To amend the Internal Revenue Code of 1986 to provide tax incentives to encourage the conversion of the defense industry to commercial endeavors, and for other purposes.

Allows the use of the targeted jobs credit for hiring a long-term unemployed defense or shipbuilding industry worker. Describes such worker as an individual certified by the designated local agency as having been unemployed in such industry who: (1) has been receiving unemployment compensation at all times during the six-month period prior to the hiring date; or (2) has been receiving unemployment compensation but has exhausted all rights to such compensation and has remained unemployed beginning on the date such rights were exhausted and ending on the date before the hiring date. Requires the individual to be employed by the employer for at least 120 days and the employer to certify that: (1) the individual was hired after the employer took reasonable actions to specifically recruit such workers; and (2) the individual was not hired to replace an employee who was involuntarily separated from employment by the employer without cause. Makes such credit permanent law. Allows an investment tax credit for nondefense production and manufacturing equipment of ten percent of the aggregate bases of such properties placed in service during the taxable year.