Obama and the GOP reaching a deal on tax cuts. Awful. Update: Correction for Unemployment Insurance
With the deadline approaching rapidly our esteemed representatives must act quickly to decide the fate of millions of Americans that are one month away from a tax increase. Yes, it is quite fair to call it a tax increase despite the levels returning to pre-Bush levels because Americans will be paying more in taxes come 2011.
As ABC reports the details of the compromise are as follows:
Oh where do I begin, where oh where? First of all, the extension is for two years! That means we are going to be right back discussing and swooning over this issue in two years. This is a deal designed to be punted down the road because apparently making difficult decisions is not something this administration is capable of doing. Instead of giving the confidence and planting the seed of positive human action, this deal accomplishes nothing.
Secondly, calling unemployment insurance after several months is kind of crazy, calling it insurance after 99 weeks is absurd and still calling it insurance 150 weeks is just clinically deranged. This is welfare, so let's call it that. It should be dramatically reduced in terms of dollar amount because after 99 weeks we are dealing with people that may be out of work for the long haul and within 13 months we will once again be debating what to do with "people rolling off the unemployment insurance".
The third point and really should be the first point as this is just a gimmick. Despite the regressive nature of FICA this deal accomplishes nothing. This is just as silly as extending the income tax cuts for two years because there is absolutely no behavior change with this cut. This is not any different than some Americans getting federal checks up to a certain income, just like Bush did in the first stimulus of the 2008 Recession. They DO NOT WORK as an economic boost because the backbone of a strong economy (savings, investments) do not get impacted within a one or two year "stimulus". Worse yet this will dent the social security fund even further thereby hiding what would otherwise be a deficit. So let's instead pile on some IOUs into the bankrupt SS fund and call it a day - brilliant.
Ultimately and most fundamentally is that all of these cuts and extensions are not paid for. None of them. There is no mention of spending cuts anywhere. What is so difficult in finding 40-70 Billion in spending cuts to match this spending out of a 3.4 Trillion budget!? Tell me please why this is so hard to accomplish. Frankly it is something that should and could be done overnight, but instead we see another kick-the-can down the road approach.
There is no leadership in Washington, no ideas, no innovation. We are just doubling and tripling down on failed policies over and over. So sad.
Update: It would appear that I misread the second provision of the tax proposal, the extension of the unemployment benefits. The 13 months does not turn 99 weeks into 99 weeks + 13 months. No, it simply extends the funding for the 99 week program for one more year. This actually explains why they used the metric of '13 months' as opposed to 56 weeks. Ace of Spades explains:
This is much better than turning 99 weeks into 160+ weeks and will make the program far less expensive.
As ABC reports the details of the compromise are as follows:
- extending lower Bush tax rates for EVERYONE for 2 more yrs;
- extending 99 weeks’ worth of unemployment insurance benefits for an additional 13 months for approximately nine million Americans – without being offset by spending cuts;
- one year payroll tax reduction for employees -- from 12.4% to 10.4% ($120 billion worth). This is instead of the “Making Work Pay” tax credit in the stimulus bill – an administration officials says this will “will have more than twice the economic impact next year as a one-year extension of Making Work Pay.” It also will be more noticed than that tax credit, which many Americans didn’t realize they had received;
- allowing businesses to deduct 100% of certain investments in the first year (President Obama pitched this in September).
Oh where do I begin, where oh where? First of all, the extension is for two years! That means we are going to be right back discussing and swooning over this issue in two years. This is a deal designed to be punted down the road because apparently making difficult decisions is not something this administration is capable of doing. Instead of giving the confidence and planting the seed of positive human action, this deal accomplishes nothing.
Secondly, calling unemployment insurance after several months is kind of crazy, calling it insurance after 99 weeks is absurd and still calling it insurance 150 weeks is just clinically deranged. This is welfare, so let's call it that. It should be dramatically reduced in terms of dollar amount because after 99 weeks we are dealing with people that may be out of work for the long haul and within 13 months we will once again be debating what to do with "people rolling off the unemployment insurance".
The third point and really should be the first point as this is just a gimmick. Despite the regressive nature of FICA this deal accomplishes nothing. This is just as silly as extending the income tax cuts for two years because there is absolutely no behavior change with this cut. This is not any different than some Americans getting federal checks up to a certain income, just like Bush did in the first stimulus of the 2008 Recession. They DO NOT WORK as an economic boost because the backbone of a strong economy (savings, investments) do not get impacted within a one or two year "stimulus". Worse yet this will dent the social security fund even further thereby hiding what would otherwise be a deficit. So let's instead pile on some IOUs into the bankrupt SS fund and call it a day - brilliant.
Ultimately and most fundamentally is that all of these cuts and extensions are not paid for. None of them. There is no mention of spending cuts anywhere. What is so difficult in finding 40-70 Billion in spending cuts to match this spending out of a 3.4 Trillion budget!? Tell me please why this is so hard to accomplish. Frankly it is something that should and could be done overnight, but instead we see another kick-the-can down the road approach.
There is no leadership in Washington, no ideas, no innovation. We are just doubling and tripling down on failed policies over and over. So sad.
Update: It would appear that I misread the second provision of the tax proposal, the extension of the unemployment benefits. The 13 months does not turn 99 weeks into 99 weeks + 13 months. No, it simply extends the funding for the 99 week program for one more year. This actually explains why they used the metric of '13 months' as opposed to 56 weeks. Ace of Spades explains:
Background:Some unemployed are eligible for unemployment insurance benefits. First come 26 weeks of state benefits. Then, if the individual is still unemployed, he may apply for federal benefits. These federal "extensions", referred to as "tiers", get progressively shorter from 20 weeks at Tier 1 to 6 weeks at Tier 4. Then come 20 weeks of "Extended Benefits" which were tacked on by Obama last year. When an individual finishes his 20 weeks of Extended Benefits, he can't get any more federal unemployment assistance. The 99 weeks number comes from adding up the state benefits, plus the Tiers and EB.
However, the program was not funded past this month. The funding scheme was set up so that individuals can finish receiving assistance for whichever tier they are on, but cannot apply for the next tier after November 30. EB payments are to halt completely on December 12.
This is much better than turning 99 weeks into 160+ weeks and will make the program far less expensive.
Comments
Post a Comment