Democrats are clever. They have tricks Republicans can’t match. At the moment, they’re pushing to renew extra payments of $600 a week to the unemployed. If this is enacted, they win, and it’s a double whammy: They win, and President Trump loses the election.
Meanwhile, Senate Democratic Leader Chuck Schumer is arguing for a big tax cut. It would kill the $10,000 ceiling on state and local taxes deductible from federal tax returns. The wealthy would benefit enormously. The press and liberals appear unconcerned. But when Republicans try something similar, they get lambasted.
The $600 weekly bonus was quietly added to the CARES Act, the first economic “stimulus” bill after COVID-19 hit the country. The money came on top of the normal stipend for the jobless. Not surprisingly, there was speculation the special benefit was a mistake. Nope, it was intentional.
Then, the Congressional Budget Office stepped in. It soon discovered that 5 out of 6 recipients would be making more while unemployed than if they returned to their regular jobs if the bonus is extended through January. Not a bad deal for them. “Already employers are having trouble persuading employees to come back,” the Wall Street Journal reported.
That problem would recede if the program were to expire on July 31 as scheduled. Workers would have little incentive to stay unemployed. But House Speaker Nancy Pelosi has proposed an extension for six months. The fresh spending would be part of a “phase four” $3 trillion bill. This time, Republicans balked. They proposed a $1 trillion measure with smaller weekly payments — or none at all.
That wasn’t the last word. Economists Casey Mulligan of the University of Chicago and Steve Moore, a member of President Trump’s economic recovery task force and a columnist for the Washington Examiner, conducted a study for the Committee to Unleash Prosperity. They concluded that the Pelosi plan would wipe out 10 million jobs and raise the rate of unemployment by 6 to 8 points.
And Trump would have no chance of reelection. Losing millions of jobs would be catastrophic for him and for Republicans in general. At the least, there would be no recovery, a notion that must have crossed the minds of Democrats.
Mulligan and Moore offered a plan that would avoid all that. By suspending the payroll tax, both for employers and employees, for the remainder the year, their study estimated an increase of 2.7 million jobs. And the recovery would accelerate.
For decades, Democratic politicians have loved the practice of subtracted state and local taxes from the taxable income on their federal return, particularly in New York. It meant governors and mayors could get away with bigger hikes in state and local taxes given their deductibility.
The loophole was threatened by President Ronald Reagan in 1981. He tried to include it in his big supply-side tax cut, but Democrats blocked his effort. But Republicans tried again with Trump in the White House in 2017 and succeeded. Schumer was thunderstruck.
He might have succeeded when Trump and congressional Republicans were putting together a tax cut. But Schumer and his allies wouldn’t agree to a deal. This was when Democrats were posing as a resistance movement. They thumbed their noses at the president.
Schumer has changed his tune. “We need to cushion the blow of this virus,” he said. “The SALT cap hurts people affected by the virus. It hurts so many of the metropolitan areas like New York, and so we want to change it, and we will.”
Maybe they will. But using COVID-19 as an excuse is nonsense. Democrats want the money. New York and other states are brimming with billionaires and millionaires, many of whom are threatening to move to low-tax states like Florida if the $10,000 cap is removed.
Schumer isn’t criticized for being greedy. That assault is reserved for Republicans. Indeed, they were so accused for their 2017 bill that trimmed tax rates on individuals, corporations, and capital gains.
Democrats are blessed with another media gift that Republicans can only dream of: free advertising. Last week, the New York Times ran a front-page story pleading for the six-month extension. Ending the program “could prompt a wave of evictions and inflict more financial harm on millions of Americans while further damaging the economy,” the New York Times said. Even worse, this “could also spread the [Covid-19] virus by forcing people to take jobs in which they might be exposed to it or expose others.”
Only inside the New York Times, on page 8, is the program’s unique result mentioned: “Millions of Americans [are] earning more on unemployment than they had on the job.”
