The Jobs at Stake in the Tax Cut Fight

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BY HERITAGE.ORG – Last Friday the Labor Department reported that private sector employers added an anemic 50,000 net jobs to the U.S. economy in November. That is far fewer than what is needed to absorb discouraged workers reentering the workforce or population growth. As a result, unemployment rose to 9.8 percent, marking the 19th consecutive month that our nation’s unemployment rate topped 9 percent, a post–World War II record.


Faced with this record breaking unemployment, what did the leftist Senate majority do the very next day? They voted to raise taxes, of course. Fortunately, a bipartisan coalition of Republican and Democratic Senators defeated the Obama tax hikes, setting the stage for an all-or-nothing tax showdown this week.

With unemployment at 9.8 percent and President Barack Obama 7.3 million jobs short of where he promised the economy would be by December 2010, just how many jobs are at stake in this week’s negotiations? The Heritage Foundation’s Center for Data Analysis crunched the numbers on various possible tax proposals and estimates that:

Permanently extending current tax rates would cause no further job losses in 2011 or over the next 10 years;

Raising taxes on just those making more than $1 million would cause 78,000 lost jobs in 2011 and 198,000 lost jobs by 2020;

Raising taxes on individuals making more than $200,000 and families making more than $250,000 would cause 238,000 jobs lost in 2011 and 693,000 jobs lost by 2020;

Extending current tax rates for just two years would cause 949,000 job losses by 2020;

Extending current tax rates for just one year would cause 1,056,000 job losses by 2020; and

Allowing all the tax hikes would cause 550,000 job losses this year and 1,205,000 job losses by 2020.

And these CDA numbers do not even capture the uncertainty caused by Congress’s failure to set tax rates in a responsible time frame. Jeffrey Lacker, president of the Richmond Federal Reserve, said in an October speech that with “the continuing uncertainty about tax rates for 2011 (now less than three months away), business planners may be finding it more difficult than usual to project economic conditions or the financial implications of prospective hiring and investment commitments. While it is hard to estimate the magnitude of the effects of these fears, or to disentangle them from general expectations of weak demand growth, they are too broad and deep for me to dismiss as implausible the notion that they have significantly dampened consumer and business spending of late.”

The American people know that unemployment at 9.8 percent is no time to raise taxes on anyone. Last month only 31 percent of Americans told Gallup that raising taxes on the wealthy was the best approach for dealing with the U.S. economy. By contrast, 62 percent chose either reducing the deficit (39 percent) or cutting taxes (23 percent) as the best approach. And this week, by a 59 percent to 30 percent margin, Americans tell the Associated Press and CNBC that Congress should cut federal spending rather than raise taxes.

The left got shellacked at the polls last moth for a reason: The American people have fundamentally rejected their agenda. But they are completely undeterred. Whether it is taxes, spending, amnesty, New START, energy—the issue doesn’t matter. The leftist majorities in Congress know they have just weeks left in power. They already lost the election. Therefore they have no reason not to force as much of their agenda through as possible, no matter how unpopular it is. Conservatives in Congress should do everything in their power to stop this leftist legislative onslaught until a more representative Congress is sworn in next month.


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Where can Congress cut spending? Watch our latest video for answers.