Let’s make a deal: taxes and unemployment insurance
We’ve gotten so unused to Congressional deals during the past couple of years (except among the Democrats themselves, to get votes from Blue Dogs) that the prospect of this one seems odd and novel.
But the Dems are poised to allow a temporary—perhaps two years—extension of the Bush (how that word must stick in their craws!) tax cuts in exchange for a Republican concession on extending unemployment benefits.
I’ve read opinions stating that a temporary extension of the tax cuts won’t do, because it won’t stabilize expectations enough. I think two years is a decent amount of time, and much better than nothing. As McConnell is quoted in the article as saying, President Obama would not sign a bill for a permanent extension anyway.
Two years of tax cuts might give us some data which can then be analyzed to see what effect they may have had on the economy and the deficit. Whatever that effect might be (or might be claimed to be), you can be sure it will be used during the campaign of 2012, which already is starting to sound not so far away:
Democrats say they would not mind the issue coming up during Mr. Obama’s re-election bid, because they see it as politically helpful to them in painting Republicans as defenders of the rich. The debate, of course, could cut the other way, with Republicans again portraying Democrats as seeking to raise taxes.
First reaction here is to go along with the deal, because the next congress will get to do or undo a tac cut extension as it sees fit ^anyway^.
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“tac” = tax
It seems to me that if this were a good issue for the Democrats to run on in 2012, they would have done so (successfully, anyway) in 2010.
In fact, I’m starting to get a sense that the American people are starting to tire of this knee-jerk class warfare rhetoric. Democrats seem to have the roles reversed where rich people are portrayed as “drains on the system” by being so evil as to make money, while poor people are the heroes that, er, keep the system going by providing someone to throw all the tax money at.
It’s the same infantile thinking that economics is a zero-sum game. The only time that’s true is when government is redistributing money. If you give money to someone who is unemployed or poor, even for good and justified reasons, no wealth is ever created. Wealth only gets created when money is invested and poor people are generally unable to do that.
What’s the deal? Maintain Federal taxes for TWO YEARS by extending the present rates, instead of letting them rise, as Congress in its infinite dealmaking wisdom decided in 2001.
And extend the period of subsidizing the unemployed beyond the present 99 weeks (aka Two years) FOR HOW LONG? Will the unemployment deal also sunset in two years?
In other words, let’s keep on doing what we been a-doing. There’s the firepower on Capitol Hill! Such bravery, such brilliant thinking, such creativity in the face of the storm.
Sheesh, maybe Baraq H. will veto something. And tag himself and the wretched Dems as tax-raisers. Please don’t throw the Repubs into that briar patch.
A two-year extension lets the Dems share in the glory, and simultaneously avoid further self-destruction.
Let’s remember that we are outside the Beltway, and think and act accordingly.
As a practical matter taking people off of unemployment benefits at Christmas would be a PR nightmare for the Republicans that the MSM and Dems would milk for all it’s worth. Giving in on that is a way of getting something for what would have to happen anyway.
My understanding is the extension of benefits is not beyond 99 weeks. Apparently it applies to tiers of benefits above the state supplied 26 weeks.
The issue that needs to be addressed is the effect of benefits extending unemployment levels. People don’t take low paying or unattractive jobs until their benefits are about to run out.
(Earlier comment was entered hurriedly.)
Without regard to the rightness of the unemployment benefits extension, to deny them to the unemployed at this juncture would be a major Christmas gift to the statist faction of our body politic. They get to portray G.O.P.ers as heartless and selfish and bla bla bla , and before you know it, it’s November whatever, 2012, and The Anointed One has been reelected.
That (and neo’s point about giving it two more years for analysis; and my judgment from before that “the next congress will get to do or undo a tax cut extension as it sees fit ^anyway^”) is why I think the deal makes sense for now.
My rarely humble opinion, anyway. Fire away!
I would like to see more emphasis on inheritance taxes. If we want the US to be more of a meritocracy we need to bring on the inheritance taxes. Instead inheritance taxes get a free pass from the ‘tax cuts for the rich’ arguments of Dems for a simple reason: the Dem donor base hates inheritance taxes as much as Repubs hate all taxes. But I think the vast middle would prefer high inheritance taxes vs high income taxes on successful people. Income drives jobs, inheritance drives trust funders. When one thinks of the American ideal relative to money, is it ‘new’ money or ‘old’ money that represents the fullfillment of that ideal? Tax the dead and tax those that received without earning from inheritance. This seems like low hanging fruit politically, but the Dems won’t touch this and the media is strangely absent on an issue that screams populism.
I wouldn’t be surprised if the Democrats deliberately timed the 99-week unemployment benefit to run out after the 2010 election.
If the Democrats had retained power, no problem. They’d just extend it again. If the Republicans won, they would face pressure to agree to an extension or else be demonized as Scrooges.
Heck, let’s just make it permanent. Lose your job at age 27 and the government sends you a check for the rest of your life. What’s not to like?
East Bay Jay: I don’t think estate taxes are as popular as you seem to think. In a quick look, I couldn’t find any recent polls on the question, so it’s hard to be sure. But although some people believe that when a person dies that’s a great time to take away the fruits of their life’s work, others beg to differ. One of the biggest arguments against it is that it’s a double tax, because all of this income was already subject to a tax during the person’s lifetime. Although you may see the estate tax as feeding on popular animosity against trust fund babies, other people see the estate tax as an unfair double taxation as well as a disincentive to earn money, and a restriction on the freedom to do with one’s money as one wishes.
East Bay Jay:
The thing about inheritance taxes is that they seem to disproportionately hit small businesses. Often the heirs are forced to sell the business in order to pay the taxes.
The super-rich are able to get around most inheritance taxes by setting up foundations and trusts. Maybe there could be some kind of reform in those areas, but I’m not a lawyer or accountant, so I don’t know.
Wealth is property, and as such should be passed on to one’s heirs. I say this coming from a lower middle class family/background -maybe- and having NO expectations of any inheritance except of the feline and canine variety.
Property rights are key to our society.
Taxes should not be designed for social engineering. But they are, and most of us simply have gotten used to it. It is part of the passivity forced on us by the Ruling Class.
Taxes should pay for (essential) government services, pure and simple. Let the social engineers and class warmongers use different devices.
Like we didn’t see this coming? And I am sure that none of us will be surprised when all Bush era tax cuts are extended for years and jobless benefits are not extended. Obama is a fucking Republican and the biggest fucking idiot in the world.
Mark,
Care to rethink your position in light of today’s news?
Do not underestimate Obama or the hard left agenda. 2010 was not a war, just one battle in the war.
This president has apparently made a decision.
For a while it looked like he was going to go down as the perennial activist and damn the consequences. With this announcement it looks like the decision is to instead, go for the win in 2012.
Start watching for signs that Hillary (or Dean or anyone else) will no longer hold out the option of putting up a challenge.
And now it becomes even more critical that the Republicans find a real candidate. The plot thickens.
Inheritance taxes hurt family farmers too.
mksmash: I’ve had similar thoughts. Wrote about it here.
It appears that Obama has become a supply side guy to save his presidency. The payroll tax cut, 100% business expensing, extension of capital gains and dividend income treatment, and extension of the tax cuts for the wealthy might just boost the economy for the 2012 election. Obama has taken his moves from the Republican playbook. That’s why his base is so pissed.