Senate approves $17.6 billion job creation bill - Mar. 17, 2010

Senate approves $17.6 billion job creation bill - Mar. 17, 2010

Jobs bill on way to Obama for signature
By Tami Luhby, senior writerMarch 17, 2010: 11:43 AM ET


NEW YORK (CNNMoney.com) -- Congress put the final seal of approval on a $17.6 billion job creation bill on Wednesday.

The measure, which has gone through many twists and turns in the House and Senate in recent weeks, now heads to President Obama for his signature. It passed the Senate Wednesday by a 68 to 29 vote.

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The legislation will:

-- Exempt employers from Social Security payroll taxes on new hires who were unemployed.

-- Fund highway and transit programs through 2010.

-- Extend a tax break for business that spend money on capital investments, such as equipment purchases.

-- Expand the use of the Build America Bonds program, which helps states and municipalities fund capital construction projects.

The bill is a slimmed down version of an $85 billion bipartisan measure crafted by the Senate Finance Committee last month. Senate Majority Leader Harry Reid, D-Nev., stripped out these four measures and put them into a separate bill, saying he hoped lawmakers would pass it more quickly. The new bill passed the Senate on Feb. 24.

However, it then had to go to the House, which added two provisions to pay for the infrastructure spending and corporate tax breaks. Its amendments require foreign financial institutions to give the Internal Revenue Service more information to help it catch tax cheats, and delays a tax break for foreign interest payments. The House sent it back to the Senate in early March.

Job creation focus

The president and lawmakers have vowed to push measures that will spur job creation, as the economy continues to lose jobs and the unemployment rate stubbornly remains at 9.7%. But the initiatives are having a tough time getting through Congress.

Wednesday's measure has been criticized by some lawmakers and economists as having little bang for the buck.

The centerpiece of the legislation is a hiring tax credit crafted by Senators Chuck Schumer, D-N.Y., and Orrin Hatch, R-Utah. The bill spares businesses from paying Social Security taxes on new hires who had been unemployed for at least 60 days. This tax, which comes to 6.2%, could save companies a maximum of $6,621.

Companies who retain these new employees for a year can claim an additional credit of the lesser of $1,000 or 6.2 percent of the wages paid to the employee in 2010. The measure's estimated cost is $13 billion over 10 years.

Some economists say the credit will prompt the hiring of 300,000 workers, while others say it will only help at the margin because companies won't hire unless they see an increase in demand, regardless of tax incentives.

Additional initiatives being considered include giving more tax breaks to companies and funneling more money to the states, which are contemplating big spending cuts to balance their budgets. Others, however, are concerned that these measures will only add to the sky-high federal deficit. Democrats counterted that the legislation is fully paid for.

Meanwhile, the deadline to apply for extended unemployment benefits runs out in coming weeks. The House has to consider a roughly $140 billion bill that would push back the deadline until year end, extend a bevy of expired tax measures and send the states $25 billion to help fund its Medicaid obligations.

In the House, several jobs bills are forming, while Senate Democratic leaders say their next jobs initiative will be targeted at small businesses.

"This is just the first, certainly not the last, piece of legislation we will put forward," Schumer said.