As Congress launches into the lame duck session, congressional Republicans are demanding an extension of all the Bush tax cuts, even for the wealthiest two percent of Americans, at an added cost to the deficit of $830 billion over the next ten years. Meanwhile, they have refused to support a continuation of unemployment benefits, which are set to expire next month, claiming that a continuation “will only add to the deficit.”
This morning, in an interview with Tea Party Caucus leader Rep. Michele Bachmann (R-MN), ABC’s Good Morning America host George Stephanopoulos picked up on the discrepancy between caring about the deficit when adding to it helps the poor, but not when it helps the rich. Asked if she would support a compromise which extended both the tax cuts and the unemployment benefits, Bachmann said no, characterizing letting the tax cuts expire as a “massive tax increase,” while dismissing extending unemployment benefits as “massive spending”:
BACHMANN: As far as a compromise goes, I want to get the current tax policy as far into the future as we can, if we can only get it extended for two years, that’s great. But I don’t think the American people should have to pay for that to have some new massive spending tied to it. If that’s the case, I don’t think you’re going to see the Republicans go along with it.
STEPHANOPOULOS: But why is it OK for the wealthiest Americans earning over $250,000 a year — remember the President has called for extending all tax cuts for those under $250,000 — for them to get tax cuts extended but for people out of a job and needing unemployment benefits not to have their benefits extended?
BACHMANN: Well remember again what this is. It’s a massive tax increase and its on the people who are job creators. And people want to think that these are millionaires sitting in leather chairs lighting their cigars with $100 bills, that’s not what we’re talking about. These are people who are carpet layers who may be employed two or three other guys, or a plumber, maybe himself and his brother, and it’s $250,000 in gross sales for their business. Their the ones looking at massive tax increases. …That’s going to hurt more people than anything if we can’t have job creation. And this is a job killer if we raise taxes on the job creators.
Bachmann’s argument for tax extension is, in one word, “bogus.” As the Wonk Room’s Pat Garofalo points out, conservatives’ claim that the tax increase will hurt small businesses is “only accurate if you take an incredibly expansive view of what constitutes a small business.” In reality, “exceedingly few small businesses” would actually be affected by letting the tax cuts expire. Meanwhile, the cuts represent “the least effective tax or spending step for job creation,” according to the Congressional Budget Office (CBO). Every dollar spent extending the tax cuts results in just 10 cents to 40 cents of economic activity, the CBO found.
Unemployment extension for those seeking jobs, however, represents the biggest bang for the buck of any government stimulus policy. According to the CBO, “the economy would see output rise by between $0.70 to $1.90.” That is part of the reason why an overwhelming majority of Americans support extending unemployment benefits for more than 2 million Americans in need, regardless of its effect on the deficit.