Is Senator Evan Bayh Going to Challenge Obama in 2012 Democratic Primary?

February 16, 2010

Is retiring Democrat Senator Evan Bayh planning to challenge President Obama in the Democratic primaries in 2012? As unlikely as this may have seemed a few days ago consider the following three stories:

According to a CNN poll, 52 percent of Americans said President Barack Obama doesn’t deserve reelection in 2012.

And here is Senator Bayh’s judgment on Congress’ and Obama’s efforts to create jobs:

“If I can create one job in the private sector by helping to grow a business that will be one more than Congress has created in the last six months.”

Finally, CNN compares Obama’s new jobs bill to one by a less than successful predecessor:

obama disco Is Senator Evan Bayh Going to Challenge Obama in 2012 Democratic Primary?

The ghost of Jimmy Carter’s one-term presidency is hovering over President Obama as the Democrats try to pass a jobs bill in time for this year’s elections. So why is the centerpiece of the measure — a tax break for companies that make new hires — a play straight from Carter’s economic policy circa 1977?

Critics of Carter’s plan — and Congress’ now — say that the problem with any jobs credit is the potential for waste. It’s estimated that of the companies that claimed the tax credit under Carter’s plan, two-thirds would have hired those employees regardless of the tax break.

“It’s a windfall for companies that want to expand anyway,” says Rea Hederman, a senior policy analyst at the Heritage Foundation. Should the bill pass, Hederman says the big beneficiaries of the tax credit this time around would be companies in the big-growth areas of health care and education.

Another problem with the 1977-78 effort is that many companies, especially small businesses, didn’t even know about the tax credit. A survey by the National Federation of Independent Business found that only 43% of their members knew of the law in January 1978.

Meanwhile bigger companies were, and still are, better-equipped to take advantage of the tax breaks because their armies of accountants can keep up with the complex changes. (Never mind that the law behind the 1970s tax credit was called the Tax Reduction and Simplification Act.)

Unfortunately everyone agrees the latest version of the jobs bill on the Hill isn’t going to do much. Bartik estimates that with its $13 billion price tag, the law would create 350,000 jobs at best — a drop in the bucket compared with the over eight million jobs lost since the end of 2007.

Regardless of its size, the bill also has some serious design flaws. The proposal last week from Max Baucus (D-Montana) and Chuck Grassley (R-Iowa) includes a requirement that in order to qualify for the tax break, an employer has to hire someone who has been out of work for at least 60 days.

“It shouldn’t matter whether the person you’re hiring was unemployed for 60 days or 20 days. You just want companies to hire the the best people they can,” says Howard Gleckman, a senior research associate at the Urban Institute and editor of TaxVox, the center’s tax and budget policy blog. “The more constraints you put on companies the less likely they’re going to do it.”

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