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Several Democrats on the Senate Finance Committee voiced
skepticism Thursday of President-elect Obama’s proposal to give employers a
$3,000 tax credit for every new worker hired. “I don’t think it works,” said Sen. Kent Conrad (D-N.D.),
a member of the Finance panel and chairman of the Senate Budget Committee. “I
don’t think it will give much lift to the economy.
“If someone offers you several thousands of dollars in
tax credits when your product is not selling, are you going to hire someone?”
Conrad asked rhetorically.
Obama surprised his colleague earlier this week by
floating the idea of combining several hundred billion dollars' worth of tax
cuts with the economic stimulus.
Conrad said economists learned from the Great Depression
that marginal incentives are not effective “when the economy is falling away
from you.”
“People use it to pay debt or to save — that’s human
nature,” he said.
Sen. John Kerry (D-Mass.), another member of Finance,
voiced skepticism.
“I’m not that excited about it,” Kerry said. “The
creation of a tax credit for hiring isn’t going to make up for the lack of
goods being sold."
Sen. Ron Wyden (Ore.), another Democrat on the Finance
panel, which has primary jurisdiction over the stimulus package, said that
infrastructure spending is more important.
“In tough times, people don’t respond that well to
marginal changes,” Wyden said.
Democratic and Republican senators have expressed
dissatisfaction with the tax rebate Congress passed last year to stimulate the
economy. Economists have calculated that taxpayers devoted 12 percent of the
rebate to new spending and put the rest of it into savings accounts or toward
old debts.
Obama has sought to load his proposed stimulus plan with
tax breaks to attract Republican support. Early this week he pitched a proposal
to Congress that included $300 billion in tax cuts, making tax cuts about 40
percent of the entire package.
While Republicans have applauded the heavy emphasis on
tax reduction, Democrats are beginning to voice concern.
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