What the Next Jobs Bill Will Look Like

House and Senate leaders are scrambling this week to glue together a stimulus bill to avert massive teacher layoffs, plug up holes in state spending and keep doctors from taking up to a 20% pay cut with Medicare patients. Today's House vote could determine the outcome of a final stimulus bill that could be worth more than $140 billion.

Here's a short guide to the action.

Many Democrats and Republicans agree on the broad outline of the job stimulus: extending unemployment insurance (UI) and COBRA health insurance through the end of the year, and renewing a handful of tax cuts, for small businesses, families, and college students. But Republicans are pushing to pay for the bill, which would require cutting spending somewhere else or raising revenue. Democrats are offering to offset for only a portion of the proposed jobs bill.

House liberals are also clamoring for two additional items: $23 billion to protect teacher jobs and $70 billion for states and localities to avert layoffs.

In the Senate stimulus sweepstakes, the mothership is Sen. Max Baucus' (grammatically funky) "American Jobs and Closing Loopholes Act of 2010." In addition to extending UI and COBRA, Baucus would extend additional tax cuts that would let Americans continue to deduct part of their college tuition, property tax, and state and local sales taxes. He would also extend tax cuts for teaching and installing energy-efficient windows. The total sum could be about $150 billion.

I hesitate to call this bill a "jobs bill," because most of the money will go to extending current payments rates for Medicare doctors through 2012 ($65 billion), assuming a greater share of states' Medicaid burden ($24 billion) and renewing up to 99 weeks of jobless benefits through November ($47 billion). Looking out for doctors, rescuing states from crushing Medicaid costs and sending checks to jobless dads unquestionably averts layoffs and juices demand, but the dollars-spent/jobs-created ratio is tough to suss out.

So is this bill any good? Extending UI is a cinch, and the states need help whether it comes in the form of Medicaid assistance, public school relief, or straight up cash. But as Howard Gleckman at TaxVox points out, there is a lot to hate in the Baucus grab bag.

It is, for instance, hard to see how continuing to allow generous tax depreciation for NASCAR racetracks will create many jobs. It is easier, however, to imagine how this will continue a windfall for the track owners. It is similarly hard to see how the national economy benefits from special tax-exempt bonds for investments in New York City's "liberty zone." Good for developers and contractors doing work in lower Manhattan, as well as investment bankers and bond lawyers. Not so good for developers trying to build projects just outside the specially-designated zone.

An election-year stimulus bill will look come out looking like a piñata with goodies for constituency groups where incumbents are running close. That's unfortunate, and maybe a good reason to let the president edit spending bills and pass them back to Congress for an expedited, no-amendment vote. But a few dumb tax credits shouldn't take the focus away from what we desperately need: immediate relief for out-of-money states and out-of-work families.