New Version of "Extender Bill" Passes House and Moves to the Senate

The House sent legislation aimed at spurring job creation back to the Senate Thursday after tacking on language to fully offset the package’s cost.

The move means that the bill will have to return to the Senate for another vote, further delaying implementation of the first portion of the Democrats’ “jobs agenda.”

The centerpiece of the $17.6 billion package is payroll tax relief for businesses that hire new workers, which would cost $13 billion over 10 years. The bill also includes extensions of the Highway Trust Fund, the Build America Bonds program and expense deductions for small businesses.

Certain House Democrats complained that it violated the pay-as-you-go budgetary rule. To make the bill compliant with the rule, the House changed some of the tax provisions that were in the Senate-passed version, including the section on delaying worldwide interest allocation. This is the version that will go back to the Senate for consideration.

Read more!

Center on Budget and Policy Priorities Issues New Briefs

The March 2nd brief finds that if a state cuts a tax, it generally has to make an offsetting cut to expenditures for a program or service in order to maintain balance. This spending cut is likely to reduce demand in the state just as much as the reduction in taxes may stimulate demand.[1] It is at best a zero-sum game, where the gains in one area are offset by the losses in another. Given states’ balanced budget requirements, neither a broad-based tax cut nor a jobs credit can do much to increase overall economic activity in the state. This tax brief is a good companion to the February 16th CBPP brief A Balanced Approach to Closing State Deficits used in connection with ANCOR's February 18th Audio Conference.

CBPP also released on March 3rd an update on state budget cuts. The report found 45 states making cuts that are harmful to vulnerable populations.
Read more!

GAO March 2010 Report on State and Local Governments' Fiscal Outlook

The new report found that state and local government sectors continue to face near and long-term fiscal challenges and although the sector's near-term operating balance remains negative the federal Recovery Act assistance alleviated pressure with March 2010 operating balance measures showing an improvement compared to January 2009. In the near-term the sector's fiscal position can be attributed to several factors--including steep revenue declines. Absent any policy changes, GAO projects that the sector's long-term fiscal position will steadily decline through 2060. The decline is primarily driven by rising health care costs. Read more!

Reid Postpones Unveiling of Jobs Plan

Senate Majority Leader Harry Reid (D-NV) has postponed unveiling his plan for a series of jobs bills until next week in order to include proposals outlined by President Barack Obama during Wednesday’s State of the Union address. Obama’s State of the Union caused a “delay by a few days to incorporate a few of the president’s suggestions,” Senate Democratic Policy Committee Chairman Byron Dorgan (D-ND)said, including the president’s call for new small-business capital gains provision.

Earlier Thursday, Reid acknowledged that he is planning to move a series of smaller, targeted jobs bills this year rather than one large package. Democrats are hoping that by moving several bills throughout the year they can keep the issue on the front burner and lure some GOP support along the way.

The first bill, which could be introduced as early as next week with the intention of passing it before the Febrary 13 recess, could include provisions dealing with small businesses, infrastructure and taxes.

Read more!