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Fact Check: Deficits, Taxes and Unemployment

December 7, 2010

This weekend the Senate failed to approve an extension of tax breaks for families making less than $250,000. The legislation was blocked from coming to a vote by a minority coalition of Republicans and Democrats who want to extend the tax breaks to all households — including those of families that have more than $250,000 a year in income.

Asked about the vote, Republican leader Mitch McConnell said

I’m very hopeful that rates are not going to go up. And what we saw yesterday in the Senate, every single Republican and five Democrats voted that we shouldn’t be raising taxes on anybody. In other words, this bipartisan opposition to raising taxes on anybody at this time.

Yet in his comments on tax cuts on NBC’s Meet the Press, the Senate Minority leader offered no words of concern for the estimated $1 trillion dollars that would be added to the federal budget deficit if Congress decides to extend expiring tax cuts for ten years to families making more than $250,000.

Later in the same program, the Kentucky Senator was asked about extending unemployment benefits for the estimated 2 million people who could lose their benefits at the end of 2010. Senator McConnell acknowledged that the Senate might act to extend these benefits, but he expressed concern about what this extension would do to federal government budget deficits

I think we will extend unemployment compensation. We’ve had some very vigorous debates in the Senate. Not about whether to do it but whether to pay for it as opposed to adding it to the deficit. All of those discussions are still underway.

We’ve got a suggestion for Senator McConnell. If he is concerned about the federal budget deficit, then he should not extend tax cuts to families who don’t need it. In addition, we hope he will embrace the recommendations proposed by Rep. Barney Frank (MA) to cut $1 trillion from the Pentagon over the next ten years. These two cuts together, would reduce the projected federal budget deficit by $2 trillion dollars in ten years.

With that extra money, extending the unemployment benefits would be no problem and would help people who really need a hand right now. The government estimates that extending unemployment insurance through the end of 2011 would only cost about $56 billion.

Let us know what you think.

12 Comments
  1. Ellen N. Duell permalink
    December 7, 2010 12:55 pm

    Jesus taught, “It is easier for a camel to go through the eye of a needle, than for a rich man to enter the kingdom of heaven.” The tax cuts were made by rich men for richer men– women too, of course–without a care for hardworking people who struggle to make ends meet. Therefore, the equitable sharing of resources by wealthy people via taxes must be enforced through our laws, without “cuts”.

  2. December 7, 2010 2:27 pm

    The hypocrisy of the Republicans is beyond belief. After yammering on about the horrible deficit spending that will enslave generations of our yadda yadda yadda, they turn around and say it doesn’t matter. Actually according to the GOP did you know that not all deficit spending is equal??? And that this tax cut for the rich will unleash their awesome buying power that will get us out of this economic slump??? BUSHWA! LIES, LIES, AND MORE LIES.

    How many times are we going to be hit on the head, just taking it?

  3. December 7, 2010 3:34 pm

    Friends, I know many people with wealth who are trying to do everything they can to support a growing economy that benefits all people. I would want us to be careful not to suggest that one group — rich or poor, Democrat or Republican — has a monopoly on the “right answers” for how to address these complex economic issues.

    For example, I have encountered both rich and poor people who are advocates of renewing the tax cuts for people in all income brackets — often with the argument that if people with means have more money they will spend more of it and the growing economy will provide jobs to the unemployed. I’m more persuaded by other groups of people — including the billionaires Warren Buffett and Bill Gates — who argue in favor or raising taxes on those with more financial means.

    These are tough policy choices and we need to listen to the suggestions of everyone. My sense is that providing money to people who are unemployed will inject more immediate cash into the economy than providing a tax break for people who already have a lot of money. Several small business owners I have spoken with agree with me. But in my view I would prefer to continue the discussion without accusing people I disagree with of Lies.

    I look forward to seeing more comments

  4. B,E.Meadows permalink
    December 7, 2010 3:46 pm

    It is time to stop all tax write off and to tax the rich making over $200,000.00 who have not been paying there fair share of taxes, Now in 2010 we find ourselves with 9.8 % unemployment and a deficit of $11 Trillion dollars because of lies bush told and the rich not paying taxes.
    It is time all people pay taxes to support our country the USA and stop helping so much everyplace else as we have done so often in the past,stop farmer writeoff, so many farmer have become large corps not small farmer make them pay taxes as the energy companies they are making billions of dollars let the USA take taxes from them also.

