Nothing is more important to U.S. Senate Republicans than extending the Bush-era tax cuts for the nation's wealthiest households. A day after senior congressional Republicans met with President Barack Obama about forging a way forward, Senate Republicans signed a letter vowing to block all other significant legislation until tax cuts are extended for all. That is irresponsible, and it confirms that their narrow interests are not in line with the concerns of most Americans. Obama and Senate Democrats should negotiate in good faith for a reasonable agreement on the tax cuts, but they should not give in to this all-or-nothing demand.
Senate Minority Leader Mitch McConnell of Kentucky defended the Republican ultimatum by claiming congressional Democrats and the president are ignoring the message from the election results. But it is McConnell and his fellow Republicans who have misread voters. The Democrats lost seats because of voter fears about the lack of jobs and to a lesser extent the size of the federal deficit — not because Democrats oppose adding to the deficit by extending tax cuts for the wealthy.
Obama supports extending the tax cuts to 98 percent of American households. Extending the tax cuts for the top 2 percent with incomes of $250,000 or more, as Republicans insist, would exacerbate the very problems that voters want addressed. It would add $700 billion to the federal deficit over 10 years without stimulating the economy to create jobs, since wealthy people tend to save rather than spend extra income.
The Senate Republicans' intransigence means a host of national priorities are being held hostage, most direly the extension of federal emergency unemployment benefits, which have expired. If these benefits are not renewed, an estimated 2 million Americans will lose this financial lifeline by the end of the year, even as the country's jobless figures continue to set records for long-term unemployment. There are still five unemployed people for every job opening.
The lapse of jobless benefits will exacerbate the nation's jobs crisis by pulling money out of the economy. An estimated 800,000 jobs have been saved by the spending associated with federal jobless benefits so far, according to the White House Council of Economic Advisers. It predicts that 600,000 jobs will be lost by the end of next year if the benefits are not extended. Without extended benefits, Florida would have had 43,392 fewer jobs as of September 2010, and failure to extend benefits again could cost the state 46,846 jobs by the end of next year.
Other vital legislative actions that have stalled due to the Republican stance include the ratification of the New START arms treaty with Russia, a measure that Republicans like Gen. Colin Powell say is essential for national security. But none of this matters to McConnell and his colleagues when tax cuts for the rich are at stake.
One reasonable idea from Sen. Charles Schumer, D-N.Y., is to raise the threshold, allowing tax cuts to expire only for households with incomes over $1 million— the millionaires and billionaires who have gained the most in America's winner-take-all economy. But even this compromise hasn't garnered Republican support.
The House voted Thursday to extend the tax cuts only for those households earning up to $250,000, which probably won't fly in the Senate. Obama and congressional Democrats should keep negotiating with Republicans. But they should not cave in to any deal that temporarily extends the tax cuts for all for two or three years in exchange for movement on unemployment benefits and other issues. That would only delay tough decisions, increase the deficit and keep the tax cut issue alive for more posturing and fundraising before the next election.