When the Senate comes back from its Memorial Day recess next Monday, one of the most pressing issues that it needs to address is the current expiration of extended unemployment benefits and other social safety net programs for laid off workers. On Friday, the House passed an extension (which did not create a new tier of benefits for workers who have completely exhausted theirs), but the Senate departed before even considering the bill.

Already, the House’s legislation is pared back from an earlier version, as it only extends jobless benefits through November (instead of through the end of the year) and doesn’t include an extension of COBRA subsidies, which help laid off workers purchase health insurance. These cuts were made to assuage the deficit hysteria shown by many members of Congress who, despite long-term unemployment remaining at an all-time high, are ready to cut and run from various recovery programs. And even with the House’s extension, such hysteria continues unabated.

“There is a sense that the economy is recovering and this is not a new entitlement,” Rep. Earl Pomeroy (D-ND) said. Rep. Baron Hill (D-IN) voted against the extension, saying “last year, I held my nose. But the economy is starting to get on its feet again.” Rep. Gerald Connolly (D-VA) also voted no, and said that the slim margins of the vote means “moving forward, what worked a year ago is not going to work now.”

It’s incredibly worrisome how many policy makers are ready to begin fiscal tightening, leaving those still out of work out to dry. As Paul Krugman put it, “demands that governments switch from supporting their economies to punishing them have been proliferating in op-eds, speeches and reports from international organizations. Indeed, the idea that what depressed economies really need is even more suffering seems to be the new conventional wisdom”:

Last week conservative members of the House, invoking the new deficit fears, scaled back a bill extending aid to the long-term unemployed — and the Senate left town without acting on even the inadequate measures that remained. As a result, many American families are about to lose unemployment benefits, health insurance, or both — and as these families are forced to slash spending, they will endanger the jobs of many more. And that’s just the beginning. More and more, conventional wisdom says that the responsible thing is to make the unemployed suffer. And while the benefits from inflicting pain are an illusion, the pain itself will be all too real.

According to the Center for American Progress’ Christian Weller, the average length of unemployment is currently 31.2 weeks, “and 44.1 percent of the unemployed were out of a job for 27 weeks or more.” “This is a new record for long-term unemployment,” he wrote. And even though the economy added jobs in April, the unemployment rate in minority communities is still astronomical, hitting 16.5 percent for African-Americans and 12.6 percent for Hispanics.

As Mark Zandi, chief economist of Moody’s Economy.com, said “in this environment, the job market is so bad, I think it’s still premature to give up on those emergency benefits.” “I mean, just a statistic, for every one job opening there’s five people that are looking for work. That is incredibly unusual, so therefore it’s premature to give up on those emergency benefits,” he added. But Congress seems ready to start giving in, potentially leaving millions with no safety net on which to fall back upon.

Congress is currently working on a bill that extends popular tax credits and unemployment benefits to help combat the effects of the poor economy. Sen. Max Baucus (D-MT) and Rep. Sanders Levin (D-MI) have designed a series of offsets to pay for part of the bill; one of these is a change in the way carried interest is taxed.

Carried interest is “the share of profits that investors pay to compensate certain people for managing their money.” Currently, investment managers who receive carried interest are taxed “at the low capital gains rate of 15 percent rather than the regular rate of 35 percent that other highly compensated workers pay.” Here’s an illustration by MoveOn of the impact of the loophole:

Levin and Baucus are proposing that their carried interest be subject to normal income tax rates. Politico reports today that lobbyists for the venture capital and private equity industries have “worked hard” in the past few weeks, making the case that requiring wealthy investment managers to pay the same income tax rate as the rest of us is a “danger to minorities, academics, pensioners, economically depressed Michigan, ‘the average American home,’ the fight against cancer and jobs”:

The venture capital and private equity lobbies have worked hard in the past few weeks to claim that raising the tax rate on executive compensation is less about the executives than it is about the danger to minorities, academics, pensioners, economically depressed Michigan, “the average American home,” the fight against cancer and jobs.

The fight-against-cancer argument comes courtesy of 28 scientists— “members of the U.S. academic and research community,” according to a letter to President Barack Obama — who, while thanking him for increasing grant money for medical research, warned that the tax measure could cut into the funding they get for long-term research from venture capital.

The lobbyists’ claim is ridiculous on its face. While it’s true that various working-class Americans, including the beneficiaries of cancer research, receive venture capital funds for their activities, the Levin effort does not target the investors in venture capital and private equity funds but rather the fund managers, who typically pay lower tax rates than teachers.

As Citizens for Tax Justice notes, “The venture capital industry is lobbying for a carve-out from the carried interest provision. They point out they foster small business, encourage innovation, and create jobs, so we don’t want this type of investment to dry up. It’s a tempting argument, but try to see through the smoke. The change affects only the managers of venture capital funds. It doesn’t change how the investors are taxed. The managers will take home less cash, but they still have plenty of incentive to work hard and make the fund successful — remember that 20 percent interest they get, plus the 2 percent management fee.”

Under threat of receivership and criminal investigation for its destruction of the Gulf of Mexico, foreign oil giant BP has hired a former top aide for Vice President Dick Cheney to be their new spokeswoman. Anne Womack-Kolton has been hired to be “head of U.S. media relations.” A rising star in the Bush-Cheney White House since the 2000 campaign, Womack-Kolton served as Cheney’s press secretary during the 2004 election before running public affairs in the Bush Department of Energy:

“Back in 2001-02 Anne Womack-Kolton defended Cheney’s secret energy task force,” Daily Kos contributor RL Miller writes. Cheney’s energy group met with several BP representatives, including a private meeting between Cheney and BP CEO John Browne. In 2007 Browne retired from BP “after lying to a court about his relationship with another man.”

With its stock spiralling, BP hired her away from the Brunswick Group, the international communications and crisis management firm which BP has been paying to “craft its public response to the spill.” Womack-Kolton joined the Brunswick Group in 2007 to manage “high stakes communications surrounding public affairs issues and political risk management for domestic and global corporate clients.”

Cross-posted on the Wonk Room.