Political Animal


October 13, 2011 3:20 PM Two ideas that shouldn’t go together

By Steve Benen

Senate Republicans have already blocked the American Jobs Act, and in the coming weeks, they’re very likely to block the individual provisions with the jobs bill, one at a time. Is there anything related to lower unemployment that could possibly overcome a GOP filibuster?

Well, maybe. Sen. Chuck Schumer (D-N.Y.) is reportedly talking to Sen. Jeff Sessions (R-Ala.) about a compromise that would give both parties some of what they want. Dems would get the creation of a national infrastructure bank — originally a bipartisan bill, until President Obama embraced it — while Republicans would get a corporate tax holiday, allowing international corporations to repatriate their overseas profits at a much lower rate. Suzy Khimm reported this morning that some center-right members of the Democratic caucus — including Sens. Joe Manchin (D-W. Va.) and Joe Lieberman (I-Conn.) — are “already over the moon” about the idea of pairing the two together.

So, does this offer a hint of progress? It depends, I suppose, on how one looks at it.

First, it’s not much of a compromise when Republicans get a tax giveaway to corporations, and Democrats get an idea that Republicans helped create — GOP Sens. Kay Bailey Hutchison (Tex.) and Lindsey Graham (S.C.) were co-sponsors of the infrastructure bank proposal. Second, Republicans may kill such a deal anyway, since the House has been actively hostile towards the infrastructure idea.

But perhaps the most important angle to keep in mind is the fact that this deal combines a sensible idea with a bad one. The infrastructure bank, with its bipartisan co-sponsors and support from the White House, deserves to be considered on its own. The tax repatriation holiday, meanwhile, is just not a good policy. Policymakers tried this several years ago, and it was a flop.

Heritage Foundation Economists: Repatriated Profits “Did Not Increase Domestice Investment, Job Creation, Or Research And Development” When It WasTried In 2004. Discussing a 2004 initiative to use a so-called “tax holiday” to repatriate corporate profits, Heritage Foundation economists JD Foster and Curtis Dubay wrote: “The evidence clearly shows that these repatriated earnings did not increase domestic investment, job creation, or research and development.” [Heritage Foundation, 10/4/11]

CRS: Evidence Does Not Show That Corporate Repatriation Increased Employment. In a report analyzing the stimulative impact of tax cuts on repatriated corporate profits, the Congressional Research Service stated of the 2004 repatriation policy: “While empirical evidence is clear that this provision resulted in a significant increase in repatriated earnings, empirical evidence is unable to show a corresponding increase in domestic investment or employment.” [Congressional Research Service, 5/27/11]

NBER Economists: 2004 Corporate Repatriation “Did Not Lead To An Increase In Domestic Investment, Employment Or R&D.” In a June 2009 working paper for the National Bureau of Economic Research, economists Dhammika Dharmapala, C. Fritz Foley, and Kristin Forbes analyzed the impact of a tax holiday in 2004 and wrote: “Repatriations did not lead to an increase in domestic investment, employment or R&D — even for the firms that lobbied for the tax holiday stating these intentions and for firms that appeared to be financially constrained.” [National Bureau of Economic Research, accessed 10/12/11]

CBPP: Many Analysts Reported “No Evidence” 2004 Tax Holiday Increased Job Creation. Explaining that proponents for a tax holiday for corporate repatriation in 2004 also promised “a large number of new jobs” and a boost to economic growth, the Center on Budget and Policy Priorities noted: “These promises were not borne out.” [Center on Budget and Policy Priorities, 6/23/11]

Making matters slightly worse, the last time Republicans pushed through this tax holiday, many of the largest corporate beneficiaries actually “cut jobs,” rather than add them.

Now, Republicans don’t much seem to care about these results — they’re not really evidence-oriented in their decision making — and are pushing the tax holiday anyway. But as compromises go, it’s hard to swallow the idea of pairing a good idea with an awful one.

Steve Benen is a contributing writer to the Washington Monthly, joining the publication in August, 2008 as chief blogger for the Washington Monthly blog, Political Animal.


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  • T2 on October 13, 2011 3:40 PM:

    news in that John McCain has said if the Super Comm fails to reach agreement and mandatory cuts go in...we'll the Senate will just vote to eliminate the mandatory cuts.
    If this sounds like it makes the Super Com a massive joke, you are right.
    McCain/Palin - one wonders what life would be like now if they'd have won? Eatin' lots of salmon, for one thing.

  • RT on October 13, 2011 3:46 PM:

    "But perhaps the most important angle to keep in mind is the fact that this deal combines a sensible idea with a bad one."

    Good point. I thought the object of this exercise was to make the GOP openly reject all the good ideas; first together in one bill, then separately.

    Is it possible to attach conditions to the repatriation bill to require that the cash be used productively? That could turn a bad idea into a decent one... for the GOP to reject.

    [Captcha = Chrvic minx!]

  • Danp on October 13, 2011 3:47 PM:

    Eatin' lots of salmon, for one thing.

    ...from a catfood can, perhaps.

  • June on October 13, 2011 3:49 PM:

    If this is a trial balloon to gauge public reaction to this idea, then I say pop the balloon. Seriously, in the court of public opinion, things are to the point where the last thing the thinking public wants to hear is that the Democratic Party is set to go through another endless round of "compromise" with bad-faith Republicans.

