This week, the Senate unveiled its version of the tax extenders package passed by the House before the Memorial Day recess, which extends unemployment benefits for jobless workers along with a handful of tax credits. It differs from the House version in that it restores Medicaid funding for states and softens the closure of a tax loophole that will prevent hedge fund managers from paying lower taxes than other workers.
During the House debate, the jobless benefits extension was scaled back and an extension of COBRA subsidies (to help laid off workers purchase health insurance) was cast aside, over unnecessary deficit hysteria (and despite 9.7 percent unemployment). And the Senate is well on its way to repeating the feat, with Sen. Jon Kyl (R-AZ) telling The Hill that “virtually all” Republicans oppose the legislation because it costs too much:
Senate Minority Whip Jon Kyl (R-Ariz.) said Republican resistance would likely remain until more of the legislation was paid for. “I think that virtually all Republicans oppose the bill in the form it was introduced here this morning,” he said Tuesday.
Of course, this is by no means a problem solely caused by Republicans. Sen. Ben Nelson (D-NE), for instance, said that “I’m not sure that I would vote for cloture. At some point you can no longer spend your way out without adding to the size of the growing problem of the increasing debt.”
As AFL-CIO President Richard Trumka told us yesterday, “we do not have a short-term deficit crisis, we have a short-term jobs crisis in this country. And anyone that doesn’t believe that has either, I think, been reading too much fiction or they have their head in the sand.” Indeed, in the short-term, it’s highly appropriate to spend to create jobs and to ensure that those who are out of work don’t engage in too much pro-cyclical fiscal tightening.
After all, consumers make up 70 percent of the economy, and when they cut back, demand plummets and more jobs are lost. At the moment, 1.2 million Americans who had expected jobless benefits have had those benefits pulled out from under them due to the Senate’s inaction.
According to a recent NBC News/Wall Street Journal Poll, Americans do not prioritize deficit reduction over job creation. In fact, only 5 percent of respondents to the poll cited it as their top concern, while 35 percent said job creation is the most important policy priority of theirs. So it isn’t like this is a matter in which pushing for more robust job creation puts lawmakers on the wrong side of public opinion.
Instead, lawmakers are giving in to fearmongering about the short-term deficit, to the detriment of both those unemployed and the wider economy. As Rep. Jim McDermott (D-WA) said, “if we can afford wars, tax cuts and bank bailouts, then we can certainly afford to maintain programs for workers who have lost their jobs through no fault of their own…We must not abandon these workers and their families.”