Posted 9:32 am Tuesday, October 13, 2009
Expanding Tax Credit Could Boost Economy
Call it what you will, it's no recovery without jobs.
And call it what you will, the Obama administration's idea to offer tax credits for employers who add jobs won't be a "second stimulus" -- it will be the first such package with a real chance of improving the economy.
Democrats are now recognizing the $787 billion package passed in February has failed to "create or save" the 3.5 million jobs promised.
"President Barack Obama and other Democrats are adamant the package has lessened the effects of the recession, saving jobs that would have otherwise been cut," AP adds. "Nevertheless, the unemployment rate rose to 9.8 percent in September, the highest since 1983. A total of 15.1 million people are unemployed and 7.2 million jobs have been eliminated since the recession began in December 2007."
Now they're looking for more effective ways to help employment numbers recover.
"Proposals include extending and perhaps expanding a popular tax credit for first-time home buyers, and creating a new credit for companies that add jobs," the Associated Press reports. "Taken together, the proposals look a lot like another economic stimulus package, though congressional leaders don't want to call it that."
The plan could give employers who add workers as much as $4,000 per job, over a two-year period (as a way to ensure the system isn't gamed).
Resistance to the plan is coming from an unexpected quarter, for an unexpected reason -- Democrats are worried about the effect it would have on the deficit.
House Speaker Nancy Pelosi says she wants to hear from economists first.
"What is it that we can afford? What works the fastest?" Speaker Pelosi asked.
But a tax credit for jobs could be the best idea this administration has had.
First, there's a big difference between a tax credit and a subsidy.
A tax credit lets a taxpayer keep what he earns. It's not a forced redistribution of resources, as a subsidy is. It allows market forces to determine what jobs are created -- instead of imposing philosophy or politics onto the market, such as attempting to "create" green jobs where there is little demand.
Second, a tax credit wouldn't "cost" the country a thing.
Of course, congressional number-crunchers might disagree, but that's because they're used to budgeting what they feel you should pay. Working with a zero-based budget -- as we all do, and as they ought to -- a tax credit doesn't go into the "expenses" column because it was never put down into the "revenue" column.
Beyond that, a tax credit makes sense. Each job potentially lifts one person -- even one family -- out of unemployment and into the taxpaying workforce. What was a liability now becomes an asset.
It's now up to Obama and his team to convince the Democrats.
"There is a lot of traction for this kind of idea," said Rep. Eric Cantor, R-Virginia, the GOP whip. "If the White House will take the lead on this, I'm fairly positive it would be welcomed in a bipartisan fashion."
