Fact Check: Deficits, Taxes and Unemployment

By Jim Cason on 12/07/2010 @ 09:30 AM

Tags: Budget

This weekend the Senate failed to approve an extension of tax breaks for families making less than $250,000. The legislation was blocked from coming to a vote by a minority coalition of Republicans and Democrats who want to extend the tax breaks to all households — including those of families that have more than $250,000 a year in income.

Asked about the vote, Republican leader Mitch McConnell said

I’m very hopeful that rates are not going to go up. And what we saw yesterday in the Senate, every single Republican and five Democrats voted that we shouldn’t be raising taxes on anybody. In other words, this bipartisan opposition to raising taxes on anybody at this time.

Yet in his comments on tax cuts on NBC’s Meet the Press, the Senate Minority leader offered no words of concern for the estimated $1 trillion dollars that would be added to the federal budget deficit if Congress decides to extend expiring tax cuts for ten years to families making more than $250,000.

Later in the same program, the Kentucky Senator was asked about extending unemployment benefits for the estimated 2 million people who could lose their benefits at the end of 2010. Senator McConnell acknowledged that the Senate might act to extend these benefits, but he expressed concern about what this extension would do to federal government budget deficits

I think we will extend unemployment compensation. We’ve had some very vigorous debates in the Senate. Not about whether to do it but whether to pay for it as opposed to adding it to the deficit. All of those discussions are still underway.

We’ve got a suggestion for Senator McConnell. If he is concerned about the federal budget deficit, then he should not extend tax cuts to families who don’t need it. In addition, we hope he will embrace the recommendations proposed by Rep. Barney Frank (MA) to cut $1 trillion from the Pentagon over the next ten years. These two cuts together, would reduce the projected federal budget deficit by $2 trillion dollars in ten years.

With that extra money, extending the unemployment benefits would be no problem and would help people who really need a hand right now. The government estimates that extending unemployment insurance through the end of 2011 would only cost about $56 billion.

Let us know what you think.