The Best And Worst Ways Government Can Help Create Jobs: CBO

Unemployment might be stuck at crisis levels, but a new government report suggests two commonly proposed Republican remedies would only have minimal effects.

Deregulation and a tax holiday for repatriated corporate earnings would do little to create new jobs, the report from the Congressional Budget office finds. Examining 13 ways to stimulate the economy and job market, the report contends that the impact of deregulation would be too slow and small to have any sort of immediate effect, while taxing repatriated corporate earnings at a lower rate would at most create a single year of full-time employment for every million dollars in federal costs required.

Both deregulation and a corporate tax holiday have been popular talking points of late, with corporations including Pfizer and Apple arguing a repatriation tax holiday would give them the extra cash to create American jobs, and Republicans often insisting large number of regulations have stifled job creation.

Both ideas have come under heavy scrutiny though, as when Bruce Bartlett, former economist for both Ronald Reagan and George W. Bush said that the idea that deregulation create jobs "is just nonsense. It's just made up."

History also shows repatriation tax holidays have done little to stimulate job growth. A recent report found that during the last tax holiday in 2004, 58 of the corporate giants that accounted for 70 percent of all repatriated cash slashed nearly half a million jobs in the following years. Even the Heritage Foundation, a conservative think tank, have changed their tune on the idea of a tax holiday.

The CBO report instead contends that extending unemployment benefits is the best way to create new jobs in the short term. The Center of American Progress recently supported this claim by arguing unemployment benefits provide the greatest benefit to the labor market when unemployment is at its worst. Indeed, according to a 2010 report by the Urban Institute, for every dollar the government spends on unemployment benefits, two are put back into the economy.

The contention is supported by another report, this one by the Census, finding unemployment benefits were responsible for the creation of an average of 1.6 million jobs each quarter between mid-2008 through mid-2010, while simultaneously keeping an estimated 3.2 million people out of poverty.

Here are 13 ways to boost job creation by 2012 to 2013, according to the Congressional Budget Office:

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Comments

[Huffy Puff]

10:45 PM on 11/28/2011

Best way: Giving money to the middle class to spend on goods and services. Employers hire more employees and purchase more goods to meet the increased demand.

Worst way: Giving money to wealthy executives who will either sit on the money, invest it overseas for cheap labor, or purchase another yacht.

[lover2011]

10:34 PM on 11/25/2011

These are the same songs that they been singing for years. How about taking a stab at Health Care to fix the unemployment. My people can create the own jobs and realities by starting their own small business. Everyone goes for the jobs with benefits, and health care. Well there simply aren't enough jobs... Hello, Obviously. If there was health care for all maybe people would be more apt to start their own businesses and create their own jobs. Instead, of shopping around for jobs with health care, and benefits. This country is so annoying sometimes. Oh, just keep leading the sheep. People get away from your corporate jobs and government jobs.. That's how there is the 1%, no one is going to start their own business when they have to worry about paying health care cost..

[Outsourced of Course]

09:18 AM on 12/01/2011

Oh, I so agree with you. It is ridiculous that decent Health Care benefits are attached to jobs in this country. Husband and I are in this situation right now. He is self-employed and I recently lost my job, and therefore, our health care benefits. Luckily we can afford COBRA for now because I have an expensive pre-existing condition. We would not be so lucky if my job had been a low paying one. I'm also finding that many of the so called jobs being created are temporary contract work with no benefits. Thanks job creators!

[frank1946]

07:19 AM on 11/24/2011

No Work, no Eat....................attempts to enslave the other Guy usually fail badly !

Even Market Socialism trashes Freedom, so Anger Management Classes for Huffpost
Readers or what ?

USA has become a "Tempest in a TeaPot" ? Owned by our Lenders, run by Psychologists ?

Americans ignore their Virtues, celebrate their Insecurity !

