The politics of tax cuts and unemployment
Posted by Gary Snyder in Business, Current Affairs, PoliticsBy Gary Snyder
The Bush Tax Cuts are set to expire at the end of December and unemployment benefits are already expiring for thousands of people a day and the only thing we get from Washington is political posturing. I think most people can agree the tax cuts need to continue on some level and we shouldn’t let unemployment expire on the neediest of people. The problem is both sides of the isle want an all or nothing proposition.
Should we renew all the Bush era tax cuts for everyone, even the richest of our society, absolutely. Should we let unemployment benefits expire on people, who through no fault of their own, lost their job in what is arguably the worst recession since the great depression, absolutely not! Pretty simple isn’t it?
The problem is the left only wants to extend the tax cuts, which includes the child tax credit, on the first $250,000 a person makes. The right, other than not wanting unemployment benefits to begin with (they’re all losers and are milking the system), want to pay for the extended unemployment benefits and not add the cost to the deficit (which has been the case historically). Both sides of the issue, one can argue, make sense to everyone outside of Washington. The unfortunate part is, this is decided in Washington.
The left is arguing (from a political point of view a winner), that Republicans want to give tax breaks to millionaires while wanting to cut off unemployment for the unemployed in this economy (and so close to Christmas). The right argues (and while valid, it is a political loser), that the left is against economic growth, socialists if you will, and want to keep the poor dependent on the government.
Reality says, extend the tax cuts for everyone and as long as unemployment is hovering around 10%, don’t cut off unemployment benefits. Both, and yes I said both, will create jobs and spur economic growth. Tax cuts have historically aided in the creation of jobs by small businesses and unemployment benefits put dollars into the economy. Someone who receives $400 a week in unemployment, where they used to make twice that much, is spending every dime.
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I have to disagree that unemployment spurs the economy. That $400 you mention is spent on things that will not boost an already sagging economy and will only increase state and federal debt. How does paying the rent help the economy? It doesn't. Neither does paying your utility bills, your cable bill, cell phone bill or even buying groceries.
The unemployed will find the means to maintain much if not all of the above. Right now we have 99 weeks, that's just short of two years worth of unemployment and now they want to extend that to what, 3.1 years if I read correctly?
While a transfer payment to an individual does help to keep things going and might be especially effective to that end in distressed areas, for example the Gulf of Mexico, but that payment can't go on forever and only puts off the inevitable. But a more important consideration is that the recipient (the Fort Wayne area especially) is able to live on the unemployment payment and goes on vacation making no effort to rejoin the work force until his benefits expire. I don't think the people who have to foot the bill will accept this burden gracefully.
Gary: The Federal minimum wage is about $7 per hour. For a 40 hour week, that's about $280.00 per week. Why in the H would ANYONE go to work at a min. wage job when, as you state, they can get over two years of $400 per week unemployment benefits???? And you can, with a straight face, say "we shouldn't let unemployment expire on the neediest of people" ! Put them to work digging ditches or whatever!!! Unemployment payments, for most unemployed, are a crutch that allows them to be like our farmers – "farm the government instead of the land!" THIS STUFF HAS TOI STOP AND IT HAS TO STOP NOW!!!!
Worker at alot of jobs have to do random drug testing, so should welfare and unemployment receipiants.
If you fail, your off of the public dole.
Also there should be something done to the companies that are paying the "unemployed" under the table and so that these people can double dip.
John, I know ten people, perhaps a few more who are looking for work. Those I know are former middle level managers who have worked, in some cases, for two decades in medium or smaller businesses. They do not want to be out-of-work, they don't want to be on the "dole," they want to have their lives back and are constantly searching for something that they can do. I am sure you have an image of someone in mind who sucks at the tit of government and doesn't every try to give something back. Fine. I can image the imagine in your mind. Certainly, there are some like that, but when unemployment goes to 9 point something as it is today the people who are sponging are surrounded by the former hard working, productive neighbor whose company closed, whose job was sent to Indian or who was replaced, along with five other guys, by automation. Don't be so hard. It is not that uniform, nor is it that easy. Everyone has a different story, most are trying hard to find work.
Are you going to pay for the testing, Pat? Someone will have to. Should we require the unemployed to pay for the test, or the taxpayer? Since the unemployed, by definition, are running out of money or are broke they are unlikely to have the spare couple hundred bucks for the test. But, since unemployed have already paid, in part, for their own unemployment compensation it seems unfair. The goal of unemployment compensation is for workers and employers to pay into it, create a cushion, so that social upheaval does not occur during economic downturn. Arch-conservative Bismark supported compensation to keep the rabble from rising up and killing their masters.
Jim,
The employer, not the employee, pays into the unemployment compensation fund. Employees contribute nothing.
Thank you, my friend. I stand corrected. Is that just Indiana or all states?
Agreed. If unemployment benefits spur the economy then shouldn't the unemployment rate have gone down last month instead of up to 9.8%?
Ah, Rip, were it that simple, were only one factor involved then it would be so much easier.
Not necessarily saying it's that simple, but you'll never encourage the unemployed to seek gainful employment when unemployment is paying better than a lot of the jobs that are available.
Lower unemployment payout to below that of the minimum wage and you'll see a drop in UE. Otherwise you're just buying votes by filling bellies.
Jim,
We as tax payers would/should end up paying for the drug testing.
I'm sure in the end, it would save us money by weeding out some of the people that are not trying to help themselves.
They should probably also test for alcohol. The problem when you weed out people is that they turn to other ways to turn a buck.
