September 8, 2011

 

House Republicans are committed to taking every possible step to improve conditions for private sector job creation and get our economy back on track so that America’s workers and business owners can do what they do best: create, innovate and lead.  We have worked throughout the year to implement the Pledge to America, our governing agenda focused on removing government barriers to private-sector job creation, and built on the Pledge by putting forth an expanded jobs agenda, our Plan for America’s Job Creators.  The House of Representatives has approved more than a dozen pro-growth measures to address the jobs crisis and we urge the Senate to consider these measures.  Last week, House Republicans announced a legislative calendar for the fall with a heavy focus on repealing excessive federal regulations and the pursuit of pro-growth tax relief.  In an effort to find areas of agreement, House Republicans recently reached out to President Obama, identifying potential opportunities for Congress and the President to work together.

 

Additional Stimulus Infrastructure Spending

“The American Jobs Act will repair and modernize at least 35,000 schools.  It will put people to work right now fixing roofs and windows; installing science labs and high-speed internet in classrooms all across this country.  It will rehabilitate homes and businesses in communities hit hardest by foreclosures.  It will jumpstart thousands of transportation projects across the country.” - President Barack Obama, Address to Joint Session of Congress

Facts About Additional Stimulus Infrastructure Spending

• In January 2009, the Obama administration promised that unemployment would not go above 8 percent if the $1.2 trillion “stimulus” became law (CBO estimates the cost of the bill will reach $814 billion and interest on the debt for the bill will be at least $347 billion), but unemployment has been above 8 percent for 31 months and has averaged 9.4 percent.  The Obama administration also claimed that the “stimulus” would “save or create” 3 to 4 million jobs.  In reality, more than 1.4 million jobs have been lost since March 2009.

• ·         In May 2011, a new study was released by economists Timothy Conley from the University of Western Ontario and Bill Dupor from Ohio State University which found that the President’s failed stimulus “destroyed/forestalled roughly one million private sector jobs.”  The full study concludes that the actual impact of the $1.2 trillion “stimulus” was a net job loss of 550,000.   

• Ron Klain, chief of staff to Vice President Biden and a senior adviser to President Obama on the Recovery Act, has already admitted that more federal construction spending, as the President has called for, will not fundamentally grow our economy or create long-term jobs.  Klain wrote in Bloomberg in June, “it’s time to let go of the idea that a handful of marquee construction projects, even majestic and lasting ones, can solve our employment problem. Such endeavors alone didn’t bring us out of the Depression in the 1930s, and they won’t end our current predicament.”

• House Republicans offered the president examples of how existing infrastructure funds could be used more effectively to support economic growth without borrowing more money by simply removing artificial barriers which set-aside 10 percent of state infrastructure funds for items such as transportation museums and the acquisition of scenic easements.  This would allow states to devote more funding to the types of infrastructure the president has advocated without requiring new spending.

 

Temporary Tax Credit for Hiring Unemployed Workers

“Pass this jobs bill, and companies will get a $4,000 tax credit if they hire anyone who has spent more than six months looking for a job.”  - President Barack Obama, Address to Joint Session of Congress

Facts About Temporary Hiring Tax Credits

• In 1977, President Carter signed the New Jobs Tax Credit (NJTC), which provided federal wage subsidies for two years, from 1977-1978, to companies that hired new workers.  During those two years, one-in-three new jobs received the tax credit at an estimated cost of $4 billion annually.  Two years later, in 1979, the unemployment rate began to increase rapidly.  In 1980, Emil Sunley, the Deputy Assistant Secretary for Tax Analysis at the Carter Administration’s Treasury Department said, “The impact of the credit on jobs was slight.”

• In March 2010 when the Congressional Democrats and President Obama approved the HIRE Act (H.R. 2847), which suspended employers’ requirement to pay payroll taxes for certain new employees through 2010 and provided a tax credit of $1,000 to an employer if they retained an employee hired under this provision for 52 weeks.  Again, the temporary tax credit program failed to make a significant and sustained dent in unemployment, which was 9.7 percent the month before the bill was passed and averaged 9.62 percent in the ten months that the program existed.

• Many have argued that these programs represents short-term subsidies for hiring that—unlike pro-growth tax reform—likely only moves up the timeline for labor demand without creating sustainable long-term growth in the economy.  As CRS noted in a January 2011 report, “The evidence suggests that investment and employment subsidies are not as effective as desired in increasing economic activity, especially employment.”

• The Republican Plan for America’s Job Creators includes truly pro-growth, long-term tax reform to provide American job creators with the certainty that they need to hire and expand, rather than a short-term tax subsidy for temporary hiring.