[DarylC]

10:00 PM on 11/23/2011

The nine most likely words from a Republican Congress, "I'm from the government, and I help rich people." http://www.ninemostlikelywords.com

[myarev]

06:59 PM on 11/22/2011

Repatriation tax holiday is another giveaway to rich corporations and their rich executives. They will not create jobs and invest in the US with this money. Bush gave them a repatriation tax rate of 5.75% and corporations brought back billions and paid themselves out. Jobs were not created. Corporations are already sitting on trillions of cash! if repatriation tax holiday is allowed, there should be very strict requirements to truly show that money was invested in the company,people and the US economy and not paid out as bonuses.

[Jeff Callahan]

06:29 PM on 11/22/2011

These big corporations want a huge tax break to bring home money they are hiding offshore. That's bull. If a common person were hiding money from the tax man, or say from Child Support, the sanctions against that individual would be draconian. We're talking seizure of bank accounts, penalties, interest, even jail time.

We should be just as tough on the corporate "people". If they won't pay their taxes, we seize their assets, freeze their bank accounts, sue their boards of directors, and jail their executives.

[Tom Hendricks]

05:48 PM on 11/22/2011

Here's one way that is outside the government and doesn't need them at all.
How about you and I solving the problem outside of congress and the government­. One way to do that and fast is National Hiring Day. Can we afford some words? Can we say words like, "Why not try it and see if we can help these people" That's the cost to you and me and to everyone else.
Time to end the party bickering from all of us. Taking a wish list to this congress is a waste of time - time that people out of work don't have. National Hiring Day is one new innovative approach to the jobs problem that doesn't need the government to work. Just needs you to talk and support trying it. When words are so free to spend, let's use them to try new solutions.
National Hiring Day - This is a day that corporatio­ns are encouraged to hire new employees. Corporatio­ns are called on to put patriotism first and help their country in
hard times. Those corporatio­ns that cannot hire, are asked to stop firing for that month.

“A friend ... He discovered that were all the large corporatio­ns just to hire .5% of their work force and most businesses with fewer than 50 employees to hire one employee and those with up to 500 add two or three, then the unemployme­nt problem would be back down to the place where people would feel there is hope. "

[mashtoe]

01:28 PM on 11/22/2011

What a joke. Here is what will help create jobs: end free trade agreements (all of them), end NAFTA, end all work visas, and have a manditory E-verify program with harsh criminal punishment for employers of illegals.

[gomezrules]

06:39 PM on 11/21/2011

LOL! So fire EVERYBODY and make them (us) all eligible for unemployment! Case solved, the deficits should be a thing of the past (due to that magical expansion of what a dollar will now buy and produce). And we will thus achieve the left's dream of us ALL being paid the same, regardless of talents, ambitions, desires, motivations, etc.! Oh, happy days! Happy days will be here again!

[marymeade2]

06:45 PM on 11/21/2011

Yes, this is what the statist's want!! I know, cornball, equality for all. Level the playing field. We are in for a ride, if we have 4 more years of this. This is their idea of Utopia. Faved/already fanned.

[J S K]

09:37 PM on 11/21/2011

ridiculous comment, no one is looking to live in poverty on 250 a week or whatever you get, very very few people want to be on unemployment, read the article again, many of the stimulus tools we use don't work

[MDhome]

02:47 PM on 11/21/2011

Demand is necessary before jobs happen and demand won't happen till people have money, and they need a job before they have an income, So - Where is the answer? Deregulation will NOT create jobs, Giving corporations a tax-free pass will NOT create a job, leaving the only answer ? Government stimulus.

[mashtoe]

01:30 PM on 11/22/2011

No, start by ENDING job killing H-1B work visas. Ending work visas should be obvious but instead the Democrats insist on more work visas, more free trade, and more international trade agreements that take away our sovereignty.

[MDhome]

11:26 PM on 11/22/2011

How many work visas issued each year? free trade has been a bipartisan deal for many years. Trade agreements also include the idea we can EXport.

[welcome to Bushville]

12:21 PM on 11/21/2011

HP, please don't post Bush's picture, nobody wants to look at that dilweed

[greyhound2]

10:41 AM on 11/21/2011

When looking at creating new jobs, it helps to understand what happened to the old ones.

They were off-shored to low cost labor pools overseas by American corporations who could import back in mostly duty free (Apple), or they were automated with the machines paid for with investment tax credits, or they were taken by illegal aliens who work for less than half the wages with no benefits and no worker protections.

