Apparently the plight of the unemployed and the financial discomfort of the middle class is providing the leverage needed to guarantee generous tax breaks for those earning $250,000 a year and up.
With Senate Republicans united behind the goal of preserving the Bush tax cuts, no other legislation was likely to move until the Democrats capitulated. Among the bills the GOP was willing to block was extension of long term unemployment benefits ”“ a measure vitally important to low-income families, and the U.S. economy.
When the Bush tax cuts were enacted in 2001 and 2003 they came with an expiration date. Although President Obama favored letting the cuts expire for households earning more than $250,000 per year, he now supports extending the entire package for two years.
There was a reason they were designed to expire ”“ scheduling them for only nine years hid their staggering 10-year impact. Today, Republicans portray these expensive tax cuts for top earners as essential to economic recovery.
Meanwhile, the U.S. faces persistently high unemployment, and the administration estimates that 7 million will lose their benefits if long-term jobless aid is not extended.
The daunting budget deficit won’t be improved by cutting the taxes of the well-to-do. U.S. obligations include preserving Social Security and Medicare, implementing health care reform, and maintaining national security. And this compromise neglects any study of key details like tax rates on dividends and capital gains, the estate tax, tax brackets, and the ongoing problem of the alternative minimum tax.
Careful analysis of U.S. tax needs does not appear to be in the cards. Senate Republicans say this is the wrong time to even consider raising anyone’s taxes. The question is whether Washington will ever be prepared to consider the cost of essential government services, and the fairest and most effective way of paying for them.
— Questions? Comments? Contact Managing Editor Nick Cowenhoven at nickc@journaltribune.com.
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