About two million unemployed people in the US will lose their unemployment benefits just in time for the holidays thanks to Congress’s inability to get anything done, and Scott Brown’s obstructionism in particular. Those unemployed people don’t deserve their $300 per week (average) checks to help feed their family and pay for continued job hunting efforts. It isn’t like those jobs exist.
Besides, people making more than $250,000 a year need to be kept away from the pain of paying a few percent more of their income in tax. They aren’t used to personal financial troubles. People without jobs are already used to such trouble so they know how to handle it. They’ve dealt with telling their children that they can’t get the nice toys for Christmas unless they skip dinner once or twice a week. If people making more than $250,000 a year can’t have a few more hundred dollar bills as pocket change, some of them, like Ben Stein, might throw a fit and get all distraught. They just can’t deal with life without their tax cuts. It could mean giving up a few thousand dollars a year. But people without jobs have been without their jobs for a while now, and that $300 per week check really isn’t much anyway.
We should thank the Republicans for saving us from spending money on unemployed people and increasing the deficit in favor of continuing tax breaks for the wealthy and increasing the deficit. It’s a great way to distract us from the lack of anything being done to create more jobs.
Tags: Congress, deficit, Grinch, jobs, Republicans, Scott Brown, tax, taxes, unemployment benefits
Jovian Outpost 
December 2, 2010 at 9:31 am |
Maintaining the current tax standards do not increase the deficit, increasing spending does. The fact you got that wrong leads me to not be surprised that you also ignore the fact that the Democrats hold a majority in both the House and Senate and could have passed unemployment extensions without any Republican votes.
But yes, lets blame the minority party for the majorities inability to govern. Why would we hold the Democrats responsible for anything.
I have a question for you. How long should people be allowed to draw unemployment benefits?
December 2, 2010 at 11:46 pm |
If Congress does not change the current tax law, tax rates will increase for 2011. Without additional spending, this will decrease the federal deficit. I don’t believe that I misrepresented that in the original post. Both parties have plans to avoid a tax increase for most taxpayers, and both will add to the deficit versus letting the rates rise as already scheduled. In fact, the deficit increase will be far greater than the increase caused by continuing to fund unemployment benefits.
In any case, getting the economy going is more important now than worrying about deficits. I do place blame on the Republicans for all this talk about deficits when we need to spend money to create demand to get the economy going. The unemployed who have lost benefits have immediate needs that are going unmet. The money they’ll get from unemployment benefits will be spent on those needs. It is a great way to stimulate the economy and keep people at least a short distance from poverty.
As the post was not exactly in-depth, I only mentioned blame for those I blame most for this all-around very distasteful episode in politics. The Democrats seem unable to set an agenda that lasts for long, seem unable to achieve their goals without redefining them (not that the Republicans don’t, but they haven’t done that as much lately), and when they do have some success, they can’t seem to put out a good message about it. They also don’t have a plan to fix any of those issues.
In short, I typically agree with the initial goals of Democrats, but I have no champion in Congress. I won’t until I have many millions to spend on political campaigns.
The answer to your question is that I think people should be able to draw unemployment benefits for at least as long as we obviously don’t have enough jobs to go around. I’m not sure what the exact criterion for that determination should be, but I’m not the guy making the polices. I keep reading that there are five people looking for a job for every job opening in the US, so not everyone can get a job no matter how good they would be at the job. The people who are drawing these benefits aren’t being picky about the jobs they chose to apply for. After all, the job doesn’t have to pay much to pay more than the benefit check.
December 3, 2010 at 9:22 am |
Ok, I agree with your analysis about the fact that the current system is scheduled to expire so the administration is spending the money they expect to get once they let tax rates go up. But one thing history has taught us is that the wealthy can afford really good accountants and they increase in revenue will not be any where near as high as the white house thinks it will be.
I like one of the statements you made, “we need to spend money to create demand to get the economy going. ” I agree that WE, the people, need to spend money and the best way to get the people to do this is to keep tax rates lower so that we have money to spend. If you let the “evil rich” people keep their money they will have money to spend or invest.
“The answer to your question is that I think people should be able to draw unemployment benefits for at least as long as we obviously don’t have enough jobs to go around.” We will never have enough jobs to go around, we will always have unemployed in this country, even at the industrial revolution we had unemployed. Unemployment is not meant to be a permanent source of social welfare, that is what welfare is for. Should not the long term recipients of unemployment benefits have to file for welfare eventually?
