Senate Republicans have already blocked the American Jobs Act, and in the coming weeks, they’re very likely to block the individual provisions with the jobs bill, one at a time. Is there anything related to lower unemployment that could possibly overcome a GOP filibuster?
Well, maybe. Sen. Chuck Schumer (D-N.Y.) is reportedly talking to Sen. Jeff Sessions (R-Ala.) about a compromise that would give both parties some of what they want. Dems would get the creation of a national infrastructure bank — originally a bipartisan bill, until President Obama embraced it — while Republicans would get a corporate tax holiday, allowing international corporations to repatriate their overseas profits at a much lower rate. Suzy Khimm reported this morning that some center-right members of the Democratic caucus — including Sens. Joe Manchin (D-W. Va.) and Joe Lieberman (I-Conn.) — are “already over the moon” about the idea of pairing the two together.
So, does this offer a hint of progress? It depends, I suppose, on how one looks at it.
First, it’s not much of a compromise when Republicans get a tax giveaway to corporations, and Democrats get an idea that Republicans helped create — GOP Sens. Kay Bailey Hutchison (Tex.) and Lindsey Graham (S.C.) were co-sponsors of the infrastructure bank proposal. Second, Republicans may kill such a deal anyway, since the House has been actively hostile towards the infrastructure idea.
But perhaps the most important angle to keep in mind is the fact that this deal combines a sensible idea with a bad one. The infrastructure bank, with its bipartisan co-sponsors and support from the White House, deserves to be considered on its own. The tax repatriation holiday, meanwhile, is just not a good policy. Policymakers tried this several years ago, and it was a flop.
Heritage Foundation Economists: Repatriated Profits “Did Not Increase Domestice Investment, Job Creation, Or Research And Development” When It WasTried In 2004. Discussing a 2004 initiative to use a so-called “tax holiday” to repatriate corporate profits, Heritage Foundation economists JD Foster and Curtis Dubay wrote: “The evidence clearly shows that these repatriated earnings did not increase domestic investment, job creation, or research and development.” [Heritage Foundation, 10/4/11]
CRS: Evidence Does Not Show That Corporate Repatriation Increased Employment. In a report analyzing the stimulative impact of tax cuts on repatriated corporate profits, the Congressional Research Service stated of the 2004 repatriation policy: “While empirical evidence is clear that this provision resulted in a significant increase in repatriated earnings, empirical evidence is unable to show a corresponding increase in domestic investment or employment.” [Congressional Research Service, 5/27/11]
NBER Economists: 2004 Corporate Repatriation “Did Not Lead To An Increase In Domestic Investment, Employment Or R&D.” In a June 2009 working paper for the National Bureau of Economic Research, economists Dhammika Dharmapala, C. Fritz Foley, and Kristin Forbes analyzed the impact of a tax holiday in 2004 and wrote: “Repatriations did not lead to an increase in domestic investment, employment or R&D — even for the firms that lobbied for the tax holiday stating these intentions and for firms that appeared to be financially constrained.” [National Bureau of Economic Research, accessed 10/12/11]
CBPP: Many Analysts Reported “No Evidence” 2004 Tax Holiday Increased Job Creation. Explaining that proponents for a tax holiday for corporate repatriation in 2004 also promised “a large number of new jobs” and a boost to economic growth, the Center on Budget and Policy Priorities noted: “These promises were not borne out.” [Center on Budget and Policy Priorities, 6/23/11]
Making matters slightly worse, the last time Republicans pushed through this tax holiday, many of the largest corporate beneficiaries actually “cut jobs,” rather than add them.
Now, Republicans don’t much seem to care about these results — they’re not really evidence-oriented in their decision making — and are pushing the tax holiday anyway. But as compromises go, it’s hard to swallow the idea of pairing a good idea with an awful one.