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Making the Jobless Pay

May 13, 2003

Here's a snapshot of what's driving the tax cut bills now in Congress: In order to give President Bush more benefits primarily for the wealthy, the Senate Finance Committee rejected extending the Temporary Emergency Unemployment Compensation program, which provides additional weeks of unemployment insurance benefits to people unable to find a job. On top of that, the tax cuts being contemplated have very little chance of generating the promised jobs, given that despite $1.3 trillion in cuts approved in 2001, the United States has lost 2 million jobs since Bush became president.

In the last three months, more than half a million jobs have been lost. On this issue, the gap between theory and reality, between claim and outcome, is too big to paper over.

Treasury Secretary John W. Snow has claimed that the cuts would revive what he called a "soggy" economy. But what if they simply drown the economy in an ocean of debt? The deficit is already soaring as a result of the first tax cut.

The Congressional Budget Office has just raised its estimate of the deficit this year to more than $300 billion from the $246 billion it predicted in March.

Tax revenues are $62 billion lower than they were last year at the same time, while spending is $76 billion higher. Congress will probably have to respond soon to the administration's request to raise the debt ceiling from its limit of $6.4 trillion.

Faced with a 6% unemployment rate, Bush is pressuring the Senate to pass something similar to the deceptive $550-billion tax cut package approved by the House on Friday. That package includes much of Bush's original $726-billion proposal and would not entirely eliminate the individual income tax on corporate dividends.

It also assumes that the cuts will not be made permanent and will even be canceled at the end of 2005, an unlikely scenario at best. The Senate passed a proposal for more than $400 billion in cuts meant to be offset by other rate hikes -- another unlikely occurrence -- to technically bring the total cut down to $350 billion.

Some of the lesser measures in the Senate plan might actually help stimulate the economy. For instance, $20 billion in direct aid to the states over two years. But overall, the cuts are targeted at upper-income taxpayers, not the middle class, the poor and the unemployed -- the people who would funnel the money back into the economy quickly.

With two Republican senators, George Voinovich of Ohio and Olympia J. Snowe of Maine, holding their ground at $350 billion in new tax cuts, which is already too much, Bush is turning across the aisle. He is visiting the states of centrist Sens. Jeff Bingaman (D-N.M.), Ben Nelson (D-Neb.) and Evan Bayh (D-Ind.) to pressure them. They should have at least the backbone of Voinovich and Snowe.

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