  5. Jacques Couture permalink
    December 7, 2010 3:59 pm

    It is amazing to me how the doors of our Federal legislation Houses can strip common sense out of so many, supposedly, intelligent, educated people.
    How in the World can they even remotely justify their recent action on benefit extension and the continuation of tax exemption for the more affluent members of our society?
    It is gross, inequitable, arrogant and bullish. Capitalism is a tool that exists and is used in some “democratic” countries of the world. It is very apparent that our legislators equate Democracy with Capitalism. How Sad!

  6. Caroll Lynn Fowler permalink
    December 7, 2010 4:08 pm

    Since this article, it appears that a compromise has been made to extend all Bush tax cuts for two years and extend unemployment benefits for 13 months which would expire at the end of December. Of course I am extremely upset that the cuts for the wealthy will be extended, but I also understand that due to the unreasonable actions of the Republicans and a few “Democrats” (who are really Republicans because they act that way), in order to prevent 2 millions of the worst affected by the economy not to suffer even more, there was not much of a choice since those unemployment benefits were already voted down. How are we going to stop these Republicans. They continue to make decisions that are so bad for our country, and they have no idea about what is going on with us, down here, in the trenches who are suffering. Anger is putting it mildly.

  7. Anne permalink
    December 7, 2010 4:47 pm

    We have to realize that those in the Senate are, for the most part, millionaires and multimillionaires themselves. Then we should look at those who the tax increase making over 1/2 million ARE-expecially those in the million + brackets. The vast majority are stockholders, often large amounts of stock, in the companies that supply the vast military industrial complex. Those companies make a huge profit during war time, thus the stock returns are very good. Also, many are the corporate owners, CEO’s and upper management in those same suppliers. They made an extremly good income with bonuses and ‘golden parachuets’ due to the wars in the middle east.
    Even those who were not large corporations who were suppliers have seen a huge increase in profits & salaries-from food suppliers to technical experts (the guided missle tech designers and so forth.)
    Then comes oil, machinery, ect.

    Those same wars, together with the Bush tax cuts (the first time in our history taxes were CUT rather than RAISED during war in our history) made the dificit what it is today. The war was run on a credit card, with China picking up the tab by buying our Treasury notes..(the same Treasury notes that are in Social Security and we are told are worthless and Social Security in real trouble.)

    Up until Reagan, it was not out of the norm for those in the top 2% in income to regularly pay over 50% in taxes and taxes were higer during war time. Those of us who are older remember the 50’s, 60’s and early 70’s (before the Reagan tax cuts) to be prosperous times when the middle class grew because so many were 1.) educated by the GI Bill 2) more jobs were open for unskilled or skilled manufacture labor, many could and did climb out of poverty or see their children have a middle class standard of living.

    Why now, after making so much profit from the war and seeing their taxes reduced for over 20 years, should the upper 2% continue to to float in a sea of wealth while the middle class and the poor are floundering? And why, when it is from the poor and middle class that the vast majority of our armed forces are drawn who have fought to protect the very country the wealthy have made their wealth, should the the poor and middle class also be made to carry the burden of taxation on what little income they have? The wealthy, with their lobbyist and lawyers have many, many tax ‘write off’s that are not available to the poor and middle class.

    If it is the wealthy that supply the jobs, where are those jobs when their corporate profits have grown? Small business has more impact on actual job supply these days.

    Why are large corporations shipping jobs overseas, along with manufacturing bases, if we are supposed to treat them with kid gloves so they will supply this country with jobs? That isn’t happening………..the jobs and manufacturing are still being shipped over seas. Most technical jobs in computers are now being done through India. Many of the giants, like Exxon Mobile and GM, paid 0-that’s ZERO- taxes last year….and that’s not the only year. Look it up in a search engine! Why are they getting all those tax breaks to make their contribution ZERO?

    It’s been said the upper 2% spend here, but those in the upper bracket buy mostly designer label…….and those most of those really pricey lables are either originating in foreign countries or being manufactured there, whether it is clothing, household items or cars. Little American labor is involved in either design or manufacturing-and only a few stores carry the truly elite of designer goods in this country. As the upper 2% do a great deal of foriegn travel, it is easy for them to purchase it abroad. Again, where are the jobs they are ‘supporting’?

    I don’t hate the rich, I’ve done very well in my life. However, I see young people from college grads to those in their 40’s trying to raise a family and it is obvious they will not have the same ability to increase their income, even by very hard work, that most of my generation did because my parents in the 50’s and 60’s were able to put us toward a better future; college cost has soared (would you believe that it was around 350$ a semester in most state colleges in the late 50’s and early 60’s?), medical expenses have soared, housing, fuel ,groceries have all risen in price. And the most affected by those increases were the working poor and middle class who could only make their limited dollars stretch so far.

    It’s time to listen to Warren Buffett and and others like him that state it is not fair when he is paying LESS taxes than his secretary. Because it ISN’T fair. Nor is it smart when the difict is so large and the economy is so bad. The GAO stated that continuing the Bush tax cuts for the upper 2% would cost the Treasury about 70BILLION $$$-while extending the unemployment help would give back into the economy $1.30+ for every dollar paid out-because those people spend it here to provide NECESSITIES.

    We need Congresspeople to stand up-have the backbone to stand for the people who voted for them, noit the lobbyist, not the wealthy and corporations (who gave huge $$ to campaigns)-but the average American. And if they don’t, throw the bums out! and really investigate the next ones running for office. Tooo many people had the wool pulled over their eyes in this last election, and sadly, they are the ones who will be the most hurt by the legislation that will be passed.

  8. Gary Vogt permalink
    December 7, 2010 5:35 pm

    It’s so obvious it rates a dopeslap

  9. marilyn permalink
    December 7, 2010 5:55 pm

    You are so right. No pun intended.

  10. December 7, 2010 6:07 pm

    Anne, in the previous comment, says it all very well and I agree with her 100%. Equitable sharing of resources by wealthy people via taxes and cutting $100 billion from the military budget beginning next year and continuing for an additional nine years, would make deficit expansion unnecessary. (I hope my arithmetic is okay?) I applaud the patience of good Friend Jim Cason, but I fear sweet reason has gotten lost somewhere in the playbook of the powerful. I do think, however, that if we declared a NO-BUY pledge during the coming holiday season, someone up there just might get the idea that we are getting kind of angry down here.

  11. Patricia Wilson permalink
    December 7, 2010 9:31 pm

    Why can’t Obama use the executive order that all unemployed have necessary/required funds as of 12/1/2010 or when their money goes out and use some of the TARP money. If he can lend it to the BIG BOYS why not the little people in much more necessities than the others. If they make high salaries by December 2011, they pay a percentage back. If the Republicans object let Obama test them. If Truman can do it with combining the military services in 1947 surely Obama can do it for unemployed workers, out of work because of the corporations’ faults not their own.

    Just let the bill expire and the old one from Bush and start anew in january. Republicans wanted to run the houses. Now they have it but they have to do it for EVERYONE not just their Koch Brothers and their ilk.

  12. sharon hoover permalink
    December 8, 2010 6:09 pm

    My understanding is that the House and the Senate still have to vote on the Obama/Republican “compromise.” Is that not so?

    Many of the richest people have grown in wealth as a result of the two wars we have been fighting for ten years. I believe that we ought to decrease the disparity between the rich and poor by immediately not extending the tax cuts for the wealthy (I’d even pay higher taxes myself to decrease the national debt) and by decreasing the Pentagon budget substantially. The pork there goes to the wealthy contractors, I believe, and supports jobs that do not benefit the economy or national security. The next place to look for savings is within farm subsidies. How many of them support small farmers and how many benefit only farm corporations.

    First, however, I’d like to start with Congress today and encourage my Representatives and Senators to change “Obama’s compromise.”

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