Friday, November 19, 2010

Rep. John Kline To The Unemployed, Bah Humbug

In an MPR interview this week, Rep. John Kline (R-MN-02), the incoming chairman of the House Education and Labor Committee, announced he doesn't support an extension in unemployment:

"We simply don’t have the money to keep extending unemployment benefits indefinitely. We just don’t have the money."

But Kline does supports and is willing to pay for the Bush tax cuts for the wealthy. By budget standards, we have John Kline saying $830 billions to finance tax cuts for the wealthy is acceptable, but $12.5 billion to extend unemployment benefits 3 months when they are now due to end during the holidays is too expensive.

Is there any doubt who John Kline is working for during this financial crisis? The unemployment extension could be paid for by not allowing the tax credits to continue for the wealthy and as the majority of Americas don't approve of the wealthy tax breaks, shouldn't Kline also be supporting that?

Instead Kline wants to extending the Bush tax cuts for the rich. In Kline's world, $830 billion to finance tax cuts for the wealthy is fine, but $12.5 billion to extend unemployment benefits for three months is too expensive. Pat Garofalo at ThinkProgressive sums this up perfectly by pointing out:

"In the last forty years, the U.S. has never allowed extended benefits to expire with the unemployment rate above 7.2 percent, far below today’s rate of 9.6 percent. Plus, there are currently five unemployed persons for every job opening in the country. In fact, there are so few job openings, that even if every open position in the country were filled, four out of five unemployed workers would still be out of work. But for Kline and the other House Republicans, extending tax cuts for the rich is much higher on the priority list then ensuring that these households have an adequate safety net"

Because Kline and Congress voted down a three month extension of unemployment yesterday, 2.5 million Americans will run out support during the holiday season. By Kline's insistance in supporting a renewal of the tax cut for those who absolutely don't need it, America loses $830 billion over ten years, or roughly $83 billion per year. That would easily pay for unemployment compensation until the jobs situation improves...

What's more important to Kline, 2.5 million unemployed Americans or a few rich friends? Which is better for America?


Minnesota Central said...

It is pretty easy to blame the Republicans but the Democrats offered the legislation they knew was symbolic. Symbolic because it had virtually no chance of passage. Based on the rules of the House (suspension bills aren't subject to amendment, nor to the motion to recommit), this legislation would require a 2/3rd approval … meaning at least 35 Republicans would have to agree to move it forward. Then it would go the Senate where Republicans had previously put a hold on S. 3706 – Americans Want to Work Act, which is similar to the one House rejected, so it would be destined for inaction.

What is being offered is actual tax cuts for business to encourage hiring as it would extend for one year the HIRE Act payroll tax credit for businesses hiring those unemployed for over 60 days ... plus it doubles the credit amount to $2,000 for businesses hiring those who have exhausted their UI eligibility.

On the surface, Mr. Kline could vote against it since Minnesota's unemployment levels is probably not high enough to get any benefits for our residents (MN is at 7% and the target for the legislation is those states with unemployment above 7.5%). Heck, employment varies by community ... Kline's Lakeville is at 6.4% while Hutchinson is at 9.9%.
There is a trickle down effect by not providing targeted UI benefits. Those benefit checks would be spent immediately on housing and living expenses. Failure to approve it results in home foreclosures resulting in lower selling values; evictions for rental property and the hassles of that; increased demand at food banks; great demand on hospitals for uncompensated care; etc. ... all that leads to lowering the economic activities ...resulting in less demand for products and services ... resulting in additional layoffs. Since this will happen in areas that are depressed already (not necessarily Minnesota) it will cause problems in those states ... over time, as people realize that Minnesota has lower unemployment than other states, we will become a magnet for unemployed workers ... which will create more demands on our systems, eventually resulting in Minnesota's unemployment rising higher ... while other states will have less workers and thus lower their unemployment. If someone drives from Hutchinson to Lakeville for a job, it will have no effect on Minnesota ... but if the person drives over from Wisconsin which had a 7.8% unemployment and thus would have gotten the additional benefit, it will create great competition for our jobs ... and potentially, Wisconsinites will move here ... and then when the next-Lockheed Martin decides to close it's doors, Minnesota suffers.

Minnesota Central said...

The Republicans solution has always been lower taxes ... Arthur Laffer argues in a Wall Street Journal entry to "declare a federal tax holiday for 18 months. No income tax, no corporate profits tax, no capital gains tax, no estate tax, no payroll tax (FICA) either employee or employer, no Medicare or Medicaid taxes, no federal excise taxes, no tariffs, no federal taxes at all, which would have reduced federal revenues by $2.4 trillion annually. Can you imagine where employment would be today? How does a 2.5% unemployment rate sound?"
Yeah, that makes sense ... nobody pays taxes ...

Mr. Kline does not have a good track record ... the Bush tax cuts, the unfunded wars, the unfunded Prescription D Medicare expansion and the Bush stimulus all added to the national debt.

One might think that Mr. Kline is finally realizing his mistakes, but I think this his NO will just create more problems.

Here's my suggestion ... pass S. 3706 - Americans Want to Work Act, which is similar to the one House rejected, and include a Tax Holiday for employer paid Federal Unemployment Tax (FUT) and let the federal government fund the State Unemployment Tax (SUT) for one year. Employers won't hire until there is a demand that their current employees cannot handle with overtime ... and we are not there yet ... but the employers that I have talked with say they will not re-hire now because their SUT has risen based on recent layoffs ... get rid of the heavy premium that employers are paying and they might rehire.

Extending the Bush Tax Cuts should have nothing to do with this decision ... yet, extending the UI benefit may become part of a compromise bill.