Thursday, January 28, 2010

From TARP to SEED 

I'd as soon he just returned the money as was agreed when TARP was created:

On the Senate floor, Franken proposed using $5 billion from the Troubled Asset Relief Program to subsidize job creation in the private sector.

"The SEED Act will incentivize rapid job creation by offering small and medium-sized companies, and non-profit companies, a direct wage subsidy to hire new workers and expand their operations," Franken said.

The job creation subsidy would be available for 50 percent of wages, up to a $12 per hour subsidy. The employer eligibility period would last 12 months.

Franken also proposes re-allocating another $5 billion in TARP funds to provide states, local governments, and tribes with grants for green job creation.

It's not completely horrible, though. I did some reading on the research regarding wage subsidies, and at least one recent study seems to find some positive effects of it. Maybe they're not very large. It appears the best results come from Germany. What we don't know is whether the money could be better spent elsewhere, says Paul Walker. Nor do we know why the Congress seems to continue to think TARP repayments are a windfall.

One wonders -- if reducing the net cost of labor to business is a good idea, why is increasing the minimum wage a good idea?

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