Senate Working On Boosting Job Creation

Congress returns to work next week after a President's Day recess with lots of talk about creating jobs but not much agreement. Renee Montagne talks to David Wessel of The Wall Street Journal about the different ideas Congress is considering.

RENEE MONTAGNE, host:

And when Congress gets back to work next week, lawmakers in the Senate will be talking about job creation. They won't necessarily be agreeing on much. To find out more about the Congress' next moves on the unemployment front, we turned to David Wessel. He's economics editor of The Wall Street Journal. Good morning.

Mr. DAVID WESSEL (Economics Editor, Wall Street Journal): Good morning, Renee.

MONTAGNE: OK. So the Senate may take up a bill aimed at creating jobs. What are the lawmakers in the Senate proposing?

Mr. WESSEL: Nearly all the members of Congress say they want to do something about jobs. After all, the jobs picture is really overwhelmingly bad. So, last week, there was some disagreements on substance and some partisan posturing.

The Democrat and the Republican who lead that Senate Finance Committee came up with one package of all sorts of things, and then Harry Reid, the majority leader, quickly shot it down and said he'll push a smaller package. And the centerpiece of that is giving employers a break on the payroll tax they have to pay for every worker they hire this year that's been unemployed for 60 days, and then giving him a thousand dollar tax credit next year if they keep those workers on the payroll for a year.

MONTAGNE: Do tax breaks have a good track record when it comes to encouraging employers to hire more people?

Mr. WESSEL: Well, economists say that history isn't terribly encouraging here. It's very hard to design these tax credits so they reward employers for doing hiring that they wouldn't otherwise do. And it's hard to write rules that stop them from playing games like firing workers and then hiring new ones to take advantage of a tax credit.

And then there's this big problem about if you do something generous, which could actually get employers to do something, it widens the already wide deficit even more. If you worry about the deficit, then you tend to do so little that it doesn't really make that much difference to employers. So it's not encouraging.

MONTAGNE: What other ideas that are out there for creating jobs?

Mr. WESSEL: There are other ideas, none of which seem very popular with Congress. One is to simply get the economy growing faster by giving it another injection of fiscal stimulus. This is popular in the House, for instance. They might give a big wad of cash to state and local governments to reduce the number of layoffs that are going on there, or another broad tax break to get more demand going on the theory that if employers saw better business, they'd be more likely to hire.

Another option, one that the government has tried in the past, is just to hire a lot of people and put them on the government payroll. But that seems extremely unpopular with politicians now because it creates a lot of short-term jobs and doesn't do much for the long run.

MONTAGNE: OK. And of all these possibilities, what do you think Congress is likely to end up with?

Mr. WESSEL: If Congress does anything, and it's very hard to know what Congress might do here, as Senator Bayh - who decided not to run for reelection from Indiana - said just yesterday: It's frustrating that Congress is unable to agree on something, even something as important to their constituents' jobs. But the most likely package is a relatively small one that has some tax credits for employers, because that seems to be the only thing that has enough support from a majority in both Houses to get done.

MONTAGNE: David, thanks very much.

Mr. WESSEL: You're welcome.

MONTAGNE: David Wessel is economics editor of The Wall Street Journal.

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