What to Expect from Jobs Bill

President Barack Obama signed into law a $38 billion piece of legislation on Thursday designed to spur job growth through tax cuts and infrastructure spending, although many economists dispute just how effective the bill will actually be.

The bill passed the Senate Wednesday in a rare bipartisan vote.  The final tally was 68-29, with nearly a dozen Republicans joining Democrats in sending the bill to the president’s desk for his signature. 
 
“I hope it is a prelude to further cooperation in the days and months to come, as we continue the work of digging out of this recession and rebuilding our economy in a way that works for all Americans,” Obama said in a nod to Republicans, which has been labeled as “the party of no“ by some.

The bill features roughly $18 billion in tax breaks and another $20 billion for highway transit programs.  Employers that hire a laid off or otherwise unemployed worker will be exempted from the 6.2 percent Social Security payroll tax. If that employee retains the worker for a year, his or her company would then be eligible for a $1,000 tax credit.  The bill would also allow businesses to write off the depreciation of capital goods more quickly and provide a one-year reauthorization of the highway trust fund. 

But, many economists believe that the legislation is much too small to make a dent in the 8.4 million jobs that have been lost during the current recession.  Top-end estimates assume that the bill will create only 250,000 jobs.
   
“The impact on hiring will be small,” writes Augustine Faucher, director of macroeconomics for Moody's Economy.com.“Before business will really boost payrolls they need to be convinced that the recovery will strengthen.” 

The bill is a scaled-back version of a $150 billion job creation package considered earlier in the year.  Democratic Congressional leaders have decided to take a piecemeal approach to job creation rather than lumping all the initiative into one giant bill that can be picked apart, deemed as wasteful spending and otherwise mischaracterized by Republicans.  By going piece by piece, Democrats are able to highlight the more popular parts of the legislation, making it harder for Republicans to oppose it.
   
“Now, make no mistake,” Mr. Obama said in his remarks at the signing ceremony in the White House’s Rose Garden. “While this jobs bill is absolutely necessary, it is by no means enough. There is a lot more we need to do to spur hiring in the private sector and bring about a full economic recovery.”