  • kindness on October 13, 2011 3:50 PM:

    Schumer may be Wall Street's Senator but he must realize he's screwing Democrats continually trying his 'Repatriation Holiday'. Seriously....has he seen OWS at all?

  • r on October 13, 2011 3:50 PM:

    That it won't help job creation, but make the rich richer, is the point, not a bug!

  • Donna Mladjan on October 13, 2011 3:55 PM:

    I haven't seen any articles that mention this tidbit about Cain's past. If the Tea Party hates the Fed, why isn't this fact from WikiPedia publicized?

    "Cain became a member of the board of directors of the Federal Reserve Bank of Kansas City in 1992 and served as its chairman from January 1995 to August 1996, when he resigned to become active in national politics.[21]"

  • martin on October 13, 2011 4:00 PM:

    So my horrible junior Senator is now Lucy and Schumer is Charlie Brown?

    Don't these guys ever learn?

  • jeri on October 13, 2011 4:00 PM:

    With corporate America sitting on hordes of cash already, a repatriation bill is an even worse idea than when it was tried in 2004. But since it would be used for further enrichment of the upper 0.1% (the major political donor class), it is probably irresistible. It's been hanging around just waiting for a suitable excuse, and this so-called compromise is probably it. We can only hope House Republicans will remain obstructionists.

    [Captcha: signvou naivete -- indeed!]

  • Eric on October 13, 2011 4:10 PM:

    The Infrastructure Bank is not such a hot idea either. The idea appears to be that the public can fund necessary infrastructure so long as some favored rentier ends up owning it. If one looks solely at the term of office of current officials, the costs may be lower. However, the long term cost of these sort of financing schemes is dramatically higher that just doing a public bond financing.

  • bubba on October 13, 2011 4:11 PM:

    I don't know. I think under the right terms they could work well together.

    Allow repatriation at a reduced rate of 20%, with the option to further reduce the rate to 10% for any portion of the repatriated funds that are immediately invested into the national infrastructure bank for no less than 10 years. Pay interest on the infrastructure bank deposits at the treasury bond rate plus a half percent extra interest. If funds are withdrawn early then there is a penalty tax of 15+ percent.

  • bdop4 on October 13, 2011 5:31 PM:

    Let's be clear: the "corporate tax holiday" is institutionalized theft. Corporations are already sitting on a mountain of cash, and adding to that mountain will not get them to hire one more person. The "incentive" of "expanding payroll" to qualify for the 5.25% rate (as opposed to 35%) is big enough to fly a 747 through it.

    Estimates I've read put the tax loss at ~78 billion (low IMO). How many jobs could you create by using that money to hire teachers/cops/firemen or repairing infrastructure?

    There is absolutely no upside for the American people with this bill, and Democrats' complicity in enacting this steaming pile of shit is the kind of bipartisan corruption that created the Occupy movement.

    Call your representative and tell them that a vote for the "corporate tax holiday" will get them thrown out of office.

  • montag on October 13, 2011 6:39 PM:

    Those Dems who support the Tax Giveaway are already bought and paid for so they can't be stopped. As long as there is a quid pro quo, maybe Chucky should do what the Republican/Teabaggers do. Every time they agree to something add something more to the pile, say a hundred judicial appointments, approval of Rob Coudray, maybe close some tax loopholes. Sure the R/T's will come back and do the same and we can have a filibuster by addition.

  • Holly W on October 13, 2011 9:46 PM:

    Schumer has openly called out the GOP on economic sabotage this year and has now been taking shots at the Tea Party economy. He knows how to do a full court press and I would think he would know to let the Republicans absorb the political hit of blocking the popular infrastructure bank (and the political hit of blocking their own idea) and to frame any idea of pairing it as more hostage taking. There is consensus infrastructure spending will create jobs and Republicans are holding more American jobs hostage in order to extract a prize for multinational corporations with a history of outsourcing.

  • Michael on October 13, 2011 10:00 PM:

    I have faith in Obama's campaigning but republicans feel confident they will have some attack which will blame Obama for what they caused and that they can get the economy blamed on Obama. Always keep a flag up for republican dirtyhandedness and repeat of lies.

  • Ken Houghton on October 13, 2011 10:09 PM:

    What idiot convinced all the "liberal" pundits that an Infrastructure Bank is a good idea. C'mon, just because Abject-Failure-as-Obama-Policy-Advisor Jared Bernstein talks it up doesn't make it anything more than a way to pillage the American taxpayer by--as you used to be smart and alert enough to recognize--privatizing the profit and socializing the risks.

    It's two bad ideas that suck eggs together. What do you expect from the Administration that thinks subsidizing North Korea slave labor camps is a "jobs bill"?

  • square1 on October 13, 2011 11:30 PM:

    Ha! I predicted it! Fuck jobs, it's tax cuts and corporate welfare, baby!

    You know, it's like Obama wants to lose. The infrastructure bank is a crap crony capitalist idea. (btw, I challenge Benen to write a coherent post explaining how the infrastructure bank has one single advantage over the traditional way that infrastructure spending is financed.) If Schumer or the douche bags in the White House think they can sell this as a compromise they are in for a rude awakening.