Reid’s jobs bill reads more like a jobless bill

For the first time in a while, there seemed to be a bipartisan breakthrough in the Senate. Senate Finance Committee Chairman Max Baucus, D–Mont., and Sen. Charles Grassley, R-Iowa, joined together and supported a new jobs bill.

But it didn’t take long for Senate Majority Leader Harry Reid, D-Nev., to scrap the bill in favor of stripped-down version. This one jettisons tax breaks meant to win Republican support as well as an extension of unemployment benefits and subsidies to help the unemployed keep their health insurance.

With an estimated cost of only $15 billion over a decade and a central focus on a poorly conceived new tax credit for hiring workers, this new bill is too small to be much more than a political maneuver. It would be better to go back to the original jobs bill.

The overall cost of the original package was estimated to be $85 billion. This is much more expensive than the new version, but that reflects its meatier approach to improving the economy, not waste.

Not all of the tax credits in the bill may seem directly related to job creation, but the extension of a business tax credit for research and development in the original bill deserves passage.

Extending unemployment benefits is also important. Beyond making the recession easier on those worst hit, unemployment benefits go to people who tend to spend the money they get in benefits quickly, thereby increasing demand and employment throughout the economy faster than most alternatives.

The extension of subsidies to help the unemployed keep their health insurance shouldn’t be overlooked either. The long-term unemployment connected with this recession will leave deep scars on its victims, and helping them to at least have health care while unemployment is still high is a noble goal.

It’s too bad neither bill got things right with the jobs tax credit. The credit would apply to firms that hire workers who have been unemployed for at least two months, with a further credit for firms that keep those employees through 2011.

Unfortunately, this tax credit doesn’t really do anything to distinguish between firms who would have hired anyway and those enticed by the credit.

It would have been better if lawmakers had come together to cut payroll taxes altogether for a year, putting more money in the hands of both firms and workers.