• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • The Senate Still Doesn’t Get the Message

    Senator Harry Reid (D-NV)

    Senate Majority Leader Harry Reid (D-NV) says “the American people need a message. The message that they need is that we are doing something on jobs.” Reid’s real message is to confirm what is now obvious to all, which is that he and his congressional allies have nary a clue as to how an economy creates jobs.

    In lieu of an ineffectual bi-partisan compromise bill crafted by Chairman Baucus (D-MT) and Senator Grassley (R-IA), Reid has reportedly developed a slimmed down, equally ineffectual bill including a new payroll tax exemption plus extensions to three existing programs – Build America Bonds, small business expensing, and a one-year extension of the highway program.

    To get a sense of how nonsensical this is, suppose the Federal government actually had an effective stimulus program somewhere, and suppose it was slated to expire. Extending the program would not create any new jobs, but would merely preserve the jobs already created. Calling such an extension a “jobs bill” demonstrates messaging once again trumping substance. Yet this is essentially what is happening with the three existing programs reported to be included in the Reid bill, except of course that two of the three have little or nothing to do with employment one way or the other. Only the small business expensing clearly is a job creator.

    So the only new element of the Reid jobs bill that offers a glimmer of hope for creating jobs is a payroll tax exemption. This exemption would encourage businesses to create some jobs but only if paid for by cutting spending. Whatever job gains it might create would be lost if the exemption were paid for through more borrowing or through harmful tax hikes on other taxpayers. And even analysis by the Congressional Budget Office, which casts a disturbingly benign eye on such proposals, suggests that $10 billion in payroll tax relief would create as little as 80,000 jobs. To put that in perspective, that’s creating 1 job for every 100 jobs lost thus far, and again even that figure ignores the actions Congress would be taken simultaneously to destroy jobs.

    Whether the Reid mini-bill, the Baucus-Grassley compromise, or last year’s $872 billion monster stimulus, the result is the same – failure. And these bills fail because they ignore the processes by which the private sector creates jobs. Jobs are created when businesses are hopeful about the future. When they see opportunity and are confident enough to take the risks in pursuit of gain.

    The American economy is a fountain of opportunities for new businesses, growing businesses, and jobs. The entrepreneurial spirit is alive and willing. But it is not foolish. American businesses see Washington awash in conflict, its leaders messaging on jobs while threatening higher taxes and more regulations. They see an endless train of trillion dollar budget deficits. They worry about resurgent inflation.

    Risk and uncertainty are fundamental to business investment. Without risk, there would be no reward. But businesses considering the investments that lead to hiring today must weigh the risks emanating from Washington along with the risks inherent in business. If Senator Reid and his colleagues want a message on jobs, a good one would be: We get it. We’re the problem.

    He would then vow to oppose any tax hikes for the balance of this Congress, and offer legislation delaying the tax hikes scheduled for 2011 for at least 5 years. President Obama would join in by telling his bureaucracies to freeze all regulatory projects that involve imposing more risks and more burdens on business. And together with Republicans, they would slash federal spending to restore some sense of fiscal discipline to the federal budget.

    According to a CBS/NY Times poll out this morning, only 1 voter in 8 approves of the job Congress is doing. The Reid bill is a good of example of the source of the voters’ ire.

    Posted in Economics [slideshow_deploy]

    8 Responses to The Senate Still Doesn’t Get the Message

    1. David Bibeault says:

      Although business tax cuts are a good idea, what businesses really need are customers. Since 70% of the US economy is CONSUMER SPENDING, cutting income taxes will give consumers money to spend. They will spend it much more efficiently than Congress. Add changing all retirement plans to conpletely tax free and everyone will feel better about spending. Politicians don't like ideas like this because they want to control the money since that's what gives them power. It's time to take that power away from them.

    2. P Kelly - Palm Coast says:

      Jobs are created when PRIVATE SECTOR ENTREPRENEURS create products or services that customers will buy. They engage in such activity in hopes of earning a profit. These profits, and the jobs created enhance the lives of the entrepreneur & his or her employees. Ideally, the product or service enhances the lives of the buyers.

      Entrepreneurs do not hire people for tax breaks. That would be like buying a car you don't need purely for a partial rebate.

    3. Mark, Joliet, IL says:

      Once again, DC just doesn't get it!! What about all of the millions that are out of work or under employed right now? I have been unemployed for 16 months and I'm still actively looking for work. I am an educated professional with 15 years of experience in IT and still cannot find work. Employers are feeling the pinch and are not hiring because Government has their hand in the employer's pocket. Get rid of the restrictions on Health care and start giving Tax Cuts or Credits to business so that they can start hiring again. This will be the only way that true jobs are created. Thanks.

    4. Ross Blomberg, Ingle says:

      Restore the free market. Centralized control of the economy is slavery by another name. Go back to tarrifs. Eliminate the IRS ( and income taxes) and the Federal Reserve. Stop all government spending that is not enumerated in the Constitution ( as the founding fathers saw it.And try using a Websters 1828 dictionary to interprate the Constitution)

    5. Shirley Robinson says:

      I have never seen Congress successful at anything. I have 3 sons out of work and 1 daughter-in-law. Resumes continue to go out but with no response. Congress needs to look at what has worked in the past and incorporate that. What has been done so far has done nothing but dig us a big hole of debt.

    6. Wes Potts says:

      Lifetime politicians don’t have a clue how to create jobs. There should be a law requiring candidates for political office to have some business experience before being elected to office. Maybe then their words wouldn’t be so empty and they could actually stop driving jobs overseas.

      The country that creates an environment for business without tax and regulations burdening them will get the jobs!

    7. DeclareTruth, The fo says:

      The Senate needs a message "Get your hands out of our businesses and our lives. Go back to wherever you came from and YOU try to find a job, because every thing you do in Washington DC messes our lives up more and more. No, we don't appreciate you, and yes, your days are numbered. Our message to you, sir, is that you should be listening instead of talking and we just can't wait to throw you and your cronies out and replace you with some people who are actually representatives of the people instead of self-serving, pompous, arrogant elitists with a Marxist agenda. Your days are numbered."

    8. Kelly Anderson Wrigh says:

      Typical Reid, his "leaner" jobs bill won't work, here's why, from your new Reno writer friend! Pls. read and share.(Remember to digg and subscribe!) http://www.examiner.com/examiner/x-28761-Reno-Con

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.