|August 9, 2011 | Reprinted from Forbes.com
The administration has been talking about jobs – but White House aides tell the New York Times that there are no “magic beads” (aren't they magic beans?) to encourage new jobs. Certainly the White House is offering no magic beads (or beans) — but that it isn't to say that there aren't good proposals out there that could have a positive impact on jobs and investment (the next column).
First, the administration's proposals – a continuation of the payroll holiday for employees and an extension of the unemployment benefits for long-term unemployed. In addition, the administration has put forward a package of proposals to encourage hiring for veterans.
It is highly unlikely that the continuation of the payroll holiday will have a brass band greeting it on Capitol Hill. This proposal has been solely the President's –neither Republicans nor Democrats on the Hill have been big fans. The price tag for the one year extension is over $110 billion dollars. Last time (December 2010) the Republicans agreed to the payroll holiday was part of a much bigger agreement on extending all the Bush/Obama tax cuts.
I can't see a pathway where the Republicans will just by-your-leave bless a $110 billion dollar tax cut that is a priority for the administration. The Republicans will have their own tax priorities and there will remain concerns by many about the impact on the deficit. So the question is will the $110 billion be offset (the administration appears silent on this question and if the answer is yes – what are the offsets? – you could confiscate all the corporate jets flown by the Fortune 500 CEOs and not even begin to raise $110 billion dollars). The administration is going to have to be willing to give up a lot to get the payroll holiday extended (lobbyists are already beating the drums again for a repatriation holiday).
The same problems are at hand with the extension of the unemployment benefits. While the costs for an extension are somewhat lower (around $56 billion in the December 2010 bill) and there is an undeniable pull of compassion — the costs may cause a good deal of pause and will raise a call for a search for offsets – spending offsets – from Republicans.
Finally, the administration has proposed for veterans to receive skills training to help them reenter the work force (swell in concept). In addition, the administration proposes a tax credit of $2400 for hiring a recently unemployed veteran going up to $9600 for hiring a long-term unemployed or disabled veteran. I would strongly encourage that the Congress make this much simpler for businesses to qualify if it is going to have a good impact.
I suggest a credit for hiring any Iraq/Afghanistan veteran regardless of whether currently working or not of $5000 and a higher credit — $10000 — for hiring a disabled veteran (and make that an easily defined and identified term). If I have learned anything working with small and medium businesses it is that as soon as you make things complicated and add bells and whistles – it just isn't worth the time and paperwork for them (or their accountants) to take advantage of a credit. Given that small and medium businesses are the ones doing the hiring in this country right now – making a veterans jobs credit easier for businesses to take advantage of could be a big difference maker in bringing real benefit to veterans.
Missing from the administration's efforts on behalf of veterans is any discussion about encouraging and assisting veterans to start their own business. From my short time in the 29th Infantry Division (MD-ANG) I was continually impressed by the entrepreneurial skills of my fellow enlisted men not to mention NCOs and officers. Consideration should be given to tax proposals that will encourage investments in Afghan/Iraq veteran-owned companies. Why not tax-free capital gains both for individuals and corporations (or possibly a partial tax credit) for any investments of up to $100,000 in a small business owned and managed by a veteran?
While the veterans' proposals are possible the outlook is rough sledding for the other proposals – especially if the administration seeks to tie in increased spending as well. With the jobs, the economy and the stock market in the tank the administration (and Republicans and Democrats in Congress as well) needs to do much better in coming up with detailed tax proposals that won't break the bank and will help (even if on the margin) get things going in a positive direction. While there may not be magic beans – there are tax proposals that can be a big help. My ideas in the next column (and welcome yours in the meantime ).