Photo: AP Photo/Manuel Balce Ceneta
Congressional Budget Office director Doug Elmendorf released his agency’s analysis of ways to increase employment and economic growth in the next to years — and President Barack Obama’s jobs bill scores well.Here are the most important bullet points:
- Policies that would have the largest effects on output and employment per dollar of budgetary cost in 2012 and 2013 are ones that would reduce the marginal cost to businesses of adding employees or that would be targeted toward people who would be most likely to spend the additional income. Such policies include reducing employers’ payroll taxes (especially if limited to firms that increase their payroll), increasing aid to the unemployed, and providing additional refundable tax credits in 2012 for lower- and middle-income households.
- Policies that would primarily affect businesses’ cash flow but would have little impact on their marginal incentives to hire or invest would have only small effects. Such policies include reducing business income taxes and reducing tax rates on repatriated foreign earnings.
As seen in the chart below, increasing unemployment assistance — a central component of Obama’s American Jobs Act — would create the most jobs over the next two years. Reducing the payroll tax — another part of the jobs bill — follows closely behind.
Republicans generally agree with many of the measures in Obama’s bill scored favourably by the CBO, but they oppose Obama’s millionaires tax to pay for it. Some GOP proposals, like a tax holiday for foreign earnings or reducing the corporate income tax, were found to have the least effect on employment.
Infrastructure spending scores poorly since few projects would immediately benefit from increased funding.
Photo: Congressional Budget Office
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