/PRNewswire/ -- Secretary of Labor Hilda L. Solis today issued the following statement regarding President Obama's framework for a bipartisan agreement to extend Unemployment Insurance and help middle-class families. The framework includes $56 billion to extend Unemployment Insurance, a $120 billion payroll tax cut for workers, $40 billion in tax cuts for the nation's hardest-hit families and students, and 100 percent expensing for small businesses over the course of 2011.
"Yesterday President Obama laid out a thoughtful framework for a bipartisan agreement that would extend Unemployment Insurance and keep the taxes paid by middle-class families from increasing.
"By the president's own account, the agreement is not perfect. But it is crucial for American families and for the American economy.
"The framework avoids a $3,000 tax increase for the typical working family and ensures that millions of working-class Americans won't see their tax cuts go away next year either. It also continues the American Opportunity Tax Credit for households with college-bound students and the Earned Income Tax Credit for low-income families. These are high-impact, job-creating tax cuts for working families.
"The agreement also provides a critical extension of unemployment benefits through the end of 2011. Without it, by the end of December, 2 million men and women looking for work would see their unemployment benefits come to an early end. Over the next year, their ranks would increase to more than 7 million people. For these individuals — none of whom were fired or quit, but who lost their jobs through no fault of their own — this means not having to worry their unemployment benefits could be eliminated abruptly as they search for jobs.
"This is a smart investment, not only in those who continue to look for work but for the economy as a whole. Every dollar that goes toward Unemployment Insurance generates $2 in economic activity. In fact, since the start of the recent recession, the Unemployment Insurance program has helped to boost gross domestic product by $315 billion. It also has saved an average of 1.6 million jobs per quarter.
"In addition to the UI extension, the president's framework includes measures for jump-starting growth and spurring private sector job creation. An important payroll tax cut will help more than 155 million workers and provide nearly $120 billion in tax relief next year. The president also fought for a provision that would temporarily allow 2 million businesses to expense all of their investments in 2011. This "complete expensing" could generate more than $50 billion in additional investment, and it would be the largest temporary investment incentive in American history.
"These are all important, responsible, temporary measures to support our economy that will not add costs by the middle of the decade. I share the president's belief that it is not affordable to make the high-income tax cuts permanent and look forward to that debate in the years ahead.
"In the midst of political rhetoric, it can be far too easy to lose sight of the fact that this economy belongs to all of us — whatever our income or employment status. The president understands that, and he is leading the way on a difficult but important compromise.
"I urge federal legislators to support this agreement, not just because it is the right thing to do for those who are desperately looking for work this holiday season but because it is the right thing to do for everyone in America."
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Showing posts with label tax cuts. Show all posts
Showing posts with label tax cuts. Show all posts
Thursday, December 9, 2010
Thursday, July 9, 2009
With unemployment skyrocketing, Libertarians suggest real stimulus
America’s third largest party Thursday criticized Democrat and Republican leaders in Congress for suggesting that rising unemployment can be solved by passing another “stimulus” government expansion, or by spending current appropriations more quickly. Libertarians propose an alternate package of tax and regulatory relief that will create the jobs Americans need.
When Congress passed President Barack Obama’s “stimulus” package early this year the White House stated the spending expansion would keep unemployment below eight percent. It instead skyrocketed to a 26-year high of 9.5 percent, which Republicans blame on not spending the money fast enough and Democrats claim is reason to pass another, similar bill.
“While Democrats are proposing another several hundred billion dollars on dog parks and ACORN recruiting and Republicans are complaining Obama isn’t spending stimulus money fast enough, Libertarians are focused on growth policies that create the jobs Americans need,” said Donny Ferguson, Libertarian National Committee Communications Director.
“We can start by preserving the 2001 and 2003 pro-growth tax cuts, scale back taxes on investments so job creators can expand their businesses, reduce taxes on individuals so Americans will have more money to save and meet basic needs and reduce unnecessary and unneeded federal regulations that are stopping employers from creating jobs,” said Ferguson. “The Libertarian Party is the only party in America with a proven plan to create the jobs Americans need.”
