House Majority Leader Eric Cantor of Va., and GOP leaders face reporters, on Capitol Hill in Washington, Tuesday, Jan. 14, 2014.
J. Scott Applewhite/AP Photo

The magical cost of tax cuts

Updated
House Republicans are poised to vote, perhaps as early as today, on making a series of temporary tax breaks permanent, at a cost of between $156 billion and $310 billion over 10 years, depending on how the package is structured. How in the world does the GOP intend to pay for this? As it turns out, Republicans don’t even intend to try to pay for the tax breaks.
 
As Danny Vinik noted, the GOP’s justification for this is absurd.
“We have essentially been allowing an R&D tax credit since 1981 in this country,” House Majority Leader Eric Cantor said on Monday about one of the six tax extenders. “So let’s just call it what it is and make it permanent so that we can get back on the path to growth. Addressing growth, addressing our unfunded liabilities connected with entitlement programs – that is the sure way to reduce deficits and reduce the debt burden.”
 
Read that last sentence again, except imagine Cantor used it in support of extending unemployment insurance instead of a deficit-increasing tax cut. It works perfectly. In fact, because the UI extension is temporary and the Republican tax cut is permanent, it makes even more sense. But that’s not how Cantor sees it.
The Majority Leader is playing a foolish game, and if his comments on the House floor this week are any indication, he’s not playing it well.
 
Republicans want to make permanent hundreds of billions of dollars in business tax breaks, but they don’t want to find offsets to pay for any of the tax cuts. Why not? Because the temporary tax breaks have been in place for quite a while.
 
But that’s not a defense. Extended unemployment benefits have been in place for a while, too. With a price tag of under $10 billion, they’d cost far less and according to non-partisan estimates, the jobless aid would be worth 200,000 U.S. jobs just this year. By Cantor’s reasoning, this should be a no-brainer – except House Republican leaders won’t even allow a vote on the benefits.
 
For that matter, responding to domestic natural disasters with emergency federal aid has been the American way for many years, as well. But when Cantor became Majority Leader, he decided disaster relief had to be paid for – no offsets meant no emergency aid.
 
It would appear, then, that when people are struggling, Cantor prioritizes the deficit. When business tax breaks are on the line, Cantor doesn’t think the deficit is especially important.
 
It’s worth emphasizing that this question is separate from the debate over the tax policy itself. There’s a legitimate question about whether these tax breaks are worthwhile or whether they’re an example of corporate welfare.
 
But before we can even have that conversation, we first have to come to terms with the inexplicable standards – House Republicans believe we can afford hundreds of billions of dollars in tax breaks that aren’t paid for, but we can’t afford a bipartisan jobless-aid package that is paid for.
Democrats brought seven unemployed people to the Capitol steps Tuesday to tell their stories in a deeply emotional – and deeply political – news conference designed to paint Republicans as heartless for not allowing a vote on a bill extending unemployment insurance benefits.
 
The people hosted by the Democrats – hailing from Baltimore to Lorraine, Ohio – one-by-one told their story about losing their jobs and about applying for work hundreds of times, only to not hear back. They described watching their unemployment benefits, benefits they need to pay their mortgages and make ends meet, disappear.
 
You have no idea how soul crushing it is to have your daughter tell you she’s a burden,” one unemployed man, Kevin McCarthy of Boonsboro, Md., said from the lectern in tears.
 
Lettice Brown, from Fort Washington, Md., worked as a geographic information systems technician with a contractor for the Census Bureau for six years. She was happy and she loved her work.
 
Less than two weeks after moving in with her boyfriend, and one week after her 30th birthday, Brown was laid off along with half of her office, after the contractor had to cut back under budget pressure from the sequester. “I have never been unemployed before, and believe me, if you haven’t been unemployed, you have no idea what it’s like,” Brown said.
For its part, the White House said yesterday President Obama has no intention of signing corporate tax breaks into law unless the House takes up emergency unemployment benefits.
 

Eric Cantor, Tax Policy and Unemployment

The magical cost of tax cuts

Updated