July 24, 2014

Party That Won’t Tax Millionaires Proposes Slashing Unemployment Benefits in Deal for Middle Class Tax Cut

 

By Travis Waldron on Dec 9, 2011 at 10:55 am

Republicans, while claiming to support a payroll tax cut extension that will primarily benefit the middle class, have cycled through a list of reasons to oppose proposals from Senate Democrats. The GOP refuses to pay for the cut with a surtax on millionaires, even as the wealthiest Americans’ tax rates have fallen to historic lows. Other GOP members have claimed the extension — which would put an extra $1,000 a year in the average American’s pocket — would undermine Social Security (it wouldn’t).

Now, with some members of the party worried that opposing the extension would cause it to lose its reputation for anti-tax zealotry, House Republicans are attempting to make it look as if they support the extension by proposing an alternative plan full of demands they know Democrats won’t accept. One of those demands, the Hill reports, is a drastic reduction in unemployment insurance that lowers a person’s maximum time on benefits from 99 weeks to 59 weeks:

The Republican proposal is expected to reduce the total number of weeks unemployed workers are eligible for aid by as much as 40 weeks and tighten rules for eligibility.

Such a reduction would significantly reduce the cost of extending federal unemployment benefits, making it easier to secure GOP support for a measure that will also include an extension of a payroll tax cut many conservative Republicans dislike.

Unemployment insurance remains one of the GOP’s favorite targets. Republicans have decried the program as a “lifestyle” that creates laziness among its recipients, ignoring the fact that nationally, there are four job applicants for each open job. The idea that unemployment insurance keeps people from seeking jobs is also betrayed by fact: a San Francisco Fed study found that those who qualify for unemployment insurance remain unemployed, on average, just 1.6 weeks longer than those who don’t.

Meanwhile, unemployment insurance remains one of the most effective forms of economic stimulus, since the money is put directly back into the economy. Failure to extend benefits would cost the U.S. economy $57 billion in the first three months of 2012, a 0.38 percent loss in GDP growth over that period. That’s roughly the same rate at which the American economy grew in 2011.

Democrats like Rep. Sander Levin (MI) dismissed the Republican proposal, saying the GOP was more interested in “confrontation” than “common ground.” “They are following a path of blaming victims of the economic downturn,” Levin told the Hill. “I can only hope that when Republicans go home this weekend they will talk with unemployed Americans and begin to understand the exceptionally challenging circumstances they face.”

Update

The GOP plan would cut roughly 20 weeks of benefits out of the unemployment insurance program, according to a copy of the bill obtained by ThinkProgress. A second step in the process would cut another 20 weeks of benefits, ultimately reducing the program from 99 weeks to just 59. In addition, the bill requires those without a high school degree to be enrolled in a GED program to be eligible for benefits, and allows states to do drug screenings or tests as a condition of eligibility if they choose.

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