An $80 billion-plus Senate plan promised an infusion of cash to build roads and schools, help local governments keep teachers on the payroll, and provide rebates for homeowners who make energy-saving investments. Two months after the plan was introduced, most of those main elements remain on the Senate's shelf.Remember when the Democrats campaigned on how they would bring back "Pay-as-you-go" budgeting so that they didn't add to the deficit. Well, that's a laugh. Either PAYGO doesn't apply to what they're doing or they waive the rule. And that was before they passed almost $800 billion in a stimulus package that didn't stimulate the economy and then passed their health care bill that won't do anything good for jobs. So now they're trying to shift to talking about what they can do to bring down unemployment and they don't have the money to do anything except for a series of small, but costly measures that won't do anything to get people back to work.
Obama's proposed $250 bonus payment to Social Security recipients is dead for the year, having lost a Senate vote last month.
What's going ahead instead are small-bore initiatives. That includes modest help for small business or simple extensions of parts from last year's economic stimulus measure. None is expected to make an appreciable dent in an unemployment rate, stubbornly stuck at 9.7 percent, which is more that double what it was three years ago.
When the Senate returns Monday, the first order of business will be trying to restore a one-month extension of health insurance subsidies and emergency unemployment aid for people who have been out of a job for more than six months. Republicans stopped a monthlong, $10 billion temporary jobless aid measure last month and insisted that the measure not add to the deficit.In other words, they're going to continue the same sorts of things that were part of last year's stimulus package with probably the same results. If $862 billion didn't stimulate the economy, why would adding about $100 billion do more?
Democrats are optimistic that the jobless aid will pass -- first as $10 billion stopgap and then as part of a broader bill extending the benefits through the end of the year. The second, larger bill includes aid to cash-starved state governments, higher Medicare payments for doctors and an extension of several tax breaks.
That larger measure, to be financed mostly by adding almost $100 billion to the debt, is the biggest piece of the jobs agenda with a good chance to pass into law. But it doesn't contain any new ideas for jump-starting the economy. It just extends elements of Obama's $862 billion economic stimulus package, which is earning uneven reviews with voters.
And then there are the Bush tax cuts that are set to expire. President Obama would like to extend them for everyone except individuals earning over $200,000 or families making over $250,000. Republicans want to keep them for everyone arguing that any sort of tax increase in a recession will be a jobs killer. Whatever they decide to do, they risk angering just about everyone if they don't decide soon.
If Congress does nothing for the rest of this year, just about everyone who pays federal income taxes will owe more next year.So whatever they decide to do, expect the debt to go up even more.
If you make $75,000 a year and sell a stock for a profit, next year you’ll pay a higher capital gains tax. If you take a $1,000 tax credit for having one child, you’ll only be able to take $500 in 2011.
And if you are a family making more than $250,000 a year, some of your itemized deductions will vanish and you will pay more taxes on income, capital gains and stock dividends.
The possibility of such tax increases exists because virtually all the tax cuts approved by Congress in 2001 and 2003 and signed into law by former President George W. Bush expire at the end of this year.
The CBO predicts that if Congress approves Obama’s budget — including keeping the lower tax rates for families under $250,000 — the federal treasury will lose a staggering $2.2 trillion in the next 10 years.Think how much easier such a decision would be if we hadn't already blown so much money on a failed stimulus package. That's the real dang shame of that blown opportunity. Not only did we miss the chance to do something that would have really stimulated the economy, we also blew so much money that all our other choices on other questions become so constricted.
The result is a series of difficult choices for policy makers and lawmakers. Democrats warn that if all the tax cuts are extended, the deficit will get worse because it could lead to higher interest rates. Republicans say that raising taxes on the wealthy will damage the economy.