Obama's disco-era jobs billAlso...WASHINGTON (Fortune) -- The ghost of Jimmy Carter's one-term presidency is hovering over President Obama as the Democrats try to pass a jobs bill in time for this year's elections. So why is the centerpiece of the measure -- a tax break for companies that make new hires -- a play straight from Carter's economic policy circa 1977?Then, as now, the economy looked anemic and unemployment was high: 7.8% when Carter entered office, compared with 9.7% now. So just eleven days after his inauguration, the president proposed giving companies a temporary tax break if they hired new employees, calling it the New Jobs Tax Credit. The law went into effect for 1977 and 1978, over which time the unemployment rate fell 2%.
A success, right? Economists today are divided, and their reasons get at the heart of the current jobs bill debate. The goal of any jobs tax credit is to spur a company to hire when it otherwise wouldn't. The trouble is, it's impossible to distinguish exactly which companies have plans to hire anyway. Lawmakers can only do their best to design a bill with the right incentives.
Critics of Carter's plan -- and Congress' now -- say that the problem with any jobs credit is the potential for waste. It's estimated that of the companies that claimed the tax credit under Carter's plan, two-thirds would have hired those employees regardless of the tax break.
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Monday, February 15, 2010
Jimmy Carter Returns
From CNNMoney.com
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