It’s been over three months since Republicans took control of the House of Representatives and strengthened their caucus in the Senate. The central premise of the GOP midterm campaign was that it could create badly needed jobs—the Republican National Committee drove a bus through the lower 48 states emblazoned with the slogan: “Need a Job? Fire Pelosi!”
Now, after focusing its initial legislative efforts on repealing “ObamaCare,” pushing Tea Party-backed dreams like a balanced budget amendment, and fighting to strip regulatory agencies of their authority, the GOP has finally released a job plan…that consists of a balanced budget amendment, the repeal of Obamacare, and several assaults on regulatory authority.
Freshman Sen. Rob Portman (R-OH), who headed the Office of Management and Budget under President George W. Bush, released the official Senate GOP jobs plan yesterday. The unveiling received a surprisingly scant amount of media attention. Surely the ongoing bin Laden saga helped overshadow the announcement, but the complete lack of any new ideas might also have been a factor. Beyond the aforementioned goals, the GOP job plan advocates expanded off-shore drilling, steep tax reductions, medical malpractice reform, and other well-worn conservative policy tropes.
Aside from being unoriginal, few of these measures could be said to have even an ostensible effect on jobs. “It is very hard to see this as much of a jobs bill,” said Dean Baker, co-director of the Center for Economic and Policy Research.
The first part of the plan attempts to attack the federal deficit. It outlines three provisions: a balanced-budget amendment to the Constitution, a statutory spending limit that “provides a budget strait-jacket so that Congress is forced to make difficult decisions each year to live within its means,” and immediate spending cuts.
This method of job creation by way of government austerity was, of course, the preferred path of Herbert Hoover in 1932. The GOP plan asserts that “out of control spending spree creates uncertainty in the economy and stops the investment,” but economists have long since dispensed with what Paul Krugman calls the “confidence fairy”—the idea that the only thing preventing companies from hiring is a lack of confidence in the government’s long-term fiscal health. Slashing federal spending often has the exact opposite affect—countries like Ireland, Latvia, and Estonia enacted steep spending cuts in the recent global downturn, and each saw subsequent slumps in output and employment.
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Quite paradoxically, the plan immediately moves on to a series of proposed tax cuts, which would of course make the federal deficit much larger. It calls for a reduction of the corporate tax rate to 25 percent along with lowering individual rates, reducing taxes on capital gains, and making tax credits for research and development and small business investment permanent.
Baker said the R&D tax credit might have a “modest positive effect” on job creation—but Congress has voted to extend it every year since the early 90s anyhow. Otherwise, the idea that jobs are created by reducing tax rates for big corporations and individuals is widely discredited. (See Bush tax cuts and job growth, 2001-08).
The GOP “jobs” proposal also calls for a broad assault on what the government is allowed to regulate. It advocates passage of the Reins Act, which would allow Congress to veto almost any regulation imposed by the federal government, and also once again demands the EPA lose its ability to regulate greenhouse gases under the Clean Air Act. Losing that authority may be a precondition for the next part of the GOP jobs plan: expanded offshore drilling for fossil fuels while allowing “greater access” to federal lands for energy exploration.
Once again, it’s very hard to see how these provisions—which are harmful in their own right—have anything to do with job creation. Baker acknowledged that expanded oil drilling “may lead to a small number of additional jobs in the oil industry,” but would also “almost certainly lead to more environmental damage, which will cost jobs.”
The gulf between the GOP “jobs” plan and reality was evident even in Portman’s rollout. Last week he previewed his party’s blueprint at Lincoln Electric in Euclid, OH. “What we’re trying to do is to create an environment for companies to succeed and, right now, America’s tax policies, our energy policy, the regulatory policy, the legal policy is making it harder for us to create jobs here in America,” he said. “So what we’re trying to do is to create more certainty, to create a more pro-growth, pro-jobs policy framework and companies, like Lincoln, will benefit directly.”
Portman noted the company added 50 production jobs in the first part of this year. But he didn’t mention one of the company’s major new projects: assembly of the largest wind turbine in northeast Ohio. The GOP plan calls for nuclear energy subsidies, but no green technology investments.
Additionally, federal and local governments helped fund the turbine project. Funds from the 2009 stimulus provided $1.12 million for the project, and the Cuyahoga County government kicked in another $350,000 loan.
(Finally, Lincoln Electric might not be the best place to push for reduced EPA authority. USA Today reported in 2008 that Lincoln emits a wide array of toxic chemicals that affect five nearby elementary and middle schools).
So nobody can now say the GOP doesn’t have a jobs plan. But nobody can really say it would create many jobs, either.
