Lawmakers on both sides of the aisle in Congress seem more open now to approving a new tax credit for job creation as unemployment approaches double digits, but its far from being a done deal.
A report in The New York Times indicates that even Republican whip Eric Cantor, R-Va., now sees some appeal in the idea. Theres a lot of traction for this kind of idea, he said. If the White House will take the lead on this, Im fairly positive it would be welcomed in a bipartisan fashion.
Thats a far cry from earlier this year when the Obama administration had proposed such a tax credit as part of February's economic stimulus package, only to be met with warnings that companies would exploit the loophole by means both fair and foul. For example, some companies might try to temporarily close and then reopen under another name, claiming all of their old employees as new workers. Other businesses that were already planning to expand could claim all of the new employees they would have hired anyway.
Some critics are also concerned that if expectations spread that Congress is going to approve a tax credit for job creation, the law of unintended consequences would come into play. Employers would postpone their hiring plans until the tax credit is in place, potentially derailing an economic recovery in the meantime.
Despite the warnings, a tax credit for job creation would likely have a stimulative effect on the economy and could indeed help the Obama administration get past the nagging criticism that despite the hopeful signs on Wall Street, the unemployment problem has not truly been addressed. Lagging indicator or not, unemployment is a justifiable worry for Americans today.
Obama has also been criticized for not being able to justify claims of creating millions of jobs with the stimulus package, as nobody can really know how many jobs would have been lost without it. By passing a tax credit for job creation, the IRS will be able to keep track of the number of claims for the credit and give the administration a handy statistic to tout when the next election rolls around. If the measure gains support from both sides of the aisle, incumbents from both parties who vote for it will be able to make the same claim for creating X number of jobs, whether they voted yea or nay on February's stimulus package.