When it comes to job cre­ation, fed­eral pro­gram is all cost and no ben­e­fit

Austin American-Statesman - - OPINION -

Pres­i­dent Ron­ald Rea­gan said, “There is noth­ing so per­ma­nent as a tem­po­rary govern­ment pro­gram.” Pres­i­dent Barack Obama is not strain­ing to prove him wrong.

Last win­ter, Obama per­suaded Congress to give busi­nesses a bonus for hir­ing peo­ple who had been out of work for 60 days or more. HIRE, for Hir­ing In­cen­tives to Re­store Em­ploy­ment, was sup­posed to stim­u­late job cre­ation and add some juice to a gasp­ing econ­omy. In prac­tice, it doesn’t seem to have worked. So what does the ad­min­is­tra­tion want to do? You guessed it: ex­tend the pro­gram. The ini­tia­tive was sup­posed to cost $13.5 bil- lion, but far fewer com­pa­nies have made use of it than ex­pected, so the tab has come to $8.5 bil­lion. The Trea­sury Depart­ment thinks em­ploy­ers must not be aware of the in­cen­tives be­ing of­fered: an ex­emp­tion from the em­ployer’s share of So­cial Se­cu­rity pay­roll taxes for the rest of 2010 and a $1,000 tax credit for each worker who is kept on for at least a year.

Maybe em­ploy­ers don’t know, but in an econ­omy in which ev­ery nickel counts, it’s more likely they just don’t care. The in­cen­tives are too small to over­come all the woes fac­ing man­agers: slug­gish growth, huge bud­get deficits that por­tend tax in­creases later on, the cost of im­ple­ment­ing health care re­form and what the U.S. Cham­ber of Com­merce calls “the un­be­liev­able amount of new reg­u­la­tion that is in the pipe­line.”

The Trea­sury Depart­ment says 4.5 mil­lion peo­ple hired be­tween Fe­bru­ary and May qual­ify for the ben­e­fits, but it doesn’t know if they would have been hired re­gard­less. Their em­ploy­ment may just be at­trib­ut­able to eco­nomic growth.

Or the credit may sim­ply in­duce them to take on Worker A, who has been out of work three months, rather than the slightly more qual­i­fied Worker B, who lost his pre­vi­ous job just six weeks ago. Again: all cost and no ben­e­fit.

That’s not to say the ad­min­is­tra­tion shouldn’t pro­mote job cre­ation. But it can’t do much good with mi­cro ef­forts like this pro­gram, which pale next to the cur­rent dis­in­cen­tives to hir­ing.

It would be far more help­ful to scour the Fed­eral Reg­is­ter to elim­i­nate reg­u­la­tions that have out­lived their use­ful­ness or cost more than they’re worth. Cut­ting spend­ing to di­min­ish fu­ture tax in­creases would also give em­ploy­ers greater con­fi­dence that in­vest­ments they make in work­ers will pay off in the long run.

Obama seems to think clever tax gim­micks can put the long-term un­em­ployed back to work. But in this case, the best thing the fed­eral govern­ment can do is not get in the way.

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