Job creation held hostage.

Yesterday, I wrote about a bill that would treat income differently based on the job description of the person earning it.  A New York Times editorial, bravely posted without a by-line, announced "The Unemployed Held Hostage".  It described this same bill, acting as if a gun was being held to the head of every jobless person in America by those lawmakers who weren't on board with using the tax code to punish this week's unpopular crowd.

The editorial reads, in part:

Since June 1, when federal unemployment benefits began to expire, an estimated 325,000 jobless workers have been cut off. That number will swell to 1.25 million by the end of the month unless Congress extends the benefits. The Senate, so far, has failed to act.

Some senators, including Democrats, have balked at an unrelated provision that would begin to close a tax loophole enjoyed by some of the richest Americans. You heard right. Desperately needed unemployment benefits have been held hostage to a tax break for the rich, and the Senate’s Democratic leadership has had to delay and finagle to get its own caucus in line.

It's a loophole to treat financial managers' capital gains the same way everyone else's capital gains are treated?  This characterization is purposely misleading -- but I won't go deeply into this aspect of the bill right now, as I already covered it in yesterday's post.

Now let's look at what benefits we are talking about: 

State-provided unemployment benefits generally last for 26 weeks, and the federal government picks up the tab after that, provided Congress approves the extensions.

That's right.  Without this bill, people who become unemployed get benefits for half a year.  The editorial author has described free, guaranteed income for people not working for over six months as "desperately needed".  Someone not working who is therefor not being paid -- after six months of being paid to do nothing -- is "held hostage"? 

Despite what the editor says, there is disagreement over the need for more extensions to unemployment benefits.  People are turning down jobs in order to keep receiving benefits for no work.  Unemployment extensions keep people unemployed, and some Americans have finally realized it.

The editorial goes on to say:

There is not even any genuine debate about how to pay for extended benefits.  An extension through November would cost about $40 billion. But unemployment benefits are correctly considered emergency spending [...] and exempt from pay-as-you-go budget rules.

No "genuine debate", huh?  Read: "There's this loophole here, so we don't actually have to pay for this, or justify not paying for it, we'll just go into more debt."  Greece did things like that a few times -- now they are suffering from a major economic collapse.  Unlike Greece, we don't have an EU to bail us out when we do.

The editorial closes with:

The House and Senate should immediately extend unemployment benefits and aid to states and close the fund-managers’ tax loophole — completely.

That so many senators have balked is a bad sign for the economy and for the most vulnerable Americans. The fact that lawmakers are not willing to ask the nation’s wealthiest to pay their fair share of taxes also makes a mockery of all their talk about deficit reduction.

This mess, and everything like it, is what is stalling job creation in America.  Production is beginning to rebound, but no one wants to hire.  Sit in a room full of business owners, and what you will hear is that we are terrified of hiring anyone right now, even when we need additional manpower.

Because extreme factions in our government have successfully passed a number of measures that strike out randomly at subsets of those evil Americans making money for them to tax (instead of quietly collecting our unemployment and welfare checks), and that make having employees more expensive (such as health care "reform"), we don't know if, in a month, we'll still be able to afford people we hired today.  Too many fast hire/layoff cycles, and our companies stop attracting qualified people.  Worse than that, every bill that penalizes producers and encourages non-production nudges us closer to a Greece-like economic collapse.  The safe thing is not to hire at all.

As long as the unemployment honey keeps flowing, people who haven't found a job they like don't feel the pressure to take a less-than-perfect option, or start businesses of their own.

I said it yesterday, and I'll say it again: taxes are less about money than you think.  Remember, our constitution's final word on direct taxes used to be "...direct Taxes shall be apportioned among the several States...according to their respective Numbers..." -- that meant that the federal government would divide up the amount of direct taxes to be taken in, divide it by the population, and tell each state that it needed to pay $x per capita.  Then the state decided how to divide it up.  If it were all about the money, that would work.  However, the Sixteenth Amendment was passed so that Congress, not the individual states, could decide exactly how our tax burden was split up.

Congress realized that by manipulating the tax code and creating entitlements, they could go beyond arbitrating what was paid, they could become the arbiters of how we live.  Taxes and entitlements increasingly drive when we retire, how and when we save our money, what we eat and drink, what healthcare we receive, what jobs we take, whether we work at all, whether we marry, how many children we have, what kind of cars we drive, and countless more choices that used to be made by individuals across the country, instead of concentrated in the Washington, D.C. power base.