Bloomberg News

Stimulus Fatigue Stymies Obama in Finding Votes for Jobs Plan

September 16, 2011

Sept. 16 (Bloomberg) -- Republican lawmakers are rejecting President Barack Obama’s $447 billion job-creation plan in its entirety and expressing skepticism about its pieces, creating doubt about whether it can overcome obstacles in Congress.

As Obama tries to rally public support behind tax breaks and spending on schools and bridges, the reaction on Capitol Hill indicates that only a few fragments of the plan may become law -- most likely tax cuts to promote consumer demand and hiring. Many Republicans dismiss Obama’s proposal as a warmed- over version of the 2009 stimulus law they opposed.

“I just don’t see much Republican support in the Senate for hardly anything that’s been out there so far, and especially when they put the pay-fors forward,” said John Thune of South Dakota, the fourth-ranking Republican in the Senate. “I mean, that’s just a complete non-starter.”

Republicans, who have ideas about how to lower unemployment by limiting regulation and expanding domestic oil production, aren’t ceding ideological or political ground to the administration. Beyond that, the Senate’s Democratic leader isn’t rushing to bring Obama’s proposal to the floor as he focuses on other legislation such as disaster assistance. Also, some rank-and-file Democrats have complained about the tax increases in the bill.

Obama proposes paying for the measure with a cap on some deductions and exclusions for high-income taxpayers, along with tax increases for private equity firms, oil and gas companies and corporate jet owners. Democrats and Republicans have objected to the cap on tax breaks, and the other revenue-raising proposals haven’t advanced in the past.

‘Pass This Bill’

With 14 months until he faces re-election and a 9.1 percent unemployment rate, the president has been traveling across the country telling the public to press Congress to “pass this bill,” though the bill itself is likely to be carved up.

“We’ve got to tell Congress to do their part,” Obama said in Raleigh, North Carolina, on Sept. 14. “You’ve got some Republicans in Congress, they like to talk about how ‘We’re in favor of America’s job creators.’ Well, you know what, if you’re in favor of America’s job creators, this is your bill.”

House Speaker John Boehner said in a Washington speech yesterday that some of Obama’s proposals “offer opportunities for common ground.” He wasn’t specific, and he didn’t signal that House leaders felt any urgency to advance the plan.

“Let’s be honest with ourselves,” said Boehner, an Ohio Republican. “The president’s proposals are a poor substitute for the pro-growth policies that are needed to remove barriers to job creation in America.”

Entire Package

The White House has been pressing for passage of the entire bill. Obama political adviser David Axelrod said on ABC’s Good Morning America Sept. 13 that the administration is “not in a negotiation to break up the package” and Republicans shouldn’t consider it an “a la carte menu.”

Still, White House Press Secretary Jay Carney told reporters later in the day that Obama wouldn’t veto partial measures. If Congress were to “send a portion of the American Jobs Act, the president would of course not veto it,” Carney said. “He would sign it and then he would return to press the Congress to get the job done.”

The package’s elements with the best chance of making it to the president’s desk are tax cuts, in part because letting the current payroll tax cut lapse would raise taxes for workers, lawmakers in both parties said. Representative Mike Simpson, an Idaho Republican, predicted that a payroll tax cut would ultimately pass.

Obama wants workers to pay 3.1 percent of wages up to $106,800 in Social Security payroll taxes, down from 4.2 percent this year and 6.2 percent in a typical year. He has proposed a similar cut to the employer’s side of the payroll tax for the first $5 million of a company’s wages and a complete payroll tax holiday for the first $50 million in increased payroll in 2012.

Skepticism

Some Republicans, including Thune and Representative Scott Garrett of New Jersey, are skeptical of the payroll tax cuts. Representative Kevin Brady, a senior Republican on the House Ways and Means Committee, said rebates and tax cuts designed to stimulate consumer demand in 2001, 2008, 2009 and 2011 didn’t work as intended.

“We’re taking a hard look at the payroll taxes from the standpoint that the last four consumer rebates -- the two Bush ones and the two Obama ones -- have been economically very disappointing,” he said. “They just haven’t performed.”

House Republicans haven’t said how they might package the payroll tax cuts when they write legislation. They might pair them with provisions the White House opposes, such as restrictions on regulation or cuts in entitlement spending.

Representative Ron Kind, a Wisconsin Democrat, questioned whether the payroll tax cut for employers would prompt much hiring by small businesses.

‘Just Not’ Hiring

Employers “are just not going to hire until consumer demand” improves, he said. The cuts in employer payroll taxes may mean “better cash flow” for struggling small businesses and help them avoid layoffs, he said. “But I don’t think it’s going to result in a lot of new hires on the employer side.”

Brady, who represents suburbs near Houston, said the idea that might garner the most Republican support would be Obama’s proposal to extend through 2012 the ability for businesses to write off 100 percent of some equipment purchases.

“For small businesses especially, private business investment like buying new equipment, new buildings, new technology, that has a direct correlation with jobs and hiring,” Brady said.

Obama’s Democratic allies, including Senator Robert Menendez of New Jersey, note that Republicans have backed infrastructure investments, payroll tax cuts and a job-training program used in Georgia.

“To me, there’s a lot of this that should be an easy lift, but certainly those are three that come -- off the top of my head -- that Republicans are actually advocates of,” he said.

Deficit Issue

Some Republicans may support money for roads and bridges, Simpson said, though he added that his colleagues look warily on new spending as long as the U.S. has a large budget deficit.

Democratic Senator Ben Nelson of Nebraska, who faces a tough re-election contest in 2012 in a Republican-leaning state, said he opposes the tax increases and would reserve judgment on Obama’s spending proposals.

Republicans plan to focus some of their attacks on the idea that Obama is trying to spur economic growth in the months leading up to the reelection campaign. Instead, they say, Congress should focus on proposals such as a tax code overhaul that would promote long-term growth.

“We don’t need temporary anything,” said Representative John Campbell, a California Republican. “We need new permanent policies: tax policies, deficit policies, and regulatory policies that people can count on so that they can make longer- term decisions.”

Garrett, the New Jersey Republican, said Obama’s broad rhetoric is better than his substance.

“The devil is in the details,” he said. “And I have yet to see any details I am actually signing onto.”

--With assistance from Steven Sloan, Kathleen Hunter and Mike Dorning in Washington. Editors: Jodi Schneider, Ann Hughey.

To contact the reporters on this story: Richard Rubin in Washington at rrubin12@bloomberg.net James Rowley in Washington at jarowley@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net


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