Federal Unemployment Deficit
McDermott in July introduced a more ambitious bill that would have extended through 2010 the compensation programs included in the stimulus act. Those benefits are now scheduled to expire at the end of this year.
But with a price tag of up to $70 billion, that bill would have been far more difficult to pass. McDermott instead decided to offer the scaled-down 13-week extension to meet the urgent needs of those seeing their benefits disappear this year.
McDermott said his bill would not add to the deficit because it would extend for a year a federal unemployment tax of $14 per employee per year that employers have been paying for more than 30 years.
Here we have some great examples of bad government!!!
First note that the bill extends a temporary tax, a tax that was scheduled to have been sunset sometime in the past 30 years!
If anyone ever questions the Kentucky Club for Growth's strong opposition to the creation of new taxes, this is the case in point. New taxes, even temporary ones, never die.
Second, this is an example of the tax and spend mindset that has led to disastrous deficits and debt.
While the bill itself is budget neutral, note that it proposes to pay for a 13-week program with a year-long tax. This 13 week extension will take four times that time to pay back. It doesn't add to the annual deficit, but that time delay is a "structural deficit."
The economy is weak, and we should recognize that, but not use it as an excuse for irresponsibility.