ABC News' Huma Khan reports: President Obama and Republicans unveiled competing jobs plans Thursday to rev up U.S. employment. Given the gridlock in Washington and lack of specifics, questions remain about whether these proposals will produce any substantive results, although there are several provisions on which the two parties have already found common ground.
The Republican plan focuses mainly on cutting taxes for corporations, passing trade agreements and spending cuts.
But what do the GOP proposals really mean, and can they be accomplished?
The biggest overhaul that Republicans are suggesting is cutting the corporate tax rate for multinationals as well as small businesses from 35 percent to 25 percent. Because the United States has one of the highest corporate tax rates in the industrialized world, U.S. companies are at a competitive disadvantage, Republicans argue.
The GOP plan would also waive taxes on overseas profits for U.S. companies that bring back the money to reinvest. Congress implemented a similar program in 2004, allowing companies to bring back that money to the United States at a low tax rate of 5.25 percent, but the measure was only temporary.
Democrats might have little appetite for tax breaks for big businesses but the idea is gaining traction among economists.
“There’s no question that the U.S. corporate tax system as a whole is an outlier,” said Edward Alden, a fellow at the Council on Foreign Relations and former Washington bureau chief for the Financial Times. “It really encourages companies to park their overseas money offshore, and it’s punitively high.”
Another proposal being touted by businesses is reforming the visa system for high-skilled workers from abroad. The number of international college graduates that return to their home countries has increased exponentially in recent years because of the onerous visa process. That, some experts say, lowers U.S. competitiveness and boosts the economic advantage for China and India, where many of these graduates go.
Though the Republicans didn’t offer specifics, “possible solutions include keeping the most accomplished graduates in math, science and other critical fields here in America as well as making it easier for start-up entrepreneurs to obtain visas,” the report states.
This specific proposal comes as a surprise, given Republicans are hesitant to touch the broader issue of immigration altogether. But even though it might find support among Democrats, the issue is likely to get bogged down in the bigger immigration debate on which the two parties stand wide apart.
“The White House favors this as a policy but remains determined to move on immigration reform only on comprehensive basis,” Alden said. “I don’t expect there will be a favorable response to this.”
One element in the Republican plan that could gain bipartisan support are pending free trade agreements with Colombia, Panama and South Korea.
The president has already given his blessing to such a move, which, his administration estimates, would create 250,000 jobs and boost U.S. exports by billions of dollars.
But like the North American Free Trade Agreement (NAFTA), it’s likely to be opposed by U.S. businesses, which argue that such agreements take away jobs from the United States and to countries where manufacturing and labor costs are cheaper.
Another area where Republicans might be able to find agreement from the other side of the political aisle is the issue of patents. The Republican plan proposes modernizing and streamlining the system to prevent frivolous lawsuits and to encourage innovation. The House Judiciary Committee already approved, on a bipartisan basis, patent legislation that could find some legs in the House and Senate.
The White House’s plan focuses on cost cutting in the federal government and eliminating regulations that hamper job creation. Though both plans present some lofty goals, experts are wary that either package will boost job growth in the near future.
With money from the Recovery Act slowly fading away, job growth is expected to lag in the upcoming years unless the private sector can pick up that slack.
And the proposals that both Republicans and Democrats have put forth are “not giant ticket items” that will have immediate impact, experts argue.
“It’s hard to create jobs in the short term particularly because … many of these are sort of supply-side measures,” said Donald Marron, director of the Tax Policy Center. “There are certainly plausible things you can do on that front. … There are many dumb regulations that need fixing but doing those things are typically not the sort of things that will create a new jobs two months from now. Economic benefits take time to accrue.”