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The Obama administration's new jobs plan seems to be an admission that the stimulus package hasn't worked as advertised.
As jobless numbers continue to rise, the magic phrases coming from the Obama administration this week are "safety net" and "tax credits."
The unemployment rate now stands at 9.8 percent -- and 10 percent looks to be a likely reality sometime in the next couple of months. For a party in power, this is not good news -- especially when "SNL," a comedy show perceived to be on the administration's side, rolls out one of the harshest indictments yet of Obama's incomplete agenda.
And so, from the beginning of the week, the White House has been doing its level best to show that it is "doing something" to help the unemployed or those who may have stopped seeking work.
Which is where the "tax credits" come in:
Among the options for additional steps is some variation on Mr. Obama’s proposal during the stimulus debate to give employers a $3,000 tax credit for each new hire, which Congress rejected last winter partly out of concern that businesses would manipulate their payrolls to claim the credit. Another option would allow more businesses to deduct their net operating losses going back five years instead of the usual two; Congress limited the break to small businesses as part of the economic stimulus law.
The search for further remedies is part of a two-track effort in the White House and Congress. Democrats are also considering plans to continue through 2010 the extra unemployment assistance and health benefits available to people who are out of work for long periods. Also likely to be retained, some officials say, is a popular $8,000 tax credit for first-time homebuyers that was included in the $787 billion stimulus law and has helped rouse a housing market that nonetheless remains shaky.
The administration will not admit it, but another way of describing what is going on here is, well "Stimulus II."
After the $787 billion package passed in February (with hardly any Republican votes), a controversy has raged (and still does to this day) over whether the stimulus was large enough or structured properly: In short, has there been too much pure spending -- or too little.
A few Democrats want a second stimulus package, but public resistance over spending in general -- to say nothing of the price tag and furor over the health care plan -- makes that a DOA proposition.
Unless stimulus is called something else -- like "safety net" proposals.
Sure, the amount being discussed now, slightly upwards of $100 billion, is one-seventh that of the previous stimulus.
But throwing a certain kind of tax credits -- designed to bribe, uh, encourage companies to begin hiring -- might be the ideal approach.
However, there's a major problem the administration must confront if it pushes Congress to produce "safety net" package. It gives Republicans a powerful and simple rhetorical argument: The stimulus package didn't work as advertised.
The Obama team argues that, absent the $787 billion, unemployment would be worse. However, it's hard to prove a speculative reality.
Meanwhile, the GOP can just point to the present reality: Job losses that haven't been seen in a quarter-century -- and the administration stepping forward to say that more needs to be done.
In asking for tax credits, the administration helps make the Republican point that there should have been more tax relief than was in the original stimulus bill. If the tax credits become law...and if they prove an effective incentive to get businesses hiring...and if they help prevent the unemployment rate from going too much above 10 percent (or brings it back down), that will be a trade-off the administration will accept -- for a few weeks of Republican "toldja sos."
Of course, that's a whole lot of "ifs."
If none of these come to fruition, the White House might be desperately seeking a political safety net of its own as the 2010 midterm elections approach.