said.
He said there are "areas of commonality" between Obama's proposals and what Republicans want.
But, he said, the president isn't going to get a rubber stamp on the plan, and he should be prepared to give on some Republican proposals.
"I object to this all-or-nothing message the president is delivering," Cantor said Friday. "That's not how people operate. We shouldn't insist on all or nothing, because Washington has been too hung up on that."
Aviation NEWS By
Neha Jain
Aviation NEWS Reporter
1. President Obama's jobs plan faces tough obstacles
If you are unemployed and hope President Obama's jobs program will create a position for you, don't hold your breath.
The part of the proposal most likely to result in new jobs - spending on transportation, schools and other infrastructure projects - is among the least likely to gain enough Republican support to pass Congress. Even if it does pass, most of the jobs won't be created until 2012 and will be mainly in the construction trades. Everyone else will have to wait until those newly employed construction workers spend enough of their paychecks to create jobs in other sectors.
The parts most likely to pass - payroll tax cuts for businesses and employees - is the least likely to create jobs.
Most of the business tax cuts would go to employers whether they hire new people or not. Some of them target businesses that expand their workforce or hire the long-term unemployed, but the track record of hiring tax incentives is not encouraging.
"The economists who have studied it have not come back with any ringing endorsements," says Joseph Thorndike, a contributing editor for Tax Analysts. "It's not that they don't work. There is no clear evidence that they work or work particularly well. They are hard to target effectively."
It's very difficult to design a tax credit that will create new jobs and not simply reward employers who replace workers who were fired or quit, or create new positions they would have created anyway.
Many business owners agree that tax credits play little or no role in their hiring decisions.
"It's responsible for 0.0 percent of our decision to add people," says Jon Fisher, a serial entrepreneur who sold his last company to Oracle in 2007 and now runs CrowdOptic.com, a San Francisco mobile technology company with about 20 employees.
"You think someone is making a hiring decision based on saving 2 to 3 percent in payroll taxes?" Fisher said, adding that he wonders "why this survives in politics and academia when it is so absolutely meaningless."
Obama's proposal would cut in half the payroll tax that businesses pay on all workers - to 3.1 percent from 6.2 percent - on their first $5 million in payroll for 2012.
Cut tax to zero
It would cut this tax to zero for employers that increase the size of their workforce or increase the pay of current workers. This zero rate would apply only to the first $50 million in year-over-year payroll increase.
It also would give companies a $4,000 tax credit for hiring a person who has been unemployed six months or longer and a tax credit of $5,600 to $9,600 for hiring a veteran.
The proposal would halve the employee's share of the payroll tax to 3.1 percent from 6.2 percent next year. This year, employees have been paying only 4.2 percent instead of 6.2 percent, but that tax break is scheduled to expire at the end of this year.
The payroll tax cuts are designed to put more money in the hands of employees and business owners. Even if business owners don't use it to hire more people, the hope is that people will spend a lot of this money, increasing demand and ultimately spurring job creation.
"It will put a little more money in peoples' pockets, it won't change the world," says Paul Secunda, a visiting professor at the University of Wisconsin Law School.
The problem with tax cuts is that people will save some of the money and use some to pay down debt. "Those don't actually support spending throughout the economy to boost demand for goods and services," says Lawrence Mishel, president of the Economic Policy Institute. And a lot of the money that does get spent goes to imports.
When the government spends money on infrastructure, it spends all of it. "There is no savings or paying down debt. And most of it is spent domestically.
Greg Rosston, deputy director at the Stanford Institute for Economic Policy Research, agrees that infrastructure spending would create more jobs than tax cuts, but that the tax cuts are far more likely to be enacted and will create some jobs.
2. Cantor says parts of Obama jobs plan OK
House Majority Leader Eric Cantor says there are indeed some proposals in President Barack Obama's jobs plan that Republicans can like.
But he also characterized the president's proposals as coming from a different viewpoint than that of Republicans. Cantor said Republicans believe anyone can succeed if given the opportunity; the president, he suggested, believes government should guarantee not just the opportunity but the success.
"The best way for us to address the jobs crisis is to make sure everyone does have that fair shot," Cantor said yesterday. "Some people believe Washington and the federal government are there to guarantee success."
That seems to be behind a recent House Republican pushback against a wide array of regulations from the Obama administration, which the Republicans say hurt businesses and jobs.
Cantor cited a couple of them yesterday, such as a proposed new regulation about fly ash that, if passed, would make things more expensive for the concrete industry.
Cantor was speaking at an event at Titan America in Henrico, a concrete company. There, company leaders and workers told Cantor they're worried about federal regulations that could hurt the concrete business, which is already hurting from the recession.
Obama visited Cantor's district yesterday to start selling his jobs plan, giving a speech to more than 8,000 people at the University of Richmond.
Cantor said he was invited to the event but stayed in Washington for votes. He was at Obama's speech to Congress on Thursday night when the president first announced his proposal.
Cantor said there are things in the plan that Republicans may approve. They agree on the need to improve infrastructure and extend a payroll-tax cut for workers, as well as new free-trade agreements with countries such as South Korea.
"A payroll tax for a working person right now in this economy is not a good idea," Cantor said.
He said there are "areas of commonality" between Obama's proposals and what Republicans want.
But, he said, the president isn't going to get a rubber stamp on the plan, and he should be prepared to give on some Republican proposals.
"I object to this all-or-nothing message the president is delivering," Cantor said Friday. "That's not how people operate. We shouldn't insist on all or nothing, because Washington has been too hung up on that."
Aviation NEWS By
Neha Jain
Aviation NEWS Reporter
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