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Pieces of Obama jobs plan win bipartisan approval

The House, like the Senate, passes a bill to repeal a never-enacted tax on government contractors, boost job training for veterans and offer tax credits for companies hiring out-of-work veterans.

November 16, 2011|By Kathleen Hennessey and Lisa Mascaro, Washington Bureau
  • CBO Director Douglas W. Elmendorf says that extending unemployment benefits or payroll tax breaks to those who are most likely to spend the money, as well as providing tax credits to companies that hire new workers, are among the types of policies that could best boost the economy and create jobs.
CBO Director Douglas W. Elmendorf says that extending unemployment benefits… (Christopher Powers, Bloomberg )

Reporting from Washington — House Republicans and Democrats joined to pass the first pieces of President Obama's jobs package, sending to the president a slim slice of common ground while the bulk of the legislation remains stalled in a divided Congress.

The legislation passed Wednesday will repeal a tax on government contractors, boost job training for veterans and offer tax credits to companies that hire unemployed veterans. The House passed the measure without dissent, and Obama has said he would sign it. The Senate overwhelmingly approved it last week.

Though both parties hailed the move as a step toward job creation, it was widely viewed as a small step. Advocates for repealing the 3% withholding tax on federal contractors, which was signed into law in 2005 but never enacted, argued that it could prevent further job losses, but gave no estimate of how many new jobs might be created.

The tax credit program is not expected to affect enough of the 850,000 unemployed veterans to make a significant dent in the nation's 14 million unemployed. Supporters estimated the job training program could reach 100,000 veterans.

But Wednesday's vote was evidence of the continued attempt to show action on the issue voters see as the No. 1 priority — the bill was approved by a vote of 422 to 0 — as well as a chance for each party to tout its preferred solutions.

Republican backers hailed the vote as emblematic of the sort of pro-business actions they endorse.

"This sends a message to American job creators that jobs are our No. 1 priority and Congress is committed to undoing policies that stand in the way of restoring prosperity," said Rep. Wally Herger (R-Chico), who sponsored the bill.

Democrats used the vote to hammer opponents blocking the larger pieces in Obama's jobs proposal.

"No one should consider these modest steps as a substitute for action on the president's comprehensive jobs plan," said Rep. Sander M. Levin (D-Mich.).

The legislation will give companies a $5,600 tax credit for each veteran hired who has been unemployed for at least six months. A smaller tax credit would be offered for bringing on vets who have been jobless for fewer than six months.

A $9,600 tax credit for hiring out-of-work veterans with service-related disabilities is also included.

The legislation represents roughly $2 billion of the $447-billion price tag for the jobs bill Obama proposed in September. The cost will be covered by an extension of a Department of Veterans Affairs loan fee.

The cost, small by Washington standards, is part of what fueled the bill's success. Although Democrats and Republicans in Congress have hinted at agreement on some measures in Obama's plan, including increased spending on infrastructure and an extension of the payroll tax cut, they have differed over how to pay for them.

Democrats want to foot the bill with a tax increase on personal income over $1 million, a move Republicans have sworn to block.

Democrats in the Senate have refused to take action on Republican alternatives passed by the House, a bevy of bills largely aimed at encouraging growth by blocking or trimming regulations on business.

The Congressional Budget Office, the independent analyst in Congress, weighed in on the issue this week with a report that seemed to boost the Democrats' case.

The best proposals to spur the economy would require government spending, the report found. Those would prove better at quickly creating jobs than anti-regulatory measures, it said.

CBO Director Douglas W. Elmendorf said that extending unemployment benefits or payroll tax breaks to those who are most likely to spend the money, as well as providing tax credits to companies that hire new workers, are among the types of policies that could best boost the economy and create jobs.

Rolling back regulations would not provide the same immediate jolt, according to the report.

"The economic effects of certain changes in regulatory policies probably would be too small or would occur too slowly to significantly alter overall output or employment in the next two years," Elmendorf wrote this week on the CBO blog.

But he also warned that spending money now to bolster the economy would contribute to annual federal deficits, which are too high to be sustained. The CBO said a long-term deficit-reduction strategy was vital to the nation's financial health.

"To achieve long-term fiscal sustainability, a combination of policies would be required: changes in taxes and spending that would widen the deficit now but reduce it later in the decade," the CBO wrote.

kathleen.hennessey@latimes.com

lisa.mascaro@latimes.com

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