“Poll after poll shows Americans are skeptical of trying to spend our way to prosperity. Poll after poll also shows they agree with the Libertarian Party that government cannot create wealth. It’s no wonder that’s why Americans are showing a growing interest in the Libertarian Party’s common-sense, reasonable and proven job growth policies.”
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When Congress passed President Barack Obama’s “stimulus” package early this year the White House stated the spending expansion would keep unemployment below eight percent. It instead skyrocketed to a 26-year high of 9.5 percent, which Republicans blame on not spending the money fast enough and Democrats claim is reason to pass another, similar bill.
“While Democrats are proposing another several hundred billion dollars on dog parks and ACORN recruiting and Republicans are complaining Obama isn’t spending stimulus money fast enough, Libertarians are focused on growth policies that create the jobs Americans need,” said Donny Ferguson, Libertarian National Committee Communications Director.
“We can start by preserving the 2001 and 2003 pro-growth tax cuts, scale back taxes on investments so job creators can expand their businesses, reduce taxes on individuals so Americans will have more money to save and meet basic needs and reduce unnecessary and unneeded federal regulations that are stopping employers from creating jobs,” said Ferguson. “The Libertarian Party is the only party in America with a proven plan to create the jobs Americans need.”
“Poll after poll shows Americans are skeptical of trying to spend our way to prosperity. Poll after poll also shows they agree with the Libertarian Party that government cannot create wealth. It’s no wonder that’s why Americans are showing a growing interest in the Libertarian Party’s common-sense, reasonable and proven job growth policies.”
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Saturday, January 10, 2009
Economic Recovery Watch: Sobering Jobless Data Highlight Need for Recovery Package to Focus On Hard-Hit Families and States
/PRNewswire-USNewswire/ -- Since a decline in overall demand is the main cause of rising unemployment and the weak economy, the economic recovery package should focus on putting money in the hands of people who will spend it quickly, according to the Center on Budget and Policy Priorities.
Most economists agree that two cost-effective ways to do this are by helping hard-pressed families, such as those with low incomes and those that have experienced layoffs, and helping states avert steep budget cuts and tax increases that would reduce overall demand. In fact, these measures would do more to protect jobs and the economy than the business tax cuts and certain other measures that some in Congress are promoting as "job creators."
These conclusions are widely shared among economists. Mark Zandi, chief economist for Moody's Economy.com and a former advisor to presidential candidate John McCain, endorsed them earlier this week, stating: "To provide the largest bang for the buck, a well-designed stimulus plan should include a temporary increase in government spending... The most efficacious spending includes extending unemployment insurance benefits, expanding the food stamp program, and increasing aid to hard-pressed state and local governments."(1)
-- Poor families are more likely than businesses or higher-income families to spend quickly any new income they receive. The Congressional Budget Office has stated that "the efficacy of fiscal stimulus depends critically on households' tendency to spend the income placed in their hands."(2) CBO has also stated, "Lower-income households are... more likely to be among those with the highest propensity to spend. Therefore, policies aimed at lower-income households tend to have greater stimulative effects."(3)
The reason is simple. Families that are having difficulty affording food, shelter, and other necessities will spend any new income they receive to cover those basic costs. Higher-income families, in contrast, are likely to save more of any extra income.
So are businesses. As Goldman Sachs has stated, "companies don't spend money just because it's there to spend. To justify outlays for new projects, the expected returns have to exceed the costs, and that usually requires growth in demand strong enough to put pressure on existing resources."(4) This is why a 2008 CBO analysis comparing different stimulus proposals put corporate tax cuts in the lowest category for cost-effectiveness.(5)
-- Food stamps and unemployment insurance are two of the most effective forms of stimulus. The CBO analysis cited above put expanded food stamps and unemployment insurance in the highest category for cost-effectiveness as stimulus. "Additional [food stamp] benefits are likely to be spent rapidly by recipients, who tend to be experiencing periods of economic difficulty," CBO noted.
As for unemployment insurance, then-CBO director Peter Orszag told Congress in 2007 that "research has shown that the unemployment insurance system is among the most effective dollar-for-dollar economic stabilizers that we have in terms of counterbalancing periods of economic weakness."(6) Supporting spending by unemployed workers in hard-pressed communities helps prevent the spread of layoffs and loss of jobs in those communities.
