After President Obama‘s $447 billion jobs bill failed to clear a supermajority hurdle in the Senate on Tuesday, it’s on to Plan B – break up the bill and pass the elements that can attract bipartisan support.Despite partisan attacks on this bill, there is common ground, especially around tax cuts and incentives for businesses to hire and invest.
But Republicans promise strong resistance to any new spending that resembles the president’s 2009 stimulus plan, which they say added $787 billion to the national deficit without creating new jobs.
For Democrats, even failed votes on some of these elements are a chance to highlight differences with Republicans, setting themes for the 2012 campaign.
Here’s how some of the leading elements of Mr. Obama’s jobs bill are likely to fare standing on their own:
- $240 billion to extend a 2 per cent Social Security payroll tax cut through 2012. While supporting the concept of tax cuts, House Republicans are wary of the jolt to workers when this payroll tax reverts to its full level in 2013. They also oppose paying for it with higher taxes for the highest income-earners. Still, cutting taxes is instant common ground between the White House and a new House GOP majority. So far, the public doesn’t view this measure as sapping resources for a popular entitlement program.
- New tax breaks for small businesses, to hire workers. Combining tax cuts and small business has broad appeal across party lines. The kicker is how to pay for it. The White House proposes expanding employer tax credits for hiring disabled veterans (up to $4,800) and unemployed veterans (up to $2,400), which are now set to expire at the end of this year. “We believe there is an opportunity to make meaningful and significant progress in this area,” said House Republicans in a Sept. 16 memo responding to Mr. Obama’s jobs proposal.
- $50 billion for roads and school repairs, and $10 billion for a new “national infrastructure bank.” Anything that smacks of stimulus spending is suspect to Republicans, but infrastructure is one topic on Capitol Hill that often has bipartisan agreement to spend more. House Republicans say some 100 existing federal transportation programs are duplicative and waste money on mandatory set asides. They propose resolving these issues in the current debate over a multi-year transportation authorization bill.
- $30 billion in new aid to local governments to prevent layoffs of teachers, firefighters, and police. This is a hard sell for Republicans, who described a similar $53.6 billion item in Obama’s 2009 stimulus plan as pandering to his party’s base, especially powerful teachers unions. They also criticise the proposal for providing one-time raises or a reprieve, then jolting workers later when the money runs out.
- $15 billion to refurbish foreclosed homes. A nonstarter for Republicans, who say a similar program for $7 billion in neighbourhood stabilisation grants didn’t work.
- $450 billion in tax hikes on incomes over $1 million. Democrats proposed a 5.6 per cent surcharge as an alternative to Obama’s suggested hike on incomes over $250,000, including cuts to charitable deductions. The president backed the switch. But tax cuts are toxic to most Republicans, who dubbed the millionaires’ tax “class warfare.”
Tuesday’s vote showed that Obama’s jobs bill was a nonstarter in the Senate. Republicans opposed it unanimously, and even Democrats were divided about various pieces of the package. Still, it fared better than the president’s fiscal year 2012 budget, which received zero votes in the Senate from either Democrats or Republicans.
Before the vote, Sens. Joe Manchin (D) of West Virginia, Jon Tester (D) of Montana, Jim Webb (D) of Virginia, Joseph Lieberman (I) of Connecticut, and Sen. Ben Nelson (D) of Nebraska criticised the jobs bill, some threatening to simply vote it down.
“I know [the jobs bill] was put together with good intentions, but it will cost another half-trillion which we desperately need to reduce our debt, which will create jobs,” said Senator Lieberman in a floor speech before the vote. Still, pressured by Democrats to present a united front, he voted for the bill.
But with US unemployment stuck above 9 per cent – 16 per cent, counting discouraged workers and involuntary part-timers – doing nothing on jobs is not an option for members of Congress, or the president.
“Tonight’s vote is by no means the end of this fight,” said Obama in a statement after Tuesday’s vote. “In the coming days, members of Congress will have to take a stand on whether they believe we should put teachers, construction workers, police officers, and firefighters back on the job.”
Until the Senate defeat, the White House had opposed breaking up the jobs bill. The president’s call for stand-alone votes could be to find consensus or to force Republicans to take tough votes, sharpening a “do nothing Congress” narrative for the 2012 campaign. “With so many Americans out of work and so many families struggling, we can’t take ‘no’ for an answer,” he said.
Meanwhile, Republicans renewed calls to break up the bill, focusing on elements that reduce the size and scope of government and rein in regulations that increase costs or uncertainty for businesses – their own narrative for the 2012 campaign.
“The president sent us a bill that he knew would never be returned to his desk,” said Sen. John Barrasso (R) of Wyoming, vice chairman of the Senate Republican conference, in a statement after the vote. “We need to work together on legislation that will help the private sector create jobs without further breaking Washington‘s bank.”
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