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America’s Unemployed Need Employment, Not Extensions
Republicans in the Senate threw the brakes on yet another extension of already extended federal unemployment benefits on Tuesday. The motion to invoke cloture on S. 1845, the Emergency Unemployment Compensation Extension Act, failed on a party-line vote. S. 1845 would have extended federal unemployment benefits through the end of March.
It’s easy to see why such a seemingly small, stop-gap measure, one that would provide tangible help to the many who are struggling to find employment during our ongoing economic downturn, would appear to be a no-brainer to some. However, as I explained in our vote alert issued last week:
The relatively short three-month timeline of this scheme belies its very real and substantial cost. The Congressional Budget Office estimates S. 1845 will increase the deficit by $6.6 billion in 2014. Despite a prolonged fight this fall over out-of-control federal spending, S. 1845 makes no attempt to offset these billions of dollars in new spending.
Our out-of-control national debt and significant deficits each year are creating considerable drag on our economy. It’s irresponsible of Congress to consider new spending without cost-saving reforms or commensurate spending cuts. When it became clear that offsets would be needed to try to move S. 1845 forward, Senator Reed (D-RI) who was also the lead sponsor of S. 1845, proposed an amendment that would have extended benefits for eleven months paid for by prohibiting “double dipping” and tacking on an additional year of spending caps that would keep the sequester in force until 2024. While it’s true that eliminating “double-dipping,” the practice of receiving both unemployment and disability benefits, would be a good, cost-saving reform, another year of sequester is little more than an accounting gimmick.
As evidenced by the Omnibus spending bill in Congress this week, legislators can’t appropriate within even the modest spending caps of the 2011 Budget Control Act now. Assuming they’ll do any better in 2024 is highly questionable. Luckily, the amendment failed, ensuring the cloture vote that followed was also doomed.
It’s worth wondering though, if the unemployment insurance extension was offset, would that be worth supporting? From a strictly budgetary perspective, making sure the new expenditure is paid for is of primary concern to taxpayers. However, research indicates that perpetually extending benefits doesn’t do the unemployed any favors. From the House Ways and Means Committee:
And despite Democrat claims that such spending on UI benefits is the “best stimulus,” all this record-setting benefit spending has bought is the slowest recovery on record. Perhaps not surprisingly, a new study identifies the EUC program as the cause of the painfully slow labor market recovery – as employers have withheld new job offers until after the Federal extended benefits program ends. Another study reinforces that such programs have been behind recent jobless recoveries.
The studies available at the links above illustrate that extending unemployment benefits increases unemployment as employers are discouraged from posting vacancies and workers are discouraged from searching, creating a lose-lose scenario for the labor market. At the same time, what vacancies are available tend not to go to the long-term unemployed. Because the longer someone is jobless, the harder it is to get hired, perpetual extensions provide the unemployed with little, if any, benefit.
As high unemployment rates continue year after year and increasing numbers of individuals stop trying to seek jobs at all, it’s clear that this business as usual approach to unemployment insurance is failing both taxpayers and the unemployed alike. Rather than rubber-stamp extensions, offset or not, legislators should take the time this national crisis deserves to consider real reforms. I mentioned just two in the vote alert:
Block-granting federal unemployment insurance would reduce federal meddling and empower states to ensure scarce dollars are allocated where they are most needed, thereby saving taxpayers money. Stricter guidelines to encourage job-seekers to get back to work sooner could help to disincentivize long-term unemployment, itself a hindrance to re-employment.
But there are lots of other great ideas out there that should be on the table as well. Just this month our friends at the R Street Institute rolled out their own proposals to help the unemployed get to where the work is, overcoming one of the biggest hindrances to employment the labor market is facing. The whole paper is worth a read. Congress can also take up other reforms to help spur job growth such as lowering the corporate tax rate, eliminating costly regulations, repealing the death tax, and many others.
Offsetting unemployment extensions is a good first step, but to really help the unemployed, Congress should let business get back to work.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Taxing Wireless to Pay for…West Virginia Tourism?!
File this one under bizarre tax legislation. Last week, West Virginia state Senator H. Truman Chafin introduced SB 259, which would hit wireless businesses with a $10 million tax hike to fund the West Virginia Division of Tourism.
According to the bill, the new revenue would be used “for the promotion and maintenance of outdoor activities including, but not limited to, skiing and white water rafting.”
While I enjoy carving up snowy mountains and navigating angry river rapids as much as the next guy, I fail to see why wireless companies should foot the bill for their promotion and maintenance. But maybe that’s just me.
