Republicans and Democrats No Closer to Compromising on Jobs Plan
Danielle Kurtzleben

June 8, 2011

Stubborn Politicians, Stubborn Unemployment

The Department of Commerce left first-quarter GDP growth unrevised, at 1.8 percent. The Department of Labor announced that the number of new unemployment insurance claims went up by 10,000 after two straight weekly drops, and now stands at 424,000, the same level as in late January. And House Republicans who have long advocated for lower corporate taxes and less regulation unveiled a new job-creation program that calls for lower corporate taxes and less regulation -- an announcement that prompted a familiar volley of heated rhetoric between House Republicans and Democrats.

Growing the economy and adding jobs in advance of the 2012 election is a priority for both parties. But with a lack of ideas on which both parties can agree, one wonders how any remedial measures will eventually pass. [Read: Obama's secret weapon for 2012: the economy.]

A wide gulf separates the two parties' positions on job creation. The Republican plan, as announced by House Majority Leader Eric Cantor today, focuses on helping businesses be more competitive without increasing government spending. One major piece involves cutting corporate taxes from 35 to 25 percent, in order to bring the U.S. rate more in line with those in other developed countries, according to Republicans. Another key aspect of the GOP plan is to reduce government regulations, which the Small Business Administration says cost the U.S. economy an estimated $1.75 trillion annually.

In the other corner stands the Democrats' "Make it in America" plan, which House Minority Leader Nancy Pelosi announced earlier this month. This plan involves a package of bills that focus on transportation initiatives, the creation of a national infrastructure bank, and programs intended to boost U.S. manufacturing.

Both parties took the opportunity to take their blows at each other. "[F]or two years, Speaker Pelosi and the Democratic Majority did it their way ... The fact is that they did not focus on jobs," said Cantor, later adding, "We have a growth plan, they do not. We are focused on the economy and jobs -- and have been since day one -- and they are not." [Read: No reason to cheer drop in jobless claims.]

"The Republicans have been M.I.A. for months on jobs," countered Nadeam Elshami, spokesman for Pelosi. He added, "This is an attempt by Republicans to, one, try to take the spotlight off their vote to end Medicare, and, two, it's an attempt to show that they have something else to talk about besides Medicare."

Bridging the gap will be difficult, with Democrats and Republicans at a seemingly intractable stalemate. "Both parties are pretty dug-in ideologically about the job issue," says Steven Schier, professor of political science at Carleton College in Northfield, Minn. "The truth may well lie in between these ideological perspectives, but neither side is willing to acknowledge that publicly, because they're so committed to their previous positions."

But the standstill on jobs measures is not simply a result of political stubbornness.

There is also no sure-fire way to create jobs. Cutting corporate taxes may only be a minor boon to the economy, according to Joseph Rosenberg, research associate at the Tax Policy Center. "It should certainly help at the margins, but I don't think anybody should expect significant job creation just from lowering the corporate tax rate," he says. Likewise, creating manufacturing jobs may be a difficult proposition. As manufacturing grows more efficient and jobs once performed by humans can increasingly be automated, it is harder than it once was for the manufacturing sector to maintain jobs.

Ultimately, President Obama will likely be the person to drive the new job-creation agenda, says Schier: "If compromise is going to occur in this situation, it has to originate in the White House, because [Obama] is the only player who has the real flexibility to leave those entrenched positions and try to strike a deal." This may in fact be a cause for optimism -- Obama has long been a proponent of transportation and infrastructure projects, like those proposed by House Democrats, but he has also shown himself receptive to Republican ideas. In his State of the Union address this year, the president advocated corporate tax reform, and today at the conservative American Enterprise Institute, the president's Administrator of the Office of Information and Regulatory Affairs, Cass Sunstein, presented a list of deregulation proposals designed to save billions of dollars. [Check out a roundup of political cartoons on the economy.]

Whatever is done to increase GDP and create jobs, it needs to happen fast, says Republican strategist Jim Innocenzi. If politicians from either party continue to fight while the economy suffers, they risk alienating voters altogether: "If you don't have a job, and you stop looking for a job, and you see these people just yelling at each other, you just dismiss them both. People are just disgusted with the process."

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