WASHINGTON, Feb. 9, 2010 (Xinhua News Agency) -- The U.S. Senate is hammering out a bill to help put Americans back to work at a time when unemployment has hit record highs.
The bill is expected to cost around 80 billion U.S. dollars and may be voted on next week, following the Feb. 15-19 President's Day recess.
But while Democrats hope the bill will boost employment, critics panned it as dud, saying it would do nothing to jolt the economy back to life.
TAX CREDIT
Among critics' qualms is the bill's centerpiece -- a tax credit for small businesses that hire new employees.
Opponents said it could spur businesses to lay off workers and hire new ones to take advantage of the tax benefits.
The idea has been tried in the past -- it didn't work then and won't work now, they say.
Anne Kim, director of the economics program at Third Way, a liberal think tank, says that's a cynical view.
"I'm sure that if this passes, there will be safeguards to prevent that kind of gaming from taking place," she said.
A bigger concern, she said, was whether the tax credit would be enough to spur hiring.
Timing is also critical -- if the credit comes before the recovery kicks in, there may not be enough labor demand to keep those workers employed.
While U.S. unemployment figures declined slightly in January -- from 10 percent in December to 9.7 percent -- millions of Americans are still out of work.
And economists said the "underemployment rate" -- a measure of part- time workers who would prefer full time work but can't find it -- painted a more accurate picture, at around 17 percent.
Incentives for states to increase construction projects also make up a prominent portion of the bill.
J.D. Foster, senior fellow at conservative think tank Heritage Foundation, said the Senate can't determine whether recipients of the tax credits would have hired new workers regardless of a tax break.
"It's all political window dressing," he said, contending that Democrats were under pressure to take action in the face of the upcoming mid-term elections.
Kim of Third Way said Congress's shift toward helping the private sector was welcome. "That's a healthy shift and the basis for long-term recovery," she said.
BIG OR SMALL
Still, it was hard to know exactly how large the credit needs to be, she said. If it was too big, it encouraged "gaming" -- companies trying to play the system -- and if it was too small it would fail to spur hiring.
On the other hand, even a small cut could prompt businesses thinking about hiring to take a leap of faith and begin adding to their staff.
