Senate Democrats now living in a 59-41 world on Stimulus II

The headline says it all — Democrats Scramble to Draw GOP Support for Jobs Bill.  The change in tactics from the we-won strategy of 2009 comes from the loss of the Massachusetts seat to Scott Brown, stripping Harry Reid of his 60-vote supermajority, which actually never produced a major bill that passed into law.  Suddenly, they need to woo at least a few Republicans, which means that a jobs bill will have to have significant GOP input:

Senate Democrats are working hard behind the scenes to draw Republican support for their first official jobs bill — a struggle forced upon Democrats by the GOP upset in Massachusetts this month that snatched away their filibuster-proof majority.

Negotiations have been ongoing for weeks, as Democrats try to incorporate GOP ideas, like a popular package of tax extenders.

Senate Finance Committee Chairman Max Baucus, D-Mont., while not expected to tackle any legislation in his own committee, has been working to get the support of his committee’s top Republican, Chuck Grassley of Iowa, as well as other committee Republicans, like Orrin Hatch of Utah. Hatch has joined fellow committee Democrat Chuck Schumer of New York in offering a jobs tax credit that is likely to be included in the bill, according to leadership sources.

The irony here is that if Nancy Pelosi and Harry Reid had allowed Republicans to contribute to the first stimulus bill (and the health-care overhaul), they probably wouldn’t have lost Massachusetts at all.  The failure of Porkulus to stimulate economic growth and job creation would have been on both parties instead of the Democrats and Barack Obama.  Instead, Pelosi and Reid high-handed the GOP and took all of the risk, expecting to get all of the reward — but instead wound up with the blame,  and the anger of the electorate.

However, the good news is entirely contained to process.  The next stimulus package — what Democrats insist on calling a jobs bill after the utter flop of their first stimulus package last year — will be a smaller-scale Porkulus, only this time with more tax cuts and credits to get Republicans on board.  Last February, there were plenty of Republicans who wanted to vote for a stimulus package but wound up voting against Porkulus in exasperation after being locked out of the process. Now that they’re on the inside, Republicans will wind up spending money in much the same manner as Democrats in Porkulus I, to much the same effect.

Take the jobs tax credit that Senators Hatch and Schumer will propose.  If it’s anything like what Obama outlined in his SOTU speech, it will be completely ineffective.  A $5000 tax credit won’t incentivize an employer to hire someone without having the demand necessary for the new hire in the first place.  A hiring decision costs many times more money than just $5000.  That credit will subsidize hiring decisions that would have taken place without the credit anyway.  They would do better to lower the capital-gains tax rate for small business investment, or eliminate it altogether, as a means to create actual private-sector growth.

The end result of the Brown election will be that Reid and Pelosi will have to do what they promised all along, and which they didn’t deliver at all: engage with the opposition.  That won’t necessarily mean a big improvement in legislation, especially on government stimulus packages, which are almost always more damaging than helpful.

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