Jobs for Main Street Act = Growth of Federal Deficit

Before the House went on holiday in 2009, they voted and narrowly passed what many call the “Jobs for Main Street Act”. In fact it was the final vote for the House of the year and decade and it passed 217-212, without a single Republican supporter. Although the House passed the bill, it might be harder to pass in the Senate due to the fact many Senators have questions in regards to how effective this bill will create job.

Thus Senators are beginning to ask themselves will the latest jobs bill really produce jobs and is it worth plunging the government even further into debt by at least tens of billions. Now the House passed a $174 billion package last month and to some degree it is referred to as the son of the stimulus, the $787 billion economic recovery plan of nearly a year ago that many especially Republicans say was ineffective in producing jobs. Therefore if the original stimulus package was to produce jobs and many of which were created immediate but will be created this year and in 2011.

While the Democratic House bill plans to spend $75 billion in infrastructure and public sector spending: tens of thousands of new construction jobs, 5,500 more police officers, 25,000 additional AmeriCorps members, 250,000 summer jobs for disadvantaged youth, 14,000 part-time jobs for parks and forestry workers. These are the same jobs that the original stimulus package was created to do but it seems as if the House Democrats feel that the stimulus has been too little and too slow in creating jobs so they hope that the son of the stimulus will help in job creation.

Another key thing to point out is that the “Jobs for Main Street Act” will use $75 billion from the Wall Street bailout fund, better known as TARP, to offset some of the costs. Still some skeptics believe this is no more than a shell game because unused bailout money is supposed to be used to reduce the deficit, which hit $1.4 trillion in the 2009 budget year. So the appetite for another costly round of economic stimulus measures seems unlikely in the Senate especially since the Senate already has a vote on tap for January 20 to again raise the ceiling on the government’s total debt just a month after upping it to $12.4 trillion.

The “Jobs for Main Street Act” is yet another reactionary measure by Congress to deal with one of the problems plaguing our nation which is jobs. While some might applaud the House for trying to create jobs but who’s to say the amount of jobs they are predicting to create will be created from this package and most of these jobs are temporary not permanent. So the real question is what are Congress and President Obama as well as American companies both big and small doing to create more permanent jobs in this jobless market?

Now President Obama has a Jobs Summit where he outlined some things that the federal government as well as the financial industry could do to help small businesses create jobs. Still two key things that Obama outlined after the Jobs Summit were not included in the House version of the “Jobs for Main Street Act. The House plan leaves out Obama's proposals to attack unemployment through tax credits for small businesses that create jobs and for homeowners who make their dwellings more energy efficient. A job-creating tax credit for small businesses has support among some Democrats in the Senate, even though critics fear it may be too complex to work. Critics argue that small business people have too much to do just to keep their business afloat than to try and figure out some fancy, complex credit. While supporters of the credit say it would empower growing small businesses and if these credits have even a marginal incentive on even a few … employers, the bang for the buck in terms of job creation would be one of the highest of any of the types of incentives that the government has created thus far.

Still not everyone is buying into such a notion and the reality is that job creation issue is complicated because of the money in the House bill goes to programs that may stimulate the economy but don’t appear to directly put people to work. For instance, $41 billion goes to extend unemployment benefits for six months and $12.3 billion to extend a health insurance subside for people who have lost their jobs. Now the unemployment benefits extension is not a bad idea but it would not be needed if Congress actually thought of ways to create jobs or to help with job creation rather than continuing to extend ideas that were put in the original stimulus package that hasn’t panned out as good as many thought it would when it was passed nearly a year ago. Also the extension of a health insurance subside for people who have lost their jobs better known as COBRA, is very costly because most people without jobs can’t afford COBRA.

The House bill also includes the extension of a child tax credit for poor families, $23.5 billion to help states cover Medicaid costs and $23 billion so states can support some 250,000 education jobs over the next two years. An additional $2.8 billion goes to clean water and environmental restoration projects. Even the investment in "shovel-ready" highway and bridge projects may not immediately translate into a reduction in the nation's 10 percent unemployment rate. Republicans cited government figures showing that, as of Sept. 30, only 9 percent of $27.5 billion for highways in the first stimulus bill had been spent. The Congressional Budget Office estimates that of the $39 billion in the new House jobs bill directed to the departments of Transportation and Housing and Urban Development, only $1.7 billion will get spent before next October.

The CBO has estimated that employment was 600,000 to 1.6 million higher in the third quarter of 2009 because of the stimulus act. The criticism over the latest jobs bill has already begun and many supporters of the bill are hurrying to show why it is needed but whenever the CBO speaks, I tend to listen considering that they are a non-partisan group and their numbers are usually close to reality than any of the numbers that other government organizations and officials give. Nonetheless the reality is that job creation must be a must this year. Most importantly if we are going to continue to grow our federal deficit and debt than we have to make sure we are getting enough bang for our buck in the short term. If we are going to grow our deficits and debt than we have to make sure we putting the money toward programs and projects that will create jobs for the American people as quickly and efficiently as possible.

While supports of the first stimulus like to say that a lot of jobs have been saved by the stimulus act but what they don’t say is that in many cases federal money is basically replacing lower levels of private or state investment. If those same supporters looked at the fact that the unemployment rate in the construction industry remains at about 19 percent, almost double the national level than they would see that despite all the upcoming construction projects, unemployment in the construction industry will remain high until states and the private sector are able to find the funds necessary to construct. Simply put the stimulus was nothing more than a needed shot in the arm, but the real solution is a long-term highway and transit investment bill which Congress has put off consideration of a six-year $450 billion infrastructure measure to replace the highway and transit act that expired in September. No one is saying that this would wipe out the double digit unemployment but at least it would put money toward something that would make America’s infrastructure stronger and faster in various ways. Nonetheless, Congress is looking at the short term problem as usual and this will only lead to our nation’s deficit and debt growing but the real question is what can we say we got for all this spending 5, 10 or 20 years from now.

Jobs for main street should be have been a priority of Congress last January but now more than ever, it is needed but it is needed in a smarter way since it is clear as a nation we will continue to spend outrageously to fix our economic woes.

References:
Information on the bill, H.R. 2847, can be found at http://thomas.loc.gov/
Congressional Budget Office: http://www.cbo.gov/
Background on the Jobs for Main Street Act: http://tinyurl.com/yz2ryx9