You’ve probably already read that the jobs/tax bill the House sent over to the Senate in late May is dead — at least for the time being.
On Thursday, the Democratic leadership failed, for the third time, to get the 60 votes need to end debate and proceed to a substantive vote. Senate Majority Leader Harry Reid (D-NV) says he’s going to move on to other things unless/until a couple of Republicans come round.
Still, it’s too soon to order a tombstone.
The tax break extenders part will probably rise again. Can’t have those NASCAR race track owners and rum producers contributing more to the federal treasury that we’re given to understand is in such desperate straits.
Perhaps we’ll also see a revival of some of the changes in the tax code that were supposed to pay for the extenders. Wall Street isn’t so popular these days. So maybe the Democrats will try resurrect the weakened version of their proposal to narrow a loophole that hedge fund managers use to pay the lower capital gains tax rate on a substantial portion of their income.
A bigger question mark is the provision that would have closed a loophole used by owners of professional services companies — doctors, lawyers, accountants, etc. — to shield their income from Social Security and Medicare payroll taxes. Billions a year in underpayments, according to the General Accounting Office.
But those deficit-minded Republicans heeded the outcry about harming small businesses that generate jobs. Lawyers are going to put a lot of unemployed people to work? Senator Olympia Snowe (R-ME) must think so. She previously voted for the jobs/tax bill, but wouldn’t support the latest version because the loophole closer was there.
On the other hand, many, if not all, of the real jobs parts of the bill may truly be as dead as the proverbial doornail. They didn’t die of a thousand cuts. But what the Democratic leadership couldn’t get the magic 60 votes for had been whittled down to a sad remnant of what the Senate had previously passed.
The House had already lopped off a month of extended unemployment benefits. By last Thursday, the extra $25 a week that eligible jobless workers had gotten since the economic recovery act was passed had been eliminated. This would have reduced the average weekly benefit to $284 — not enough to lift a family of three above the federal poverty line.
The extension of the enhanced federal match on state Medicaid costs (FMAP) had also fallen victim to price tag concerns. Instead of a straightforward six-month extension of the 6.2% base rate, the bill would have provided states with 3.2% for three months and 1.2% for the remaining three.
About $8 billion sacrificed on the altar of the deficit. No heed to the impacts on the deficit of the job losses ahead as states make further cuts to rebalance their budgets.
As if that weren’t enough, funds the economic recovery act had provided for a modest increase in food stamp benefits were tapped to partially offset the costs of the rest. I understand that somewhere around $9.5 billion was shifted out of the safety net here.
But this may all be a shuck. Los Angeles Times reporter Janet Hook says that the tax breaks the bill would have extended are worth $32 billion. Nearly enough to cover the unpaid-for part of the jobs bill. Did any Republican suggest they be allowed to die?
More likely, as Washington Post blogger Ezra Klein argues, the Republicans are betting that voters will view the adverse impacts on the economy — and, I would add, their personal situation — as evidence that the Democrats have failed.
But will all Senate Republicans actually stand firm on the issue of unemployment benefits? According to U.S. Department of Labor estimates, more than 1.2 million people have just lost the extended unemployment benefits they presumably were counting on. They’re by no means all in “blue” states.
By the time Senators go home for the July Fourth recess, the number will have swelled to more than 2 million. These people aren’t going to be happy. And I think Republicans are going to have a hard time blaming the Democrats. An even harder time persuading them that restoring their benefits would be fiscally irresponsible — a debt we shouldn’t be leaving their now-poor children.
Senator Snowe has suggested a standalone bill extending unemployment benefits as emergency spending, i.e., without an offset. The Democratic leadership has reportedly said no dice. But I doubt this is the last word.
I do, however, fear that it is for the FMAP extension and the other jobs-related parts of the bill. I hope I’m proved wrong.