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House Republicans Push Plan To Renege On Tax Deal By Cutting Unemployment Benefits

By Guest Contributor on May 24, 2011 at 7:15 pm

"House Republicans Push Plan To Renege On Tax Deal By Cutting Unemployment Benefits"

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Our guest blogger is Danielle Lazarowitz, Special Assistant for the Economic Policy Team at the Center for American Progress Action Fund.

As tough as the tax deal was to swallow last December, it is about to get even worse, as Republicans are trying to eliminate the key piece of the agreement that helped working Americans. At the time, President Obama had to make the difficult compromise of extending the high-end Bush tax cuts, an unnecessary tax break for millionaires, in order to keep tax rates low for 98 percent of Americans and to continue funding for extended unemployment benefits through the end of 2011.

Earlier this month, House Republicans introduced the Jobs, Opportunity, Benefits, and Services Act of 2011 or, as they prefer to call it, the JOBS Act of 2011, which will cut unemployment benefits and allow states to apply their UI money to other things (such as tax cuts). As the Center for American Progress’ Heather Boushey and Jordan Eizenga wrote last week, “the JOBS Act, which provides an incentive for states to cut unemployment benefits, is less about creating jobs and more about hurting those who have lost one.”

And because it would cut the unemployment benefits that were a key part of the tax deal, this legislation amounts to House Republicans breaking their word. “In December, the price that had to be paid in order to give unemployment benefits to America’s workers was to give tax cuts to the richest people in America. That happened — but now they want to renege on the other side of it,” said House Minority Leader Nancy Pelosi (D-CA) at a press conference.

With national unemployment at 9 percent and more than 40 percent of the nation’s unemployed out of work for over six months, it critical that extended unemployment benefits remain in effect. The benefits are not only an important safety net for unemployed workers who lost their jobs through no fault of their own, but good for the economy. Economist Wayne Vroman estimates that for every dollar spent on unemployment benefits, an additional $2 was put back into the economy. Meanwhile, Moody’s Analytics economist Mark Zandi estimates that making the Bush income tax cuts permanent only puts 32 cents back into the economy for every dollar spent.

Even Republican governors see the importance of this program. As Arizona Gov. Jan Brewer (R) said last week as she endorsed a proposal to extend unemployment benefits, “We know that we have lots of people here in Arizona that are depending on those dollars to put food on the table for their families.”

The passage of JOBS Act would void the bipartisan agreement made in December to help the nation’s unemployed. If we can’t trust republicans to keep their word on an agreement as substantial as the tax compromise, we can only guess who they will betray next.

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