-- But unemployment insurance reforms are needed. Fewer than half of unemployed workers actually receive jobless benefits because the unemployment insurance program, designed in the 1930s, is seriously out of date in many states. Most states, for example, require applicants to look for a full-time job, even if they are parents raising very young children and were working part-time before being laid off. These laws -- designed when most workers were married men who were the sole breadwinners for their family -- particularly disadvantaged women, who are much more likely to work part-time than men.
Congress is considering financial incentives to encourage more states to adopt reforms that would allow more part-time and other laid-off workers to qualify for benefits. States that adopt the reforms would receive temporary federal funds to cover the cost of paying the associated benefits for several years, but there would be no ongoing cost to the federal government, because regular unemployment insurance benefits are fully state-funded.
-- Fiscal relief is also badly needed. Prior to the recession, states not only balanced their budgets every year but also had built up the largest budget reserves in recent history. (This refutes the claim by some that states' budget problems reflect fiscal mismanagement.) The recession has largely wiped out these reserves. Already 30 states have had to cut services ranging from health care to education, and more than a dozen have raised revenues.
As a result of the deepening recession, state deficits are likely to total $350 billion to $370 billion over the next 2 1/2 years. Without fiscal relief to close part of that gap, states will have to institute exceedingly deep budget cuts and tax and fee increases. Both kinds of measures reduce overall demand: tax increases leave consumers with less money to spend, and budget cuts reduce state payments to vendors, benefit recipients, and others, thereby taking money out of the economy. These measures would undercut the stimulus Washington is trying to provide.
-- Loans are no substitute for fiscal relief. A few policymakers support converting the fiscal relief to loans. This would render it ineffective as stimulus. Many states have legal barriers that explicitly prohibit them from borrowing funds to cover operating expenses. Even states that could accept the loans would be reluctant to do so, since they cannot know when their budgets will recover sufficiently to begin repaying the loans. In the last two recessions, most states' fiscal problems continued two to three years after the economy hit bottom.
Funds for infrastructure projects that can be undertaken in the next couple of years constitute effective stimulus, as well. Such infrastructure investments are appropriate measures to include in a recovery package.
The Center on Budget and Policy Priorities is a nonprofit, nonpartisan research organization and policy institute that conducts research and analysis on a range of government policies and programs. It is supported primarily by foundation grants.
NOTES:
(1) Mark Zandi, "The Economic Impact of a $750 Billion Fiscal Stimulus Package," testimony before the House Democratic Steering and Policy Committee Forum, January 6, 2009.
(2) Congressional Budget Office, "Economic Stimulus: Evaluating Proposed Changes in Tax Policy," January 2002, http://www.cbo.gov/ftpdoc.cfm?index=3251&type=0.
(3) Congressional Budget Office, "Options for Responding to Short-Term Economic Weakness," January 2008, http://www.cbo.gov/ftpdocs/89xx/doc8916/01-15-Econ_Stimulus.pdf.
(4) GS Weekly, September 21, 2007.
(5) CBO, 2008.
(6) "State of the U.S. Economy and Implications for the Federal Budget," Hearing before the House Budget Committee, House of Representatives, December 5, 2007.
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Most economists agree that two cost-effective ways to do this are by helping hard-pressed families, such as those with low incomes and those that have experienced layoffs, and helping states avert steep budget cuts and tax increases that would reduce overall demand. In fact, these measures would do more to protect jobs and the economy than the business tax cuts and certain other measures that some in Congress are promoting as "job creators."
These conclusions are widely shared among economists. Mark Zandi, chief economist for Moody's Economy.com and a former advisor to presidential candidate John McCain, endorsed them earlier this week, stating: "To provide the largest bang for the buck, a well-designed stimulus plan should include a temporary increase in government spending... The most efficacious spending includes extending unemployment insurance benefits, expanding the food stamp program, and increasing aid to hard-pressed state and local governments."(1)
-- Poor families are more likely than businesses or higher-income families to spend quickly any new income they receive. The Congressional Budget Office has stated that "the efficacy of fiscal stimulus depends critically on households' tendency to spend the income placed in their hands."(2) CBO has also stated, "Lower-income households are... more likely to be among those with the highest propensity to spend. Therefore, policies aimed at lower-income households tend to have greater stimulative effects."(3)
The reason is simple. Families that are having difficulty affording food, shelter, and other necessities will spend any new income they receive to cover those basic costs. Higher-income families, in contrast, are likely to save more of any extra income.
