President Obama signed the Hiring Incentives to Restore Employment Act (HIRE) Thursday, providing $18 billion in tax credits to businesses. The legislation aims to encourage hiring and reduce the country's persistently high unemployment rate, which currently stands at 9.7%.
The act exempts companies from the 6.2% Social Security payroll tax for new hires who were unemployed for the previous two months, and gives companies a $1000 tax credit if those employees stay employed for at least a year. There are also write-offs for equipment purchases, an expansion of the Build America Bonds program, and $20 billion for road maintenance and transit construction.
This spending will be funded, in part, by a crackdown on offshore tax abuses. Foreign banks that fail to reveal U.S. account holders will be penalized, making tax evasion harder.
The act will also increase the national debt by $13 billion over the next three years.
Critics have said the legislation is both too big and not big enough. According to Republican Senator Greg Judd of New Hampshire, "This isn't so much a jobs bill as it is a debt bill."
Others claim the tax breaks won't noticeably help the nation's unemployment situation. Many experts, including the Congressional Budget Office, estimate that the resulting job creation won't exceed 300,000 by the end of the year. (The recession has cost Americans 8 million jobs.)
This stimulus package is a small fraction of last year's stimulus package, estimated to be worth $787 billion. And the president himself says, "There is a lot more we need to do to spur hiring in the private sector and bring about full economic recovery."
Others are more sanguine. "The beauty of this bill," says Democratic Senator Charles Schumer of New York, "[is] it's simple, it's focused on private-sector job growth, and it's paid for."
The bill delivered to the President received bipartisan support. Democrats combined with eleven Republicans to pass HIRE for the second time, 68 to 29.