Unfortunately, “hidden” cell phone tax legislation like SB 259 is all-too-common these days. In fact, the average nationwide tax burden on wireless service is a whopping 17.2 percent, including federal, state, and local taxes, according to a 2012 study by Scott Mackey of KSE Partners, LLP. To put things in perspective, the average tax rate on other goods and services is 7.4 percent. The study also found that, on average, wireless customers pay an extra $8.07 per month in taxes and fees as a result. That $8.07 is simply another regressive tax that hurts low-income earners in the midst of our stagnating economy and rising health care costs.
Instead of forcing wireless companies (and in turn, cell phone users) to cough up an extra $10 million for tourism, lawmakers in Charleston should focus on scaling back state spending, which soared in the Mountain State by 43 percent between 2000 and 2010.
To avoid higher wireless bills, West Virginia taxpayers should tell Senator Chafin and company that ski slopes, river rapids, and cell phones don’t mix.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Video: House Ways and Means Committee’s Tax Reform Goals
Today, the committee in charge of the Tax Code released a video on how the system doesn’t work and how they plan to fix it. The Republican-led body presents three solutions:
Though these are lofty goals for Congress, it's clear from recent legislation like the 2012 American Taxpayer Relief Act that making a meaningful impact on our Tax Code will require extensive reform. Almost everyone agrees that the system is “too complex, too confusing, and too costly” and that is precisely why having a plan makes sense. Still, identifying the problem is just the first step towards fixing it. U.S. businesses -- big and small -- deserve, a fair, effective, and efficient Tax Code and Washington is in the prime position to fix it.
Here’s hoping that Congress can come together to relieve all taxpayers of the dread and stress of the current Tax Code (a system that has been changed “4,400 times over ten years” by both parties).
For more information on how complex our tax system is, check out NTU’s 2013 Tax Complexity study, which will be updated later this year. NTU Foundation also surveyed folks which tax system the U.S. should change to during our annual Milton Friedman Legacy Day event.
How would you change the Tax Code? Streamline the current system? Completely replace it? Leave a comment down below!0 Comments | Post a Comment | Sign up for NTU Action Alerts
Court Strikes Down Net Neutrality, Leaves Door Open for Internet Regulation
Yesterday’s ruling by the U.S. Court of Appeals for the DC Circuit in Verizon v. FCC offers encouragement, though not complete reassurance, that the legislative branch’s authority over a sweeping telecommunications policy has been reaffirmed. On one hand, the Court wisely struck down “net neutrality” rules that the FCC adopted in 2010 without the consent of Congress, saying that the “agency overreached in barring broadband providers from slowing or blocking selected Web traffic.”
These rules sought to regulate Internet service providers to prevent the discriminatory delivery of broadband. My colleague, Pete Sepp, weighed in on the FCC’s rulemaking process in 2010 when he called network neutrality “a hostile government takeover of the Internet, and with it bureaucratic micromanagement.” Preventing the FCC from excessively regulating in this area is a win for limited government.
Still, the Court’s ruling wasn’t all good news. It also opened the door for FCC regulation of the Internet by asserting that it has jurisdiction over broadband access, though Congress has never granted it such. Plus, the FCC may consider an appeal to the U.S. Supreme Court. All of this means taxpayers will have to remain vigilant to ensure that the Internet remains a vibrant medium for commerce and information sharing.0 Comments | Post a Comment | Sign up for NTU Action Alerts
The owner of Wesley Berry Flowers calls in to talk about the Marketplace Fairness Act and the problems with an Internet Sales Tax; hosts Pete & Doug preview some of the upcoming issues taxpayers will face in 2014 - plus the Outrage of the Week!1 Comments | Post a Comment | Sign up for NTU Action Alerts
Latest Taxpayer's Tab: Congress Already Reworking Budget Deal
Less than one month after its passage, Congress is already revisiting some of the key agreements it reached in the Ryan-Murray budget deal. In this week's Taxpayer's Tab, NTUF compiled all of the bills that would make changes to two major benefits programs: emergency unemployment insurance, and pay for military retirees.
During the December budget negotiations, Congress failed to reach an agreement on how (or whether) to extend emergency unemployment insurance benefits, which were offered to provide relief for long-term unemployed Americans who had exhausted other forms of payments. One of the obstacles lawmakers continue to face is how those benefits would be paid for if they were to continue. A number of proposals have called for a short term extension without any offsets to the cost; others, including an amendment offered by Senator Harry Reid (D-NV), would extend the program for a longer term in exchange for offsets spread out over the next ten (or more) years. A 3-month extension is estimated to cost about $6.56 billion, according to the Congressional Budget Office.