So are businesses. As Goldman Sachs has stated, "companies don't spend money just because it's there to spend. To justify outlays for new projects, the expected returns have to exceed the costs, and that usually requires growth in demand strong enough to put pressure on existing resources."(4) This is why a 2008 CBO analysis comparing different stimulus proposals put corporate tax cuts in the lowest category for cost-effectiveness.(5)
-- Food stamps and unemployment insurance are two of the most effective forms of stimulus. The CBO analysis cited above put expanded food stamps and unemployment insurance in the highest category for cost-effectiveness as stimulus. "Additional [food stamp] benefits are likely to be spent rapidly by recipients, who tend to be experiencing periods of economic difficulty," CBO noted.
As for unemployment insurance, then-CBO director Peter Orszag told Congress in 2007 that "research has shown that the unemployment insurance system is among the most effective dollar-for-dollar economic stabilizers that we have in terms of counterbalancing periods of economic weakness."(6) Supporting spending by unemployed workers in hard-pressed communities helps prevent the spread of layoffs and loss of jobs in those communities.
-- But unemployment insurance reforms are needed. Fewer than half of unemployed workers actually receive jobless benefits because the unemployment insurance program, designed in the 1930s, is seriously out of date in many states. Most states, for example, require applicants to look for a full-time job, even if they are parents raising very young children and were working part-time before being laid off. These laws -- designed when most workers were married men who were the sole breadwinners for their family -- particularly disadvantaged women, who are much more likely to work part-time than men.
Congress is considering financial incentives to encourage more states to adopt reforms that would allow more part-time and other laid-off workers to qualify for benefits. States that adopt the reforms would receive temporary federal funds to cover the cost of paying the associated benefits for several years, but there would be no ongoing cost to the federal government, because regular unemployment insurance benefits are fully state-funded.
-- Fiscal relief is also badly needed. Prior to the recession, states not only balanced their budgets every year but also had built up the largest budget reserves in recent history. (This refutes the claim by some that states' budget problems reflect fiscal mismanagement.) The recession has largely wiped out these reserves. Already 30 states have had to cut services ranging from health care to education, and more than a dozen have raised revenues.
As a result of the deepening recession, state deficits are likely to total $350 billion to $370 billion over the next 2 1/2 years. Without fiscal relief to close part of that gap, states will have to institute exceedingly deep budget cuts and tax and fee increases. Both kinds of measures reduce overall demand: tax increases leave consumers with less money to spend, and budget cuts reduce state payments to vendors, benefit recipients, and others, thereby taking money out of the economy. These measures would undercut the stimulus Washington is trying to provide.
-- Loans are no substitute for fiscal relief. A few policymakers support converting the fiscal relief to loans. This would render it ineffective as stimulus. Many states have legal barriers that explicitly prohibit them from borrowing funds to cover operating expenses. Even states that could accept the loans would be reluctant to do so, since they cannot know when their budgets will recover sufficiently to begin repaying the loans. In the last two recessions, most states' fiscal problems continued two to three years after the economy hit bottom.
Funds for infrastructure projects that can be undertaken in the next couple of years constitute effective stimulus, as well. Such infrastructure investments are appropriate measures to include in a recovery package.
The Center on Budget and Policy Priorities is a nonprofit, nonpartisan research organization and policy institute that conducts research and analysis on a range of government policies and programs. It is supported primarily by foundation grants.
NOTES:
(1) Mark Zandi, "The Economic Impact of a $750 Billion Fiscal Stimulus Package," testimony before the House Democratic Steering and Policy Committee Forum, January 6, 2009.