 

Extending Unemployment Insurance 

 

“The plan also extends unemployment insurance for another year.” - President Barack Obama, Address to Joint Session of Congress

Facts About Extending UI

• With unemployment currently at 9.1 percent, only 2 out of the last 28 months have seen unemployment below 9 percent (February and March 2011).  From March 2009 (the month after the failed $1.2 trillion “stimulus” was signed) through August 2011, unemployment has averaged 9.4 percent.  Prior to President Obama taking office, unemployment had not been above 9 percent in 28 years.

• For 31 consecutive months the unemployment rate has been at or above 8 percent—the level the president said unemployment would never reach if the “stimulus” was approved.  Prior to the enactment of the “stimulus,” unemployment had not been above 8 percent for two and a half years consecutively since the Great Depression.

• Even President Obama’s newly selected chief economic adviser, Alan Krueger, has published academic work on the negative impact of more generous unemployment insurance and protracted joblessness. 

• House Republicans know that the only real solution to the nation’s chronic unemployment is creating jobs for the 14 million unemployed Americans in this country today.  That’s why House Republicans have produced a Plan for America’s Job Creators and approved more than a dozen pro-growth measures to help address the job crisis.

 

Infrastructure Bank

 

“And we’ll set up an independent fund to attract private dollars and issue loans based on two criteria:  how badly a construction project is needed and how much good it would do for the economy.” - President Barack Obama, Address to Joint Session of Congress

Facts About the Infrastructure Bank

• In 2009, House Democrats first proposed the development of a federal Infrastructure Bank a wholly owned government corporation controlled by a five-member board of directors with the ability to issue bonds and to use the proceeds to provide loans and loan guarantees for state and local construction.

• Like Fannie Mae and Freddie Mac, most infrastructure bank proposals would exposes taxpayers to the risk of default.

• The Wall Street Journal Editorial Board said of the Infrastructure Bank, “Instead of a Washington-centric bank that picks winners and losers, Congress would be wise to move in the opposite direction: devolving most public-works decisions to the state and local levels so users decide whether they want to finance a new school, bridge or water system.”
  
  
• House Republicans offered the president examples of how existing infrastructure funds could be used more effectively to support economic growth without borrowing more money by simply removing artificial barriers which set-aside 10 percent of state infrastructure funds for items such as transportation museums and the acquisition of scenic easements. 

 

Additional Stimulus Education Spending for States

“Pass this jobs bill, and thousands of teachers in every state will go back to work.” - President Barack Obama, Address to Joint Session of Congress

Facts About Additional Stimulus Education Spending for States

• The original stimulus included $53.6 billion for the “State Fiscal Stabilization Fund,” which was generally used to subsidize states’ public education costs and supplement state budgets, rather than hire a substantial number of new employees. 

• In a number of areas, cash-strapped state and local governments used the money to give employees raises.  Meanwhile, these governments were shielded from budgeting within their means to meet funding gaps, delaying tough budget decisions that would have otherwise been essential.

• According to the Department of Education, the “one-time appropriation” in the stimulus bill was meant as “a historic infusion of funds that is expected to be temporary.”   However, in 2010, the President signed into law an additional $10 billion “Education Jobs Fund” (H.R. 1586) to supplement states’ education costs further. Now the President is asking for more education subsidies to extend this supposedly “temporary” program.

• House Republicans agree with the 222 economists from across the country who stated in December 2009 that “The 2009 near-term ‘stimulus’ has proven to be an inefficient spur to job creation and does not merit repeating,” and concluded that “the country’s economic future depends on Congress’ ability to rein in the growth of federal spending.”

 

Regulations

 

“And I agree that there are some rules and regulations that put an unnecessary burden on businesses at a time when they can least afford it.  That’s why I ordered a review of all government regulations.  So far, we’ve identified over 500 reforms, which will save billions of dollars over the next few years.” - President Barack Obama, Address to Joint Session of Congress

Facts About Regulations

• The Obama administration has publicly listed a total of 219 new regulatory actions under consideration for the upcoming year, each of which would have an estimated cost to our economy of $100 million or more. 

• Early last week, in response to a request by Speaker Boehner, President Obama revealed that seven of these regulations would have an estimated economic cost of more than $1 billion each, with a potential combined cost of more than $100 billion in a single year.

• A recent study by the Heritage Foundation found that an unprecedented 43 major regulations were imposed in fiscal year 2010 with a total economic cost of $26.5 billion, the highest total since at least 1981.

