Okey dokey. Let's see how this turned out.
The
original Jobs Act proposed by Obama in September of 2011 stalled and died in October 2011. So Obama's White House broke up elements of the Jobs Act and tried to pass it in pieces.
There was the Teachers and First Responders Back to Work Act of 2011: this did not pass.
There was the Rebuild America Jobs Act, which did not pass.
The next portion, HR 674, did pass. That was a repeal of the automatic 3% withholding rule for payments made to government contractors. Why was that rule there?
Bloomberg:
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Congress passed the withholding requirement in 2006 to reduce tax evasion among government contractors.
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It isn't clear whether that 2006 rule was effective or not, but certainly, as Bloomberg points out, government contractors backed the heck out of this repeal bill. It might not have passed by itself, though, so the Senate Democrats tacked on a one-year continuation of the Work Opportunity Tax Credit for businesses who hire returned military veterans.
By the way, the estimated cost of repealing the 3% rule? Again, via
Bloomberg:
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Repealing the withholding measure would deprive the Treasury of $11 billion in revenue over 10 years, according to the congressional Joint Committee on Taxation. Lawmakers agreed to offset the forgone revenue by changing a provision of the 2010 health-care law.
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So here's the deal: reducing taxation on government contractors, and reducing tax revenue. Notice that the way this is going to be paid for:
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The offset would include the nontaxable portion of Social Security benefits in the definition of income used to calculate eligibility for government health-care programs. It would move some people from Medicaid into subsidized coverage in new health-insurance exchanges and would push others out of subsidized coverage.
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So the solution was to offer
less Medicare and
less subsidized coverage. So that government contractors could pay less taxes. Brilliant! Thanks, Congress and Obama!
So what's left is the last portion. the
JOBS (Jumpstart Our Business Startup) Act. This was just signed into law by Obama, after passing through Congress.
Hey, remember when we figured out that part of the problems that helped create the the Savings and Loan Scandal, the Dot-Com bubble and the Housing Bubble centered around deregulation? Well, forget all that. Because you know what the JOBS Act is? It is a big old deregulation give-away. Matt Taibbi breaks it down here:
Why Obama's JOBS Act Couldn't Suck Worse
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The "Jumpstart Our Business Startups Act" (in addition to everything else, the Act has an annoying, redundant title) will very nearly legalize fraud in the stock market.
In fact, one could say this law is not just a sweeping piece of deregulation that will have an increase in securities fraud as an accidental, ancillary consequence. No, this law actually appears to have been specifically written to encourage fraud in the stock markets.
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Taibbi breaks down all the various odious proposals that basically give Wall Street the green light to lie their asses off with no penalties. The cherry on the cake is that many people wrote Taibbi to complain and say that it isn't really Obama's doing, that this is all the fault of those darn Republicans. So then Taibbi wrote another long piece detailing exactly how the bill came into being and was passed, and how no, actually, Obama's White House had plenty of input and was centrally involved in this deregulation. He also pointed out the difference between simplifying rules to help start-ups and encouraging liars to lie their asses off for profit, since there are no legal consequences:
Yes, Virginia, this is Obama's JOBS Act
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No one is arguing that America's regulatory framework isn’t convoluted and imperfect, or that raising money for small companies hasn’t been a severe pain in the ass for quite some time. Undoubtedly this new law will make it easier for new firms to attract startup capital and go public, both good things.
But this bill accomplishes those things at the cost of slashing investor protections to a degree that isn’t just unnecessary, but stone-cold crazy. It includes ideas that just ten or fifteen years ago were conclusively proven to result in wide-scale fraud.
For instance, if this bill is supposedly about increasing access to capital for small businesses, why do we also need to repeal the conflict-of-interest ban on bank analysts talking up startup firms in an attempt to gain their investment banking business? Wasn’t it just ten minutes ago that Eliot Spitzer had to drag the entire financial services industry into court for pumping up worthless stocks in order to get their business?
People have apparently forgotten just how crooked the IPO market was during the tech boom. Banks and underwriters were openly, nakedly, offering to sell their research in exchange for investment banking business. Piper Jaffray, for instance, made a pitch to be the investment banker for a medical startup called TheraSense Inc. by including in its pitch materials mock copies of mock research reports – reports that included a "strong buy" recommendation. The "mock" report contained drooling descriptions of the hypothetical sales of TheraSense, calling the company’s fictional sales "nothing short of breathtaking."
Piper Jaffray won TheraSense’s business, pocketed $3,785,512 in investment banking fees, and promptly made good on its promise by issuing a "strong buy" recommendation on the stock.