So you want to increase Research & Development to create new products? Corporations are given grants from taxpayers they never have to pay back, develop something new and place a patent on it for sole ownership, and then ship the productions jobs overseas to lower cost labor pools. How does the American taxpayer benefit from that?

[mashtoe]

01:31 PM on 11/22/2011

Exactly. The list above is just more DC BS. H-1B work visas is a perfect example of how the US government under BOTH parties is working to actively suppress wages.

[PragmaticStatistic]

07:03 AM on 11/21/2011

Get real. Nothing the government can do will stop the computerization efforts that merge job functions, or productivity improvements like the robotics and other technology improvements, like the one-man automated garbage truck, that eliminate multiple positions. Any effort at creating new jobs only increases the possibility of creating another position at eliminates other jobs. For example, increasing jobs in green technology will result in eliminating jobs that all ready exist at other companies, or other industries. Normal business competition both creates new jobs at your company and eliminates them at the competitor across the street. Or, vise versa. That new job that you just funded with your tax dollars, could eliminate your job through normal competition. But, that is how capitalism normally works, but, without the government funded incentives.

What we have now, however, is a form of capitalism that is heavily influenced by socialism from all the companies that either profit from government spending, tax breaks and job incentives, the privatization of government services and deregulation. In the last 30 years, government did not get smaller, it just got a lot more expensive due to politically influential businesses feeding off your taxes in way that hides the expense.

[mashtoe]

01:33 PM on 11/22/2011

BS. The US government is subsidizing automation and helping to increase the rate of layoffs. A good example is H-1B work visas. Without H-1B US employers would have to pay more for engineering labor and that would make automation more expensive. And it should be more expensive because H-1B is driving down wages due to artificial increases in the labor supply.

[PragmaticStatistic]

08:09 PM on 11/22/2011

How does what you just said about H-1B visa's affect on automation any different than my comment about the inability of the government, its job stimulation, and its partnership with business, to negate the affects of office and factory automation?

[GunnyJ]

06:41 AM on 11/21/2011

More psychological MSM warfare.....

[JRNO]

01:59 AM on 11/21/2011

#1 is an absurdity, before money can be paid out for unemployment checks to be spent in the economy it has to come from money taken OUT of the economy through taxes, inflation, borrowing or spending cuts, minus the handling cost for bureaucrats to administer. If two dollars are put back into the economy for every dollar spent on unemployment wouldn't that make it a good thing when jobs are moved overseas and people laid off here and then collect unemployment?
#1 can be true ONLY if the government has a surplus of money in it's account. And it is $15,000,000,000,000 away from that right now.

[J S K]

09:42 PM on 11/21/2011

all it means is that unemployment dollars go directly into the economy, where as repatriation holiday dollars for instance may go back overseas, or into the bank, you are making foolish arguments, try using your brain

[mashtoe]

01:35 PM on 11/22/2011

Unemployed people shop at Walmart, Walmart buys goods from communist China, so the money goes quickly out to communist China.

Instead, we need to end free trade, end H-1B, end NAFTA, and secure the borders(manditory E-verify).

[JRNO]

05:28 PM on 11/22/2011

The money spent on unemployment is a transfer of money from one person to another, minus the costs of administering the program, it is not new money or wealth created from production. Any increase in consumption by recipients of unemployment will be more than offset by the taxes on those in productive jobs.
Increased, sustained employment can only come from the increased productive output of profitable businesses. The net economic effect of unemployment payments on the society as a whole can only be negative as it transfers money from production to consumption.

What is the SOURCE of the money used for unemployment payments (beyond the taxes witheld for that purpose)? This is the question that is never considered by advocates of seemingly unlimited government spending. To answer this question reveals the absurdity of stimulus spending.

Sorry for not using my brain in my comment. I'm not so good at grammer either.
Let me rephrase the second sentence:


If it is true that two dollars are put back into the economy for every dollar spent on unemployment wouldn't that make it a good thing that people are unemployed?
Wouldn't that make it a good thing if business shift production to less costly countries and leave more people on unemployment here, thereby putting more money into the economy?