Jeffrey Toobin's thorough profile of Sen. Chuck Schumer in a recent issue of the New Yorker provides valuable insights into the micro politics that the Democrats practice these days.
Schumer worked with Republican Sen. Orrin Hatch (R-Utah) to advance a bill that would provide $15 billion to exempt private-sector employers from paying the 6.2 percent Social Security payroll tax in 2010 for any new hires who had been unemployed for at least 60 days. However, the bill -- known as the Hiring Incentives to Restore Employment (HIRE) Act or the Schumer-Hatch Bill -- is so small in a $14 rillion economy that it hardly can be expected to do any good.
Moreover, Toobin quotes Dean Baker, co-director of the Center for Economic and Policy Research, who correctly observes, "the Schumer-Hatch tax credit will probably create almost no jobs." Firms hire so many new workers every month -- upwards of 4 million -- that employers are getting a tax credit for employees they would have hired anyway. The tax credit is too small -- amounting to $1,000 per new hire -- to incentivize additional hiring. "It truly is money for nothing," says Baker.
Schumer argues that the bill will have semi-magical, psychological effects. "When I got to Washington, I used to think, Oh, you know, politics, it's a lot of hype and fluff. But you go to the markets and they are immutable and you can't fool them. And, the longer I'm around, I think it's the market's psychology that matters dramatically. So if the local businessman thinks, hey, they've got a good plan here, and over the next two or three years the economy is going to get going, he is likely to spend more -- all because of the little Schumer-Hatch proposal."
And Schumer hopes that the Democrats will be rewarded for such maneuvers. In his words, "The Republicans vote no, we win -- and, if the Republicans vote yes, we win." All this shows how unreal politicians have become and why such large segments of the American electorate holds that Washington is not working for them.
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