Today President Obama will meet with the nation’s top bank executives in the President’s “latest push for lenders to take greater responsibility as the nation combats an economic crisis that began on Wall Street.” “The president is looking forward…[to discussing] the need to increase small business lending and the Administration’s plans for financial reform,” a White House spokesperson said.
This morning on NBC’s Today, RNC chair Michael Steele said that in order for banks to start lending to small businesses, the federal government should reduce the unemployment tax:
STEELE: Well, I think, first off, he should recognize that banks aren’t going to lend money to people who can’t pay them back. … So there’s — there’s this whole cycle of not understanding exactly how the economy works with respect to small-business owners. Take that pressure off of them. Let’s — let’s eliminate the capital gains tax. Let’s reduce the unemployment tax.
The unemployment tax is a tax levied on employers in order to provide payments of unemployment compensation to workers who have lost their jobs. Unemployment insurance provides a vital lifeline to more than 10 million Americans currently looking for work in an environment where jobs are scarce. Moreover, the benefits also provide fiscal stimulus as they are almost certain to be spent and put back into the economy quickly. Economists estimate that one dollar put towards unemployment benefits contributes about $2.15 to economic growth.
So Steele’s solution to fixing the economy is to take away benefits from those who have lost their jobs. If these taxes are reduced, who will pay? Rather than raid unemployment benefits, the Obama administration is proposing to assist small businesses through funding from the TARP program, which Republicans also oppose.
This isn’t the first time Republicans have sought to limit funds to unemployed Americans. Before the Senate passed its jobless benefits package last month, Senate Republicans held up the bill for four weeks, which prevented more than 200,000 Americans from receiving the benefits.