Don’t look now, but the Democrats in Congress may be poised to jettison their proposed 1.9% tax on incomes above:
WASHINGTON (AP) — Democrats may jettison their demand for higher taxes on millionaires as part of legislation to extend Social Security tax cuts for most Americans, officials said Wednesday as President Barack Obama and Congress struggled to clear critical year-end bills without triggering a partial government shutdown.
Republicans, too, signaled an eagerness to avoid gridlock and adjourn for the holidays. With a massive, $1 trillion funding bill blocked by Democrats, GOP lawmakers and aides floated the possibility of a backup measure to keep the government in operation for several days after the money runs out Friday night.
[…]
Democrats have made the proposed millionaires’ tax central to their plan for the payroll tax cut extension, and officials stressed no decision had been made on whether to drop it. They spoke on condition of anonymity to talk about legislative strategy.
Any such move would represent a concession to the Republicans in both houses who are opposed to the surtax. But it could also require Democrats to agree to politically painful savings elsewhere in the budget to replace the estimated $140 billion the tax would have raised over a decade. [AP]
Oh, and even if the House-passed version of the bill to extend unemployment benefits passes, the benefits would be scaled back relative to the status quo. The White House says that 3.3 million people would lose their benefits if the House bill becomes law.
Downsizing unemployment benefits in a recession is economic malpractice. UI is one of the most efficient forms of economic stimulus in existence. Beneficiaries don’t sock their money away in off-shore tax havens, they spend them to live.
UI benefits don’t just benefit those who are unemployed. They benefit every grocery store and gas station and pharmacy that has unemployed customers who would otherwise stop buying – which is all of them. UI benefits sustain families that are unemployed and help preserve jobs for those who are still working.
The payroll tax cut will put an extra thousand dollars in the pockets of working families each year. That’s nice, but it’s a pittance compared to the stimulative effect of continuing UI benefits.
Happy holidays, 99%.
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