After relentlessly pushing for an extension of the Bush tax cuts on everyone including top income earners, Republicans finally won a temporary victory yesterday when President Obama agreed to extend the cuts for two years in exchange for a 13-month extension of unemployment insurance, something that was uncontroversial in prior congresses. This was not enough to satisfy some of the more hardcore Republican lawmakers and interest groups. “Ensuring that people don’t receive a tax increase for the next two years is vitally important, but ultimately that’s not enough confidence, that’s not enough certainty,” said Rep. Jeb Hensarling (R-TX), a leading House Republican.
The conservative Club for Growth, too, rejects the deal because it didn’t make both the Bush tax cuts and the estate tax repeal permanent. Their plan: “Instead, Congress should pass a permanent extension of current rates, including a permanent repeal of the death tax, and drop all new spending.” The only “new spending” included in the plan, of course, is a desperately needed extension of lapsed unemployment benefits that will ultimately help at least 7 million jobless Americans and prevent the loss of another 600,000 jobs next year. The Heritage Foundation also opposes the plan and wants the tax cuts to be permanent: “By allowing for only a two-year extension of current tax rates, the President’s agreement provides no long-term certainty that is essential for economic recovery. Heritage, too, denounced the inclusion of jobless benefits, calling them a “permanent entitlement” while repeating the canard that they will discourage the unemployed from seeking work at a time when unemployment is at 9.8% and there are five job seekers for every one available job.
The Bush tax cuts, of course, are not paid for, and will add $120 billion to the deficit over the next two years. Republicans seem fine with that, but many also oppose the compromise because of extending unemployment insurance for 13 months, which will cost half as much.
“We cannot add on something like a year of unemployment benefits.” Rep. Michele Bachmann (R-MN).
“If we’re going to extend the unemployment insurance beyond its normal level, let’s at least pay for it and get this nation off its ruinous spending path.” Rep. Jeb Hensarling (R-TX)
Sen. Tom Coburn (R-OK) — the de facto leader of the Senate GOP and a past opponent of jobless aid — told National Review shortly before the deal was struck that the inclusion of unemployment benefits could influence his position. “The question [for Republicans] is: At what price are you buying?” he said.
“I would definitely look at how they were going to cover the expense of extending the unemployment [insurance]…. I firmly believe we need to live within our means.” Rep. Tom Reed (R-N.Y.)
Arkansas GOP Rep.-elect Steve Womack said “There’s a limit to just how much this country can afford,” and went on to say that enough was enough when it comes to jobless benefits.
These Republicans have made it clear that deficit spending is unacceptable — unless, of course, it provides completely permanent tax cuts to wealthy — and are doubling down on the least stimulative elements, while denying jobless and working Americans relief that will actually help our economy dig out of the deep hole we’re in.