Of course, delay now is better than an immediate tax hike. But because the extension is only temporary, a large portion of the investment and job growth that characteristically accompanies low taxes will be lost. When entrepreneurs and employers make decisions to start or expand an enterprise, uncertainty about tax rates translates directly into a reduced propensity to invest and to hire. With only a two-year extension, investors know that before their returns are realized, tax rates may be jacked up to the levels favored by President Obama. So while the tax deal will succeed in temporarily putting more money in the hands of consumers, it will fail to deliver its full potential for creating lasting growth.
Those tax cuts have been in place for a decade. If they were going to work, they would have by now.
What Mitt has to say about unemployment insurance is particularly frightening:
The indisputable fact is that unemployment benefits, despite a web of regulations, actually serve to discourage some individuals from taking jobs, especially when the benefits extend across years.
He must be referring to all those jobs created by the tax cuts...?
The system is also not designed for a flexible economy like ours in which some employees move from job to job for short periods, and are therefore ineligible for unemployment compensation when they are faced with a protracted spell without work.
To remedy such problems we need a very different model, perhaps establishing individual unemployment savings accounts over which employees would exercise direct control when they lose their jobs, or putting in place financial incentives for employers to hire and train the long-term unemployed. One thing is certain: While we cannot rebuild our flawed system overnight, we are surely not required to borrow the funds to pay for it. In spending $56.5 billion to extend benefits, the deal is sacrificing the bedrock Republican principle that new expenditures be paid for with offsetting budget cuts.
Individual unemployment savings accounts? Just like the health savings accounts that so many of the free marketeers love so much! The fact that wages have been stagnant for decades while the costs of everything have increased sharply doesn't seem to be a consideration for this type of thinker. Of course multi-millionaire Mitt doesn't have to worry about these things. He's living quite comfortably in the top 20% of wage earners in the US, who received 49.4 percent of the income generated in the U.S. last year, according to the census.
The average working family is struggling to make ends meet as it is. That anyone is even considering the idea that these folks should have to pay into an unemployment fund is both ridiculous and frightening.
cross-posted at MainSt/workingamerica.org