The Failure of Bipartisanship

Is bipartisanship worth it if it comes at the price of bad policy?

Senators Max Baucus (D-MT) and Charles Grassley (R-IA) recently announced bipartisan legislation that they say is intended to "address the current economic conditions." Senator Orrin Hatch (R-UT) praised the legislation, saying it "demonstrates what can happen when both parties come together in a meaningful way to address the needs of the American people."

Senator Hatch is right about one thing: The draft bill does show us what happens when the two parties come together. And what it shows us isn't pretty.

First, the Baucus-Grassley measure will not meaningfully "address the current economic conditions" -- it will create few, if any, new jobs, and will do nothing to stop massive impending layoffs of teachers, firefighters, police officers, and other state and local workers.

Most of its 362 pages contain nothing more than extensions of existing tax cuts and special interest giveaways that have little or nothing to do with putting Americans back to work. In fact, $31 billion of the $85 billion bill goes to extending a research and development tax credit that is expected to be extended anyway and would do nothing to address the jobs crisis.

It does include a payroll tax "exemption" which sounds, at first, similar to a jobs tax credit proposal that I support. But a look at the details shows this exemption would be, at best, barely effective and, at worst, downright wasteful. It's really just another business tax cut. Businesses could claim it even if they don't increase their payrolls at all - for example, if they hire a new employee simply to replace an employee who's retiring. I estimate it will, at very most, create 200,000 jobs, at a cost of $13 billion.

Second, the Baucus-Grassley bill is far too small, at $85 billion. Even if we spent that amount in a highly targeted way, it would still leave us a long ways away from solving the unemployment problem.

Now contrast this with what the House of Representatives has done. In December, the House passed a $154 billion job creation bill. This bill also isn't big enough to sufficiently address the enormity of the jobs crisis, but it is a very strong step in the right direction. Both in size and scope, the House bill is far superior to the Senate bill.

The House bill allocates $48 billion to creating jobs on infrastructure projects, including improvements to airports, railways, highways, and mass transit systems. Given the abysmal state of our infrastructure, these types of investments are urgently needed, and they will yield economic benefits for generations to come. They are also highly effective at putting people back to work.

The House bill also spends about $79 billion to help provide jobs for teachers, firefighters, police officers, park rangers, and other public service professionals. The importance of these workers and services in our communities is obvious. And again, this is one of the best ways to target spending if job creation is your goal.

Not only does this $79 billion help public service workers, it helps workers in the private sector, too. Many state services are provided by the private sector, such as the hospitals and nursing homes providing health care. And a teacher or firefighter who has a job also has money for things like restaurant meals. That means more business for restaurants and more jobs for wait staff and cooks, who now in turn also have more money to spend in their communities. This is the "multiplier effect" economists love to talk about.

Lastly, the House bill extends unemployment and health care benefits for the millions of Americans who rely on them while they look for new work. This spending also creates jobs, 900,000 of them in 2010, by putting money into the pockets of people who will spend it in their communities, creating more demand for the goods and services that businesses provide.

Now here's the upshot: The House bill passed on a straight party-line vote. Not a single Republican supported it. So here's your choice: You can have a bipartisan load of baloney, or a partisan bill that could put far more than one million Americans back to work. What would you prefer?

Millions of Americans are out of work, and things aren't going to get much better for a very long time -- unless the government acts boldly. That's why it's a cruel pretense to hold out the Senate "compromise" as offering any real relief to the people who so desperately need it.

Senate Majority Leader Harry Reid, to his credit, appears to recognize what a cynical ploy it is to promote the Baucus-Grassley hodgepodge as a jobs bill. He has called for passing the bipartisan tax exemption first and following it up later with more "bipartisan" legislation. As we've seen, this would do little to create jobs; it would lower the unemployment rate by just 0.1%. The proposal appropriately reauthorizes the highway transportation bill, thereby preventing some job losses, but without committing to greater infrastructure spending no additional jobs will be generated.

Senator Reid is boxed in by an entrenched opposition that does not seem to be interested in more job creation -- it only cares about its tax pork -- and by Senators who allow deficit fears to trump the need to spend more on job creation. (In fact, we have a huge deficit because we are in a huge recession where tax revenues are down and safety net spending is up. The first step toward deficit reduction is actually generating millions more jobs and creating more taxpayers. This common sense does not seem to be evident in the Senate.)

It should be manifestly clear by now that bipartisanship holds very little promise of actually solving the key economic challenges facing our country.