(2) Congressional Budget Office, "Economic Stimulus: Evaluating Proposed Changes in Tax Policy," January 2002, http://www.cbo.gov/ftpdoc.cfm?index=3251&type=0.
(3) Congressional Budget Office, "Options for Responding to Short-Term Economic Weakness," January 2008, http://www.cbo.gov/ftpdocs/89xx/doc8916/01-15-Econ_Stimulus.pdf.
(4) GS Weekly, September 21, 2007.
(5) CBO, 2008.
(6) "State of the U.S. Economy and Implications for the Federal Budget," Hearing before the House Budget Committee, House of Representatives, December 5, 2007.
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Thursday, January 8, 2009
Libertarians: We're Not Going to Spend Our Way to Economic Recovery
American's largest third party is calling plans by the incoming Obama administration a "multibillion-dollar boondoggle."
"We're not going to spend our way to economic recovery," says Andrew Davis, a spokesperson for the Libertarian Party. "You can't even call Obama's economic plans a gamble because the results are written in stone. We've tried this Keynesian experiment many times in the past, with no proven success. It's nothing but a multibillion-dollar boondoggle."
The Libertarian Party says that Obama's spending proposals, which include funding the largest public works program since the 1950s, will take too long to implement and don't pass a cost/benefit test.
"The best plan for economic recovery would be giving more money back to taxpayers in the form of tax cuts, which can increase consumer spending and increase job creation," says Davis. "It will also avoid the corruption and wastefulness of government spending—something that must be addressed at once if we expect to remain a free and prosperous nation."
"Public works projects, like those proposed by the Obama administration, will take too long to implement and many will cost far more than their economic benefit," Davis explains. "So, not only will the government be spending taxpayer money on wasteful projects, it be spending money during a time when economic relief is not needed. Conversely, tax cuts are always in season."
The Libertarian Party also warns that adding close to a trillion dollars in additional government spending to the budget will push the United States closer to financial ruin.
"Elected officials don't like to talk about the reality of government spending because it's not an issue that gets them reelected, especially when they will be long-gone before it comes time to pay the piper." says Davis. "However, we've reached an event horizon in spending that if government doesn't immediately begin to cut its programs, the only option will be massive tax increases unlike Americans have ever seen."
Davis says the government's focus should be on permanent and significant tax cuts. "However, any tax cuts absolutely have to be offset by a reduction in government spending, or else we're merely asking for higher taxes in the future," Davis explains. "We must not make the same mistakes of the Bush administration, which cut taxes, but also dramatically increased government spending."
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"We're not going to spend our way to economic recovery," says Andrew Davis, a spokesperson for the Libertarian Party. "You can't even call Obama's economic plans a gamble because the results are written in stone. We've tried this Keynesian experiment many times in the past, with no proven success. It's nothing but a multibillion-dollar boondoggle."
The Libertarian Party says that Obama's spending proposals, which include funding the largest public works program since the 1950s, will take too long to implement and don't pass a cost/benefit test.
"The best plan for economic recovery would be giving more money back to taxpayers in the form of tax cuts, which can increase consumer spending and increase job creation," says Davis. "It will also avoid the corruption and wastefulness of government spending—something that must be addressed at once if we expect to remain a free and prosperous nation."
"Public works projects, like those proposed by the Obama administration, will take too long to implement and many will cost far more than their economic benefit," Davis explains. "So, not only will the government be spending taxpayer money on wasteful projects, it be spending money during a time when economic relief is not needed. Conversely, tax cuts are always in season."
The Libertarian Party also warns that adding close to a trillion dollars in additional government spending to the budget will push the United States closer to financial ruin.
"Elected officials don't like to talk about the reality of government spending because it's not an issue that gets them reelected, especially when they will be long-gone before it comes time to pay the piper." says Davis. "However, we've reached an event horizon in spending that if government doesn't immediately begin to cut its programs, the only option will be massive tax increases unlike Americans have ever seen."
Davis says the government's focus should be on permanent and significant tax cuts. "However, any tax cuts absolutely have to be offset by a reduction in government spending, or else we're merely asking for higher taxes in the future," Davis explains. "We must not make the same mistakes of the Bush administration, which cut taxes, but also dramatically increased government spending."
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