News Column

House Passes First Obama Jobs Bill

Oct 27, 2011

Stephen Dinan


Acting with striking bipartisanship, the House on Thursday passed a small part of President Obama's jobs-stimulus package that would free government contractors from a 2006 regulation that all sides now say hurts small businesses.

The vote on the $11.2 billion bill -- orchestrated by House Republicans -- is so far the only point of agreement out of the half-trillion-dollar plan that Obama proposed last month but that has been unable to muster majorities even in the Democratic-controlled Senate.

The House bill, which still needs Senate approval, would head off a new rule that would force federal, state and local governments to withhold 3 percent of payments to government contractors -- something businesses said amounts to a destructive new tax.

"The president has traveled the country telling Americans, 'We can't wait' to pass job bills. Well, we aren't waiting. We continue to pass job bills," said House Majority Leader Eric Cantor, Virginia Republican, just before the 405-16 House vote. All 16 opponents were Democrats.

But the overwhelming margin of support could do little to hide the simmering tensions over the rest of the president's jobs package.

"Let's not pretend this is a job-creation bill," said Rep. Sander M. Levin, Michigan Democrat, who said the change was overdue but didn't get at fundamental economic problems. "Let's get busy here on bills that will, indeed, help to promote jobs in the private sector."

Obama's broad jobs plan -- new infrastructure spending, federal money to hire state and local public employees, and an expansion of the payroll tax cut, all paid for by higher taxes -- has failed to gain steam. So both Republicans and Democrats are trying to pick the pieces they like.

The problem is how to pay for them.

Under budget rules, the withholding repeal is deemed to cost $11.2 billion over the next decade. To make up for the budget costs, House Republicans offered a separate bill to change the way last year's new health-care law decides who is eligible for Medicaid or health exchange subsidies. The shift is expected to save $13 billion.

The White House said this week it supported the eligibility change, but House Democrats were less enthusiastic, and that bill only passed by a 262-157 vote. That opposition could signal problems when the legislation reaches the Senate.

Rep. Joseph Crowley, a New York Democrat and staunch defender of last year's health-care law, said the change would keep some struggling families from getting access to health care.

"This is a slippery slope," Crowley said. "You take away opportunities for the middle class to afford health insurance under the ACA by whittling away at it. It's the middle class who are hurt here."

The health fight was a sideline to the main battle over the withholding, though Republicans consider the two to be linked, and the House Democrats' stand could make passage of the package tougher in the Senate.

Last week, Senate Democrats blocked an effort to end the withholding tax and pay for it by ordering the president to cut $30 billion in discretionary spending over the next decade. The White House and most Senate Democrats objected, saying discretionary spending already has been trimmed enough.

Lawmakers said the 3 percent withholding fight should serve as a caution to a Congress desperate to sweat future savings out of the budget.

The withholding passed a Republican-controlled Congress in 2006 and was signed by then-President George W. Bush. It was seen as a way to try to force tax cheats to pay their taxes.

But it soon became clear that the costs to the federal government to implement the withholding could nearly equal the savings expected from better tax payments, and businesses warned that in the current bad economy, profit margins are so slim that a 3 percent withholding could be the difference between being in the red or black.

The IRS already delayed the start date from 2011 to 2013, but both the Obama administration and House Republicans now say they want it repealed altogether.

"This is an idea that never should have been advanced in this form. It's been a long road to correct it," said Rep. Earl Blumenauer, D-Ore.

Source: (c) 2011 The Washington Times (Washington, DC)

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