Job Creation What?

In Newsweek, Allan Sloan has a new column about the job cuts at Ford and the American Job Creation Act of 2004. He makes a tongue-in-cheek point that "Congress should thank its lucky stars that federal truth-in-labeling laws don't apply to names it accords to legislation."

Here's the thing: Ford cut 10,000 American jobs last year. This year, they could cut up to 30,000 more. That's the population equivalent of a small city. This all went down at the same time that, as Sloan reports, "on page 2 of one of its news releases yesterday, Ford said that "repatriation of foreign earnings pursuant to the American Jobs Creation Act of 2004 resulted in a permanent tax savings of about $250 million." "

In other words, Ford is a company that the Republican tax incentive package was aimed squarely at. It is still faltering. Ford's tax savings was the result of "repatriating" about $850 million in foreign earnings during a holiday during which the rate was reduced to 5.25% from the standard 35% rate. So even a massive tax savings wasn't able to salvage the landscape for the automaker. And it was only a one-time shock of cash. Some might wonder how much worse Ford would have been hurt without the extra $250 million, but the point is that if the American manufacturing sector is going to make a comeback, it's going to take more than gimmicks. How about looking at major health care reform?

So, if the "Jobs Creation Act" didn't, you know, create jobs, then what did it do? Good question. Here's Sloan again:

American Enterprise Institute fellow Phillip L. Swagel, formerly chief of staff of Bush's Council of Economic Advisers, told my Post colleague Jonathan Weisman last August that "you might as well have taken a helicopter over 90210 [a Beverly Hills Zip code] and pushed the money out the door." That's a memorable quote—and a dead-accurate observation.

It'll be interesting to watch the State of the Union speech next week and see if the President calls for more the same failed policies or charts a new course. I've got a hunch we might be disappointed.