Unemployment Insurance and Taxes

Civil and Human Rights News 11.24,10

The San Francisco Chronicle has a really good editorial explaining why extending unemployment insurance is critical, and why extending the Bush tax cuts is not:

The vast majority of economists agree that allowing jobless benefits to expire right now will harm the economy. The Center on Budget and Policy Priorities estimates that allowing benefits to run out could cost the country an additional one million jobs over the next year. Congress has never before refused to extend benefits while the national unemployment rate was higher than 7.4 percent. Right now it’s still flirting with 10 percent.

House Republicans – who blocked the extension – claim that it’s all about fiscal responsibility, and that the cost of the benefits must be offset by spending cuts elsewhere.

But this is not about fiscal responsibility. If they cared about fiscal responsibility, those same House Republicans wouldn’t insist on extending the Bush tax cuts for the top 2 percent of Americans, those making more than $250,000 a year.

If they get their way, that tax break will cost the country $700 billion – far, far more than a temporary extension of unemployment benefits.

The benefits cost this country about $6 billion per month. The bill before the House was for a three-month extension.

To be fair, Republicans genuinely believe that taxation is onerous and harmful to the economy.  They do believe that if more people (esp. rich people) are able keep as much of their money as possible it will make the economy stronger and “trickle down” to the rest of us.

But that’s just isn’t true.

Here’s a chart showing that the richest 1 percent have seen their incomes rise over the last 30 years. But contrary to the theory of “trickle down” economics, there hasn’t been the same kind of growth for everyone else.

Graph showing the growth of the income gap since 1979

Graph from the Center on Budget and Policy Priorities

In other words, the rich getting richer hasn’t historically had any benefits for the rest of us.

And it’s not likely to.

If it costs us a little – and it is a little – to help the poorest Americans get through this recession, and that help (in turn) actually accelerates us getting out of the recession, then it seems like that is something we should do.

What do you think?