Senate Gets Job Done

Congress finally got the job done on one of its bills designed to get Americans back to work.

The Senate today voted 68-29 to pass the HIRE Act, a bill that had been batted back and forth by the House and Senate for the past three weeks. Now the bill finally goes to President Barack Obama for his signature.

The heart of this bill—one of several jobs bills in the pipeline—is a tax credit for employers who hire new workers. Employers who hire people who have been unemployed for at least 60 days will get an exemption from Social Security payroll taxes through December for each of those workers. They also can take a $1,000 tax credit on their 2011 tax return for every new worker retained at least 52 weeks.

Supporters think these tax incentives will be enough for businesses to start hiring again.

“This is a good day for American workers,” said Senator Chuck Schumer.

The economy is growing again, but few jobs are being created, he noted.

“Our job here is to take that growth and translate it into jobs for the American people, plain and simple,” Schumer said.

Skeptics, however, contend the tax breaks won’t have much impact on employment. Until businesses see more demand for their products or services, they’re not going to hire more workers, even if a fraction of the cost of hiring a new employee is offset, they argue.

The legislation also enables small businesses to write off $250,000 of the cost of new equipment purchased this year, instead of having to depreciate those costs over time. This extends the higher limit on Section 179 expensing that was in effect in 2008 and 2009.

This break is designed to stimulate spending on new equipment, but the same argument that applies to the hiring credit applies here as well: Businesses aren’t going to shell out money if they don’t see the need to expand, even if the government makes it a little more attractive to spend that money now versus later.

The legislation also extends federal highway and mass transit programs through the end of the year and reduces the cost of borrowing for state and local school construction and energy projects.

The biggest objection to the bill—besides its limited impact on job creation—was its $17.6 billion cost.

“This isn’t so much a jobs bill as it is a debt bill,” said Senator Judd Gregg.

Gregg said this bill marked the third week in a row that the Senate has voted on a bill that spends more than its own “profligate budget” authorized.

“When is it going to stop?” Gregg said.

The Democrats’ budget blueprint already called for trillion-dollar deficits “as far as the eye can see,” he said. Moodys has concluded the nation’s AAA credit rating could be at risk in the future if the federal government keeps spending at the current rate, he noted.

There’s lot of talk about systemic risks to the economy, but the real systemic risk “is this Congress,” Gregg said.

Schumer contended Gregg was telling unemployed Americans that Congress can’t help them.

“There are shades of Herbert Hoover in what my colleague is saying,” Schumer said.

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Kent Hoover is the Washington bureau chief for bizjournals.