Another point of contention arose regarding retirement benefit calculations for military veterans under the age of 62. Currently, those personnel are offered benefits at a reduced rate. Congress is now debating whether those reductions should exist at all, or whether certain servicemembers -- namely, those retired due to disability -- should be exempt.
For a detailed list of the bills NTUF compiled, check out the latest Tab online here.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Does House Oversight Hearing on Wasteful Spending Mean Hope for Taxpayers?
NTU Vice President Brandon Arnold offered testimony to the House Committee on Oversight & Government Reform today, making recommendations for saving taxpayer dollars and improving efficiency in government – including submitting NTU and U.S. PIRG’s bipartisan savings report, “Toward Common Ground.”
The bipartisan tone may offer some encouragement for taxpayers, who just endured a budget deal that scrapped spending caps over the next two years. All the panelists, and the Representatives who asked questions, offered pro-active proposals for dealing with wasteful federal spending. Perhaps it's just the renewing effect of a new year, but the enthusiasm and energy being focused on finally addressing the most indefensible expenditures of taxpayer money was encouraging.
Arnold echoed a theme heard throughout the hearing saying, “Just one of these 65 recommendations has been enacted into law… there remains much work to be done.”
That attitude that the lack of progress in dealing with government waste was unacceptable was universal.Reps. Carolyn Maloney (D-NY) and Elijah Cummings (D-MD) asked both panels how progress can be made toward getting something done on this front.
Beginning with “low-hanging fruit,” and working to get legislation to the floor, were popular responses echoed by many as they acknowledged the challenges ahead, and failures of recent Congress’ to keep wasteful spending contained.
Committee Chairman Darrell Issa pledged to his Senate counterparts to put any legislation addressing reforms they agreed upon in the Senate Oversight Committee to a vote in the House Oversight Committee.
Arnold concluded, “Although cutting waste can limit some red ink, such efforts alone cannot solve our serious long-term debt and deficit problems. However, they can demonstrate to Americans Congress’s desire to act as a good steward of their hard-earned tax dollars.”
Whether the positive, cohesive, tone will translate into more than one of those NTU and U.S. PIRG proposals being passed by this time next year, time will tell.2 Comments | Post a Comment | Sign up for NTU Action Alerts
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As the year comes to a close, undoubtedly we begin to reflect on the ups and downs of the previous year. But lawmakers in Congress may be looking back a little further than that after reading the Congressional Budget Office's (CBO) latest report on the federal debt and deficit.
Last week, the non-partisan budget agency released an update to its November report, "Choices for Deficit Reduction." The report offers some sober analysis of the country's mounting debts and deficits, which are at historically high levels. The graphic below puts things into some perspective:
As CBO shows, not only are total outlays higher than they've been over the previous three decades, they are on pace to grow even more, and the revenues they're funded by are coming in relatively slowly. That particular trend illustrates the fact that for all the talk of a recovery, the U.S. economy still has a long way to go before things return to pre-recession levels of prosperity. As CBO explains:
"Making the task of deficit reduction more complicated is the economy's slow recovery from the severe recession. By CBO's estimate, the economy is now about 5 million jobs short of where it would be if the unemployment rate was down to its sustainable level and participation in the labor force was back up to its trend. The shortage of jobs has occurred mostly because demand for goods and services has been weak relative to the productive capacity of the economy."
But historical trends mean very little if we can't draw some conclusion for policy and outcomes going forward. CBO paints a rather harsh picture of where the current path of spending and borrowing at such high levels may lead:
"Because federal debt is already unusually high relative to GDP, further increases in that debt could be especially harmful. ... Higher debt would lead to larger interest payments; making those payments would eventually require some combination of lower noninterest spending and higher taxes. In addition, increases in debt tend to reduce national saving, leading to more borrowing from abroad and less domestic investment, which in turn reduces people's future income relative to what it would otherwise be. Also, when debt rises, lawmakers are less able to use tax and spending policies to respond to unexpected challenges, such as economic downturns or international crises. Rising debt could itself precipitate a fiscal crisis by undermining investors' confidence in the government's ability to manage the budget."
At the end of the day, deficit reduction matters a great deal, and is ultimately a matter of either reducing spending, increasing taxes significantly, or both. Lawmakers will have to make a decision about which direction to pursue when they return to Washington for 2014.0 Comments | Post a Comment | Sign up for NTU Action Alerts