When they return from the August recess, the Senate Finance Committee may be asked to look at renewing the Bush tax cuts for high-income earners. From the Wall Street Journal:
Washington business groups are urging Democratic leaders not to use procedural shortcuts to bring major tax legislation to the Senate floor later this year, arguing that it would be 'a grave disservice to the historical and constitutional role of the Senate.' What they’re not saying: such an approach would also offer a better shot at passage of legislation that would extend Bush-era tax breaks for high earners - families making more than $250,000 a year - due to expire at the end of the year.
The Finance Committee may also have another bill to consider: S. 3706, the Americans Want to Work Act.
If the Committee is serious about addressing the economic problems we're facing, passing 3706 should be a no-brainer. Based on the models Mark Zandi at Moody's put together, extending unemployment benefits will add $1.61 to the GDP for every dollar spent. By comparison, extending the Bush tax cuts will add 32 cents for each dollar spent... and that's if all of the Bush tax cuts were extended.
It should be a no-brainer, but we know it's not going to be that easy. The Finance Committee has a decidedly partisan voting record when it comes to extending unemployment, and Senators Kyl, Hatch and Bunning are all on the record against extending benefits, if not against unemployed men and women themselves.
Passing S. 3706 would be a win-win solution that could help break the vicious cycle of low demand, and jump start the virtuous cycle of increased demand. Here's how:
- Today, poor sales is rated as the single most important problem businesses have1.
- Today, loss of income is affecting 14-15 million unemployed workers and their families, most especially the roughly 1.5 million (or more) 99ers who have exhausted their benefits.
- That's the vicious cycle: businesses aren't hiring because sales are bad, and people aren't buying because unemployment is bad.
- If passed, 3706 will provide extended credits for businesses to hire the long-term unemployed, and add a fifth tier of EUC for the 99ers.
- If passed, the paychecks and benefits created by 3706 will go right back into the economy as people pay for the things they need.
- That's the virtuous cycle: more people with increased purchasing power lead to increased sales. As sales increase, businesses will be able to hire more employees to meet increased demand.
Choosing to extend the Bush tax cuts for high earners will help the well off, but won't fix the unemployment problem. Passing 3706 will help everyone, high earners and unemployed alike, by proving a better return (1.61 vs 32 cents) for the stimulus dollars spent, and growing the economy that much more.Notes: