That experience of feeling sure that one has already witnessed a current situation, even though the exact circumstances of the prior encounter are uncertain and were perhaps imagined is back again. This time, it is not just a feeling, but a real knowledge that the events from December 2010 are going to be repeated and the wealthy will avoid (again) seeing their taxes increased. Last year President Obama was forced into a deal to extend Bush-era tax cuts for the wealthy for two years in exchange for extending unemployment benefits and initiate the payroll tax cuts for one year to help the economy and struggling Americans who are desperate for jobs.
Republicans have not agreed to extend the payroll tax cut that benefits 160 million American workers and their employers because they refuse to consider 3.5% surtax on incomes over $1 million. Their argument (again) is that any tax increase on the wealthy, the so-called job creators, will stifle hiring when jobs are in short supply. It is the same argument they have made for nearly 3 years, and after ten years of the wealthy’s tax cuts, the jobs have not materialized. It is noteworthy that the super committee tasked with deficit reduction could have solved the payroll tax and unemployment benefit extensions if they used a balance approach of spending cuts and revenue increase but instead of increasing the wealthy’s taxes, Republicans proposed cutting their tax rate by 7%.
If extending and expanding the payroll tax cut for employers and workers made economic sense, extending the unemployment benefits should be a no-brainer. Paying for both with a 3.5% surtax on income over a million dollars would protect the Social Security Trust and shift some of the burden to the wealthy who are doing exceedingly well in the sluggish economy. Extending unemployment benefits is beneficial to 48% of unemployed Americans now receiving benefits, but it also offers a positive return on investment by the federal government.
For every dollar spent on unemployment benefits, $1.52 is returned to the economy in spending. Like the payroll tax cut, unemployed Americans spend every penny immediately and those funds in turn will create more jobs. Over the past couple of years, 700,000 new jobs were created as a direct result of extended unemployment benefits. Conversely, failing to extend the benefits could destroy half-a-million jobs in 2012 and the government will lose much-needed tax revenue. Unemployment benefits are taxable at the federal level and with 2.2 million unemployed Americans drawing unemployment benefits, the revenue loss is substantial. Although Americans living below the federal poverty level is growing daily because there are no jobs, unemployment benefits helped 3.2 million Americans avoid increasing the poverty numbers.
There are some Republicans who see the necessity to extend both the payroll tax cut and unemployment benefits, but their plan destroys jobs. Where Democrats proposed a clean 3.5% surtax on the richest Americans, Republicans’ alternative plan freezes federal workers’ pay through 2015 and eliminates 200,000 federal jobs. The Republican plan does touch the wealthy who earn $1 million annually by increasing their share of Medicare premiums, and takes steps to halt millionaires from receiving unemployment benefits and food stamps. It is unbelievable, but the IRS reports that millionaires received $20.8 million in unemployment benefits and although they should be denied the benefits, the savings to the government is negligible.
Congressional insiders say that neither party’s plans will get past the 60-vote majority needed to move legislation forward, and it will most certainly come down to last minute hostage negotiations like December 2010. In fact, holding the economy hostage has become the primary tool for Republicans who will protect the 1% from any tax increase at all costs and Democrats have little choice but to punish millions of unemployed Americans and avoid increasing taxes on 160 million wage earners or concede to allowing Republicans to kill 200,000 government jobs and freeze wages for millions more.
This current round of Republicans holding the economy, unemployment benefits, and payroll tax cuts hostage is not a case of déjà vu, it is a habitual, calculated plan to protect the richest 1% of Americans. In August, Senate Minority Leader Mitch McConnell was candid when he admitted Republicans took the debt ceiling hostage, and he said he could imagine doing it again. Indeed, McConnell promised that the next time a president asked for a debt ceiling increase in 2013, he said, “we’ll be doing it all over.” True to his word, for a change, Republicans are willing to raise taxes on 160 million Americans, end unemployment benefits for 2.2 million Americans, and send the economy into a recession just to protect the wealthy from a 3.5% tax increase on income over $1 million. If Republicans are successful, 200,000 government jobs will be lost and millions of federal employees will see their wages frozen for four years.
The Republicans complain that President Obama and Democrats are waging a class war because they are helping the economy and 99% of the population which is what government’s task is in a representative democracy. In the past year, the GOP took the economy, jobs, and the 99% hostage just to save the wealthy from paltry tax increases whether it was 0.5% for retaining and hiring teachers, police officers, and firefighters or 0.7% for millions of infrastructure improvement jobs. Now that Republicans are going to hold jobs, the economy, payroll tax cut, and unemployment benefits hostage no-one should be surprised. Republican policies or their hostage taking is a lucrative criminal habit and like all criminals, they have learned that raw extortion works; especially when Democrats are dedicated to saving the economy and 99% of the American people who will remember exactly who was willing to kill them to protect the richest one percent of the population. If there is one thing the 99% can take away from the past year, it is that the Republican Party will sacrifice anything and everything to win the class war for the one percent; even their jobs in the House and Senate.