Democrats on Capitol Hill have begun crafting a second job-stimulus plan after the abject failure of Porkulus to rein in unemployment, and it looks like they will take a hair-of-the-dog approach again. Only half of a preliminary estimate of $300 billion in additional spending would go towards anything remotely resembling stimulus, such as tax cuts and business loans. The rest would go towards unemployment benefits and another round of pork spending:
The Hill arrived at the $300 billion figure by adding up the following provisions:
Lawmakers are looking to extend unemployment insurance and COBRA healthcare benefits for the unemployed through 2010 at a cost of $100 billion alone, according to the sponsor of House legislation, Rep. Jim McDermott (D-Wash.).
House Transportation and Infrastructure Committee Chairman Jim Oberstar (D-Minn.) and Rep. Peter DeFazio (D-Ore.) pushed Wednesday for $69 billion for highway and transit projects that could be started almost immediately with funding. Oberstar had criticized the earlier stimulus bill for not including enough infrastructure spending, and House Speaker Nancy Pelosi (D-Calif.), House Appropriations Committee Chairman David Obey (D-Wis.) and Sen. Kent Conrad (D-N.D.) have voiced support for more infrastructure spending to create jobs.
Democrats would also increase loans from the Small Business Administration (SBA) at a cost of $20 billion, according to Zandi.
He called for raising limits for the SBA loans, removing the interest rate cap on them in order to allow credit to be given more freely and using leftover bank bailout money as small-business credit.
Tax credits for businesses that hire new full-time workers would cost about $27 billion under a proposal by Sen. Russ Feingold (D-Wis.) and the Economic Policy Institute, a left-leaning policy group. A new hiring tax credit has received extensive discussion and is under consideration by President Barack Obama, according to his economic team.
Providing more aid to states, a move to stem further job losses, also has support among lawmakers, The New Republic reported Tuesday. Zandi, noting that the state governments will have a $150 billion budget shortfall in fiscal 2011, has called for $75 billion in federal aid for states.
A federal work-share program backed by Sen. Jack Reed (D-R.I.) and four other Democrats would cost about $600 million.
The total cost of all of those proposals would be $291.6 billion.
In other words, we’re seeing the exact same approach as the Democrats took in February, which produced nothing but fraudulent “jobs saved or created” numbers and double-digit unemployment. The proposals would suck more money out of the private sector, expand the debt incurred already by this administration, and keep investors on the sidelines, with the possible exception of the SBA loans program.
The state aid package amounts to a second bailout of states that refuse to exercise fiscal responsibility. Porkulus provided massive block grants to states, ostensibly to keep teachers and first responders employed. Instead, the states used the money to paper over budget gaps and put off badly-needed decisions on scaling back their spending. The next $75 billion will amount to a second federal bailout of the states, which are supposed to function as their own sovereigns instead of becoming dependent on the federal treasury — especially as directly as this. And at the end of these bailouts, the same structural budget problems will still exist in these states, which will eventually force them to make the tough decisions after the rest of the country has subsidized their procrastination.
Transportation funds are a well-known and well-documented resource of pork for legislators. The transportation bill each year carries hundreds or thousands of pork line items meant to guarantee re-election. The only jobs they save are those of legislators. Furthermore, expediting transportation projects amounts to a Cash for Potholes program, stealing “jobs” from later years, especially when the debt service on all of the borrowing becomes so onerous that Washington either hikes taxes or cuts spending. Those jobs are temporary by nature and do very little to stimulate long-term growth and stable jobs.
The extension of benefits has value, but not as job stimulus, and there is evidence that these extensions are harming job creation. Including this in any discussion of job stimulation is at least mildly Orwellian.
If Congress wants to stimulate the economy, it needs to stop expanding government and incurring massive deficits. That means an end to ObamaCare, cap-and-trade, and Card Check, as well as significant reductions in federal government. That would send positive signals to private capital that they can expect pro-growth policies and predictable tax rates, which would encourage investment and job creation. They don’t need a summit to reach that conclusion — they just need a big dose of common sense.