Merrill Lynch, Bear Stearns, Chase, Lehman, Morgan Stanley: they all did essentially the same stuff. Many of them tied the compensation of their analysts directly to their ability to attract investment banking business, i.e. how much they were willing to prostitute themselves for fees.
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Here's some of the fingerprints on this JOBS Act:
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The Republicans certainly contributed to the JOBS Act, and sponsored the original House bill, and dreamed up some of the final version’s more revolting provisions. But the meat of the bill grew out of three different Obama administration working groups.
The first place to look is in Tim Geithner’s Treasury Department. About a year ago, in March of 2011, the Treasury Department held a conference to discuss how to provide small companies with access to capital. At that conference Treasury decided to convene a working group called the "IPO Task Force."
The group ended up being chaired by Kate Mitchell, the former head of the National Venture Capital Association, a trade group which, obviously, represents venture capitalists.
...>snip<...
Despite the fact that Obama had showered Wall Street with trillions in bailouts (and his Fed appointee Ben Bernanke had given out $16 trillion more in secret emergency lending), the president in the first years of his first term took heat for being too tough on the financial services sector, which particularly objected to the presence of grumpy, down-on-fraud ex-Fed chief Paul Volcker on the president’s Economic Recovery Advisory Board.
So Obama basically sacked Volcker to appease Wall Street and renamed the Economic Recovery Advisory Board, calling it the "President’s Council on Jobs and Competitiveness." He also made a key decision at that time in putting Gene Sperling, a former adviser to both Larry Summers and Timothy Geithner, in charge of his National Economic Council.
Sperling was a key figure in one of the great deregulatory efforts in recent American history, serving as Summers’s key negotiator during the repeal of the Glass-Steagall Act in 1999. Incidentally, just before he took the key Obama post, Sperling earned $887,727 from Goldman Sachs in 2008 for his "advice." His deregulatory fervor would become another factor in the passage of the JOBS Act.
After changing the name of the Economic Recovery Committee to the Jobs Council, Obama made a radical switch of the group’s leadership. No more would it be run by a tough-on-crime curmudgeon like Volcker, who complained about the "moral hazard" of massive public assistance to banks coupled with weakened regulation and enforcement; the new council would have a different flavor.
Instead, it would be run by General Electric CEO Jeffery Immelt, a man who basically personified Volcker’s "moral hazard" concerns. Immelt collected tens of millions in salaries and bonuses for running a firm that a) came crying to the state for over a hundred billion dollars in bailouts, guarantees and surreptitious Fed support in the years after the crash, and b) was under investigation at the time of Immelt’s appointment for a variety of crimes.
Anyway, some time after the crash, as Obama’s own SEC was working out how much to fine Immelt’s own company for (among other things) accounting fraud and rigging municipal bond bids, Obama decided to put Immelt in charge of a task force that ultimately would recommend a slackening of regulatory enforcement as a means to create jobs.
Immelt’s Jobs Council would eventually make a series of recommendations to the president, including among other things a revamping (read: a weakening) of environmental laws, a slackening of immigration rules to allow high-skill immigrants to stay in the U.S., a reduction in the onerous corporate tax burden (Immelt’s GE, by the way, not only paid no federal taxes between 2004 and 2009, it received a tax credit of over $4 billion, despite earning $26 billion in American profits), and a new approach to startups that would allow new companies more access to capital.
...>snip<...
The third participant in the creation of the JOBS Act came from inside the SEC. The Commission had a task force called the "Advisory Committee on Small And Emerging Companies," which played its own role in forming the JOBS Act.
A curious feature of the JOBS Act is that many portions of this law could have been instituted unilaterally by the SEC, which has had this discretion but for years has chosen not to exercise it, because even the SEC knows many of these ideas suck. In fact, some of this new "Small and Emerging Companies" committee’s ideas were actually policies that the SEC had already tried out and discarded, because they didn’t work.
For instance, the committee in early January proposed rolling back the ban on general advertising of new public offerings. The SEC already lifted the ban on this sort of advertising once before, in 1992.
But seven years later, after numerous cases of unsophisticated investors being duped by misleading advertising, the SEC, at the height of the tech boom, reversed its own policy, admitting that the change had led to a surge in so-called “microcap fraud”:
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The whole thing is worth reading.
So congratulations, America. The Jobs Act of 2011 that was supposed to help the economy, is instead mostly a give-away to government contractors and a license to steal to Wall Street, because, you know, onerous regulation. With the blessings of both parties and the Obama White House.