• House Republicans are supportive of President Obama’s decision to ask the EPA to withdraw its new draft ozone standards. Still, we believe it is critical to not stop there.  Our regulatory relief agenda includes repeal of specific regulations, stopping rules like Cement MACT, expediting the permitting process for construction projects, and making structural reforms to the rule-making system.  The House of Representatives has approved more than a dozen pro-growth measures to address the jobs crisis and we urge the Senate to approve these measures.

 

Trade

“Now it’s time to clear the way for a series of trade agreements that would make it easier for American companies to sell their products in Panama, Colombia, and South Korea – while also helping the workers whose jobs have been affected by global competition.” - President Barack Obama, Address to Joint Session of Congress

Facts About Pending Trade Deals

• Expanding markets for U.S. small businesses and manufacturers is critical to create new American jobs.  Over the past two and a half years, House Republicans have encouraged the President and congressional Democrats to approve the 2007 U.S.-Colombia agreement and the 2006 U.S.-Panama agreement.

• Enacting the agreements would create American jobs and lower prices for consumers. The agreements have the ability to add 250,000 U.S. jobs (according to Obama administration estimates) and $10 billion to our economy, while leveling the playing field for American workers, farmers, and businesses.  With a 9.1 percent unemployment rate, swift action by the administration to send up, support, and implement these agreements is critical to creating jobs.

• While these agreements are delayed, other countries such as the EU, Taiwan, and Canada are leaving America behind—all are vigorously pursuing, and in some cases have already signed, free trade agreements with these critical South American countries.  Inaction comes at a cost—according the Committee on Ways and Means, in the past two years, U.S. farmers and ranchers have lost more than $1 billion in sales to Colombia.

• House Republicans are ready—and have been ready—to pass these free trade agreements, in tandem with separate consideration of Trade Adjustment Assistance legislation, as soon as the president sends them to Congress.

 

Payroll Tax Holiday Extension

“Pass this jobs bill, and all small business owners will also see their payroll taxes cut in half next year.” - President Barack Obama, Address to Joint Session of Congress

Facts About the Payroll Tax Holiday Extension

• In the past, the Obama administration said that the payroll tax was “a one-year, temporary tax break intended to help working families in these tough economic times and to help generate growth and jobs. After the temporary provision expires, payroll tax rates will return to what they were before.”

• When the payroll tax reduction was first enacted in December 2010, the unemployment rate stood at 9.4 percent.  Joblessness started to decline in the subsequent quarters, getting as low as 8.8 percent in March 2011.  However, the rate has since moved in the opposite direction, back to 9 percent or above for the past four months.  This fluctuation correlates to the transitory impact that such a temporary tax cut has on economic activity.  

• Marginal income tax rate reductions affect economic incentives.  When Republicans provided tax relief in 2003, the amount of revenue collected by the government went up by more than $700 billion over five years and the deficit went down.

• House Republicans support pro-growth tax relief, such as lower rates on capital gains, dividends, and marginal income rates, creates a better environment for job creation and produces more revenue for the government.  As we’re weighing all the options to get our economy growing again, it’s time to focus on reforming the tax code to make it friendlier to job creation, and fairer, flatter, and simpler for all workers.

 

The Republican Plan for America’s Job Creators

 

Empower Small Business Owners and Reduce Regulatory Burdens:

• Require congressional review and approval of any government regulations that have a significant impact on the economy or burden small businesses.
• Audit existing and pending regulations to identify and address those that hinder economic growth.

Fix the Tax Code to Help Job Creators:

• Increase American competitiveness to spur investment and create more American jobs by streamlining the tax code and lowering the tax rate for businesses and individuals including small business owners to no more than 25%.
• Reform the tax code to allow American businesses to bring back their overseas profits without having to pay a tax penalty so they can invest in our economy and create American jobs.

Increase Competitiveness for American Manufacturers:

• Pass the three pending free trade agreements with Colombia, Panama, and South Korea to create up to 250,000 jobs.
• Continue to open new markets to American made products.

Encourage Entrepreneurship and Growth:

• Modernize our patent system to protect our nation’s innovators, discourage frivolous lawsuits, and expedite patent reviews.
• Re-Authorize and improve federal programs and approval processes to streamline development of new products.
• Remove barriers to building a first class workforce so that the United States can compete in the global marketplace and lead the way in technological development and growth.

Maximize Domestic Energy Production to Ensure an Energy Policy for the 21st Century:

• Promote lower energy prices through increased domestic production.
• Encourage all forms of energy production.

Pay Down America’s Unsustainable Debt Burden and Start Living Within our Means:

• Build upon the House Republicans’ Budget by enacting significant spending cuts.