December 8, 2010 at 11:45 pm
Just because the wealthy can afford good accountants doesn’t mean we should give them whatever tax rate they want. I’d sure like to see them pay at least as large a ratio of their income as I pay. Making several orders of magnitude more income than most Americans shouldn’t entitle one to a tax rate lower than what most Americans pay. Just as the wealthy can afford good accountants, the wealthy can take care of themselves even if their taxes go up a little. If they really are worried about federal budget deficits, they should consider it their patriotic duty to pay those higher taxes and prevent the deficit from rising even more.
It is true that if people spend more money the economy will improve. Even giving tax breaks to the wealthy will help, just not very much. The CBO put together a nice report detailing several options, and reducing income taxes was the least effective of the bunch. Providing aid to the unemployed was listed as the most effective. The unemployed have needs they can’t meet without some income, so if they get that little bit of income, they’ll spend it quickly. That’ll help improve the economy quicker by raising demand as soon as the checks are cashed. Lower tax rates for 2010 will help the most starting in 2011, but they aren’t predicted to create as many jobs by 2015 as the unemployment benefits can create in a year.
The wealthy aren’t in the same dire predicament as the unemployed. They can hold onto the money longer and invest rather than spend (which helps, but not as much). That is what they’ve been doing with the tax break for the last decade, and it hasn’t done much to create jobs, or raise the average income. I’m not suggesting the wealthy are evil for using their money that way. I’m sure it makes economic sense for their personal finances; it just doesn’t help the rest of us much. They don’t have to take that into consideration in their decisions, but a proper government for the people must.
Such a government should also try to use taxpayers’ money effectively. Unemployment benefits are very effective because the money is quickly spent and put into the economy. It also has the nice benefit of mitigating the social problems of having 10% unemployment. When the economy is doing well, we have around 5-6% unemployment. I think we need to lower unemployment to near those rates (maybe 6.5%) before limiting the length of unemployment benefits. We need to make the status of unemployed something that is short-term for most people, and that does not describe the current situation.
December 9, 2010 at 9:43 am
Because of the progressive tax system, the “rich” do pay more in taxes than you do (or at least more than I do). I know they pay a larger percentage of their income than a majority of Americans.
“Unemployment benefits are very effective because the money is quickly spent and put into the economy.” I love this Democrat bumper sticker. In reality though, the money spent by those on unemployment goes out of our economy. Most of that money is spent on the lowest cost goods, made outside the US, and on basic “necessities” like food and fuel for their cars, both of which come from outside the US.
Unemployment benefits in America creates jobs in China, Taiwan and Mexico. If you want to create jobs in America, you allow people to keep their money and spend it on things like home expansions or business expansion, those create jobs right here in America.
December 15, 2010 at 1:29 am
The tax system is progressive if you ignore a few details or make a few assumptions about the taxpayers you are comparing. Sufficiently wealthy people, unlike me, can take advantage of the capital gains tax to reduce what they owe. Warren Buffett claims his federal rate was under 18% for 2006. I pay a higher rate.
I do think that the unemployment benefits would help more if there was more manufacturing happening in the US, but if we hadn’t lost as much manufacturing I think the economy would be in better shape now.
Still, the benefits will help. Some stuff does come from the US, like the orange juice I buy. Like most people, I work, live, and buy my groceries in the same country. The foreign goods I get there had to be delivered in this country, and then sold in this country, by people who are employed to make that commerce happen and who are citizens of this country. Then there are companies like Apple that contract out to foreign manufactures but still do a good bit of work in this country.
The contracting work goes both ways. For instance, there are a number of companies, both US and foreign, with major offices and facilities in Houston (so all have US employees) who work in one facet or another of oil production. Even though I don’t live in Houston, I do work for one of these companies, so it is possible that an infinitesimal fraction of your gas bill ends up in my paycheck, even if the gas came from Brazil. What I’ve been working on has been sold to customers in other countries, and my employer sells its various goods around the world. It is good to help bring down the trade deficit.
As for your last paragraph, a number of economists disagree, and so does the CBO. Should we start citing references now?