Later today, Senate Republicans will filibuster the American Jobs Act, the $447 billion bill to add demand into the economy through infrastructure spending, payroll tax cuts, extended unemployment insurance and a variety of other programs, paid for by a 5.6% surtax on millionaires. Republicans are likely to be unanimous in their opposition, while Democrats will be unanimous, or near-unanimous, in their support. That would put the bill at 53 votes, seven short of the 60 needed to clear a cloture vote, because the modern Senate is an anti-majoritarian institution.
Where will Senate Democrats go from here? They’ll have a talking point about Republicans being uninterested in jobs in the middle of a jobs crisis. At the same time, there will be a jobs crisis, and incumbents are likely to be blamed next year for their failure to arrest it. So Senate Democrats may take apart the bill and try to pass particular pieces.
For instance, New York Sen. Chuck Schumer (D-N.Y.) has been quietly courting some Senate Republicans and Democrats to see whether there is any appetite for merging a GOP-backed idea — a tax holiday for corporations to bring home their overseas profits — with a Democratic-supported plan of creating a national infrastructure bank. At the same time, Democrats are weighing whether to push ahead with other individual pieces of the president’s jobs plan, like its extension of the payroll tax cut.
On the floor this week, Senate Majority Leader Harry Reid (D-Nev.) also plans to schedule votes with significant GOP support but tepid backing among Hill Democrats: free-trade agreements with South Korea, Colombia and Panama. And on Tuesday, the Senate is expected to give final passage to a bipartisan bill cracking down on Chinese currency policies, a populist proposal with broad support in the Senate but opposed by House Speaker John Boehner (R-Ohio).
As Bernie Sanders alludes to later in this piece, this is like exchanging a fire extinguisher for a match and some kindling. The so-called free trade agreements will cost roughly 200,000 jobs over 10 years and commit the United States to placidly doing business with the most dangerous place for trade unionists, Colombia, in the world. The repatriation tax holiday is a horrible idea that didn’t create jobs the first time it was attempted in 2004, that solves a non-existent problem of capital inflows which are already at a decent enough level, and that teaches multinational corporations how to avoid taxes by stashing more of their profits overseas.
The payroll tax cut, while criticized by some, acts as a wage increase for wage earners who have seen their take-home pay fall. And the Chinese currency bill is just smart policy. But because they have the likelihood of being effective, the Republican House will resist any efforts to pass them. And ideas like a sustained 5- to 7-year infrastructure spending program are really pie in the sky, however necessary.
So outside of a trade adjustment assistance bill that merely limits the damage caused by the trade agreements (and we’ll see if the money gets appropriated after the program is authorized), I just don’t see any fiscal help coming from Congress for the rest of this term. Which means that fiscal policy will turn even more negative after the payroll tax cut and extended unemployment insurance benefits run out at the end of this year. Merely extending them would only preserve the great status quo we have going at the moment.
UPDATE: Just to reinforce this notion that repatriation tax holidays are miserable policy, a new report shows that the companies that benefited most from the holiday in 2004 cut a net 20,000 jobs, and the country was deprived of $3.3 billion as a result. And the author of that study? The Senate Permanent Subcommittee on Investigations. So they know the outcome of such a policy.