Plus and Minus

There are some +'s and -'s to the tax cut compromise working its way through Congress.  And there are a number of ways it can be improved.

Plus
Unemployment benefits extended for 13 months
Middle class tax cuts extended for 2 years
Decrease in the payroll tax (Social Security)
The above will help grow jobs since the people receiving them will spend the money and stimulate the economy.
Possible approval of START treaty by Senate
Possible passage of DADT

Minus
1/3 of the tax package goes to rich Americans and corporations - this will add $300 bilion dollars to the deficit without, if history is taken into account, any "trickle down" to create jobs.
The additional debt adds to the potential for a decrease in US bond ratings (Moody's)
It provides a validation of the disastrous conservative vision of the economy that led to the current mess in the first place
If the high end tax cuts are not allowed to expire in 2 years, they will lead to cuts in social services and entitlements such as Social Security and Medicare, further eroding the social safety net of the country and dragging us back to pre-(1930's) depression conditions.  That's really the point of these tax cuts, isn't it?  Or as the very conservative Grover Norquist said: "My goal is to cut government in half in twenty-five years, to get it down to the size where we can drown it in the bathtub." 

How it might be improved
Make the time period for the high end tax cuts expiration one year instead of two
As a minimum, set the estate tax rate back where it was in 2009: 45% on estates worth 3.5 million dollars or more.

The Senate passed the compromise package today but it still needs to get through the House.  Perhaps it can be improved there.  Or perhaps the version the House passed can be taken to committee and reconciled with the Senate bill.  Let's hope so.

Protect the Rich, Screw the Unemployed

Republicans and a few Democrats have prevented passage of an extension of unemployment benefits. The bill did not come to the floor for a vote today and 2,000,000 will lose their benefits in December. Merry Christmas.

The opponents of the extension are generally the same clamoring for the continuation of the Bush tax cuts for the rich. So let’s get this straight - a one year extension of unemployment benefits would cost $60 billion dollars of short term deficit. The Bush high-end tax cuts will cause a structural deficit of $700 billion over the next 10 years. Hmm - this somehow makes sense to a deficit hawks.

For every dollar in unemployment benefits there are two dollars pumped into the economy - more economic activity means more jobs. The unemployed will spend the money, not hoard it. One thing appears quite clear - the Bush high end tax cuts suck at job creation.

Some Congressman oppose the benefits because they claim it keeps people from looking for a job. I guess living high on the hog is easy when you get $290/week.

We have never cut off benefits when the unemployment rate was this high. The jobless rate is 9.6% - if we factor in the underemployed, the figure is closer to 17%.

How these people can sleep at night is beyond me.

Obama met with the leaders of the Party of No today and they made some progress on, you guessed it, compromising on the tax break extensions for the rich. While the President doesn’t pass legislation, he can use his bully pulpit to get the public behind what makes sense and he can twist arms in the halls of Congress to get the Democrats on board. They still have a majority in both houses.