Archive for category Tax Policy

Source: Calculated Risk

WASHINGTON (AP) Millions of people stuck on the jobless rolls would receive an extension of unemployment benefits averaging $309 a week under a Senate bill that appears set to break free of a Republican filibuster.

But Senator Orrin Hatch hates to let go of that money. He’s a born-again deficit hawk. (Or maybe he’s just running scared from the Tea Partyers).

“What the president isn’t telling the American people is that many of us in the Senate are fighting to make sure our children and grandchildren aren’t buried under a mountain of debt,” said Sen. Orrin Hatch, R-Utah. “If we are going to extend unemployment benefits, then let’s do it without adding to our record debt.”

Last December, Senator Hatch explained why he voted for the Bush administration’s deficit spending, deficits that doubled the National Debt in eight years. Under Bush, “it was standard practice not to pay for things,” he said.

What Senator Hatch isn’t telling the American people is there’s a reason why Congress has always routinely extended unemployment benefits (before the Party of NO appeared on Capitol Hill last year). They don’t add to the National Debt because they’re already financed by state and federal payroll taxes.

The unemployment insurance system is jointly operated by the state and federal governments. Under the Federal Unemployment Tax Act (FUTA), the federal tax rate is 6.2% of taxable wages applied to the first $7,000 of income. Most of the federal payroll tax can be offset by state unemployment taxes, which vary from state to state, as do the benefits.

Over the long run, unemployment is funded by a dedicated revenue stream. It’s paid for.

UPDATE: Unemployment: Report Says Jobs Hole Could Persist For A Decade

UPDATE: David Dayen on FDL:

This extends benefits through November, only four months away. The White House has said they would fight for an additional extension if, as expected, unemployment does not recover significantly. So we’ll have this fight all over again soon. But Democrats basically lost this round…

UPDATE: Senator Sherrod Brown (D-OH) had this to say about his Republican colleagues:

“They voted for Bush tax cuts for the wealthy, charged it to our grandchildren, didn’t pay for it,” he said. They “voted for the giveaway or bailouts to drug and insurance companies in the name of Medicare privatization, charged it to our grandchildren, didn’t pay for it.

“And now they’re saying, because these are laid off workers who have done the right thing for most of their lives and now need some help, that we can’t provide it for them. It’s terrible public policy.”