Democrats' Economic Bill Unlikely to Affect Economy or Democrats

Job seekers wait in line to have their résumées reviewed, June 2, 2010, at the second annual Anaheim/Orange County Job Fair in Anaheim, Calif. Robyn Beck / AFP-Getty Images

With the recent underwhelming employment numbers, and softening economic growth in the first quarter, congressional Democrats are looking to save their hides this fall by doing the only thing they can: pass a bill. Unfortunately for them, the proposal, announced by Senate Finance Committee chairman Max Baucus (D-Mont.), looks like too little, too late.

The New York Times reports that the bill would "restore unemployment benefits for those whose aid is running out and provide states with $24 billion to help with health care costs." It would include other measures, such as the "doc fix" that prevents cuts in doctors' Medicare payments, that bring its total cost over 10 years to $100 billion, but most of it will be paid for by tax increases on investment managers and oil companies. The opportunistic, if justified, populist posturing is apparent.

But will it raise employment in time for the midterms? Not much. As we explained recently, the typical measures taken to stimulate the economy—tax cuts and spending infusions—take some time to tangibly affect employment figures. Now is too late to do much before November. The other problem for the Democrats is that they are afraid of their own shadow. They lost the political spin war over the $700 billion stimulus bill of 2009. The White House estimates that the bill saved or created at least 1.7 million jobs. But the public is unpersuaded, in part because of how hard it is to see or feel a job that was saved. The Pew Research Center found in April that 62 percent of Americans did not believe the stimulus bill helped the jobs situation, while only 33 percent thought it did. It's also hard for the Democrats to claim credit for the painful, growth-killing tax increases or spending cuts that would have been needed at the state level were it not for the stimulus, or were it not for Baucus's bill, even though they deserve it.

So here the Democrats are, running from the claim that they spend too freely and putting forth a small-bore measure that will alleviate some of the pain of weak job growth but will not dramatically effect the employment level in time to help them in the elections. It would be nice to think that the Democrats realize all this and are doing this just because they think it's the right thing to do on the policy merits, perception be damned. But no one that uncynical gets to write about politics for a living. Anyway, Baucus made it clear what his agenda is, saying, "We have to get more Americans back to work." Good luck, senator.