By NAFTALI BENDAVID And GREG HITT
Senate Democrats are preparing to release a roughly $80 billion jobs program this week, but its prospects are uncertain in a political landscape where voters are angry about unemployment yet fuming about federal spending.
Senate leaders are proposing that part of that money come from funds originally allocated to the financial-sector bailout effort, the Troubled Asset Relief Program, or TARP. But top Democrats have decided to slice the jobs initiative into smaller chunks in the face of Republican attacks on big federal economic-stimulus programs.
Action on the jobs measures will be a warm-up for the larger debates over federal spending proposed in President Barack Obama’s 2011 budget plan released Monday. Both sides agree that jobs are a national priority. With Republicans on the cusp of 41 votes in the Senate, Democrats need some GOP support to avoid procedural obstacles that could doom their effort. If Republicans do block their initiatives—particularly proposed tax breaks for businesses—Democrats are prepared to blame the minority party for seeking election-year political advantage at the expense of hard-pressed workers.
For Mr. Obama and his Democratic allies, the fiscal challenges will be difficult to reconcile as the year unfolds. Mr. Obama is calling for new action to spur job growth, which will almost certainly add to the deficit. At the same time, the public is up in arms over the government’s red ink, and Mr. Obama is seeking a freeze in domestic spending.
Democrats have been planning for months to focus on job creation early this year. But the party’s loss last month of a U.S. Senate seat in Massachusetts that it had held for decades has added a new urgency to the sense that Congress needs to focus on the economy.
The Senate plan is one of a series of initiatives proposed recently by Democrats scrambling to show voters that they are tackling the nation’s persistent unemployment problem. The House last year passed a $154 billion jobs program that includes some, but not all, of the same elements as the Senate plan.
Mr. Obama is offering a series of initiatives of his own. Last week, he proposed a $33 billion tax credit for companies that create jobs. On Tuesday, he again suggested using $30 billion from the TARP program for a small-business lending fund. And in his 2011 budget, he included $100 billion for aid to states, infrastructure funding and other jobs programs.
Democrats must sort through these overlapping initiatives in coming weeks and decide which make the most sense economically as well as politically.
Senate Democrats plan to launch one bill, which could be introduced as early as Friday, to extend authorization for highway projects, give tax credits to businesses for job creation and other investments, and help state and local governments issue construction bonds. Democrats say those actions could create jobs right away.
A second phase would focus on infrastructure spending; help for state and local governments so they can provide jobs for teachers, police officers and other employees; and aid for people and firms making homes, schools and factories more energy efficient, an idea called “cash for caulkers.”
“I think people are very tuned in to their constituents and job growth,” said Sen. Maria Cantwell (D., Wash.). “So I think if there are proposals that people believe concretely will really create jobs, I think you’ll have bipartisan support.”
But Republicans criticized the Democratic leaders for crafting bills without input from the minority party.
“They’re writing the jobs bill the same way they wrote the health-care bill—behind closed doors,” said Sen. Lamar Alexander (R., Tenn.). “We’ve not been invited to participate, which isn’t a good beginning.”
Mr. Alexander and other Republicans also oppose the plan to use TARP funds, saying that by law the money is supposed to go toward reducing the deficit.
Among the ideas Democrats are sifting through is a proposal by Sens. Charles Schumer (D., N.Y.) and Orrin Hatch (R., Utah) to reward businesses for creating jobs. Under their plan, any employer that hires a worker who has been unemployed for at least 60 days wouldn’t have to pay the worker’s 6.2% Social Security payroll tax for the rest of 2010.
Another idea being promoted by Democrats involves beefing up a tax credit that would encourage businesses to make job-creating investments. Such investments—equipment upgrades, for example—are often written off for tax purposes over several years. But the so-called Section 179 credit would allow firms to write off the value of investments in a single year.
Democrats also want to extend and broaden the “Build America Bond” program created in last year’s stimulus package. That initiative provides tax-preferred bonds to help state and local governments fund job-creating infrastructure projects, such as construction of schools, hospitals and roads.
Additionally, Democrats are considering using the jobs package to renew several recently lapsed tax breaks, include the tax credit supporting business research and development.
Write to Naftali Bendavid at firstname.lastname@example.org and Greg Hitt at email@example.com