Sure, that would spur some folk to act, but not all people on UE are deadbeats or cheats. More than a couple are trying as hard as they can to find work so they won't be thrown out of their homes, lose their cars are whatever. Every person on UE has a different story.
Jim – In what way do ANY employees EVER pay ANYTHING for unemployment insurance?? Please help me out on that – IT ALL COMES FROM EMPLOYERS and from TAXPAYERS!!! And, Jim, no one ever has to be unemployed!! The problem is that no one "wants" to work for less that they made before their job was lost – and that is caused by the radical left politicos (and some of these are Republican!!) who want to make everyone EQUAL. Equality, (except in the courts) is not a function of government!!!
John, relax. I was corrected by ConservProf, as you might see below. Thank you for the clarification. I will ask the same question, however, is that the law in every state or just in Indiana, or somewhere in between. I have plenty of jobs at $1 an hour, if anyone is looking.
In all states, the "employee" pays nothing.
Jim – THAT'S not minimum wage! Do you have jobs at minimun wage available?? If so, ask, and you might be suprised at the lack of contacts! Very,very,very few takers -we have "trained" ourselves to expect handouts!! – and THAT is the problem!!!! Putthe government back where it is supposed to be, and the 15% to 20% unemployed will disappear – it always has- pre Obama/Reed/Pelosi !!!
Every person on UE has a different story.
This is true. However, along with UE there are numerous other sources of aid, food stamps, assistance with utilities, etc. on top of that a lot of those on UE for approaching 99 weeks have learned how to operate in the underground economy for tax free cash under the table. Many of which are living better than they ever had while employed. Try convincing that group to go back to honest tax paying jobs even though they're going to take a hit in their wallet!
Hey, John, keep that blood pressure down. People in our community, especially those who draw salaries and those who work in low-pay jobs are hurting and worried. Wage slaves, people who punch in every day, are scared their job will be exported to Vietnam. The people who are barely adapted to work at McDonalds are always scared and have learned parts of the system to keep themselves going. People who work in construction will be happy to learn that JP Morgan has corralled a billion in copper assets. They will never plumb a house or pull wire at Essex, but their speculation will raise costs for us all and give the copper thieves more incentive to break in to your basement. Remember a few years back to the Bush years when the cost of gas went to $4 a gallon. That was mostly because of speculation on Wall Street where the big guys bought control of large amounts of oil and gas and pushed prices up and up and up. The people on the bottom who are using food stamps, getting Section 8, unemployment and standing in bread lines are small potatoes, and most….most….are not thieves or gaming the system. They don't want to be there anymore than you would, John. The ones who move the economy up and down like great waves in the sea or the Wall Streeters and the big bankers. The rest of us are so many rubber duckies in the ocean, some, however, like you, have water wings. Don't spit on the drowning.
Unemployment should be a "loan" after a certain number of weeks. That would help those who really need it, yet keep loafers from procrastinating or settling into the "underground" under-the-table tax evasion. The poor have EIC that rewards them for working, but results in a "negative" tax rate, while the "rich" pay 70% of taxes. The ultra wealthy, if taxes get too high, will simply take their marbles to other countries. They won't tolerate extortion. Tax cuts should continue for all. Unemployment should become a loan for any further extensions. We MUST reward productivity to get more of it.
There are loafers. But, do you know of any personally? Do you know anyone who is unemployed and looking?
As for their marbles, they already do take them elsewhere and use the Caymen Islands, among other tax havens, to avoid paying taxes. I agree with rewarding productivity.
John,
Do you think people like being on unemployment? Sure, you can cite the examples of the extreme but by in large, most people on unemployment need it; not because they are out to milk the system for half of what they made before, but because they lost their job through no fault of their own. You are correct in one aspect of your comment, unemployment is a crutch; a crutch to help families stay in a home, eat, stay warm, have cloths for their children and I could go on.
Gary Snyder nailed it. Very, very few people want to be unemployed. Very few.
Jim – "Very few people want to be unemployed" As normal, "without data, it's just another opinion". How would you EVER get a truthful answer to that question to an unemployed?
Not too many years ago, I remember fellows bragging about the great job they were taking at the old International Harvester here in town – "set for life" – "great benefits" – "real high wages"- "lot's of overtime" ………………………… and to what avail? Same thing at Dana, General Electric, Bowmar, Zollner – et al.
Then enter the era of "dependancy on others" – be it a union and/or the government – and look what happens – WORKERS NO LONGER NEED TO BE CONCERNED ABOUT THEIR FUTURE! – and then, it falls apart – like in the last year or so – "i no longer can operate on my own – I have become so dependant on ????? that I don't know what to do anymore!"
Gary – Yes, I do know presently unemployed people and I agree that many are in real need. Without exception, they are seeking gainfull employment – filling in with lower paying (and even minimum wage) jobs when necessary. But, I contend, way too many expect and "feel entitled to" havng someone else being forced to hand them what they need WITHOUT "as-we-go" paying for it – shove it into our kids, grandkids time to pay it back.
We, through our elected AND bureaucratic government, have created a monster! On November 2, 2010, hopefully we have begun to correct this problem!
Well, John, we can agree that one loafer is way too many.
As for the monster in Washington, it certainly has been a long time in the making. But, I am happy to see that we made a $9 billion profit on the Citi Bank bailout. That will pay for a small portion of the Bush off-the-books -war in Iraq.
I agree, Jim – it all began in January of 1933 – and it has taken 78 years to begin to reverse it!!!