Gerry Connolly Explains Why Deficits Prohibit Reauthorizing Jobless Aid But Not Bush Tax Cuts
Members of Congress who want to keep the Bush tax cuts for the wealthy say the economy is too weak to handle a tax hike on the richest people in America, even if keeping the tax cuts adds billions to the deficit.
But earlier this year, some of the same people said the economy was too strong to justify adding billions to the deficit to help the unemployed.
"A year ago, we were in the midst of the worst recession in 80 years and desperately trying to find ways to climb out of it," said Rep. Gerry Connolly (D-Va.) in May, when asked to explain his vote against reauthorizing extended unemployment benefits. "We did the right thing and it's working. Now, a year and four months later, it's a very different situation."
Connolly now favors preserving the tax cuts for a year or two, even though doing so would probably add more to the deficit than preserving the unemployment benefits. "I have made the economic argument that raising taxes right now, which is effectively what you do when you allow the tax cuts to expire, I think, does real damage to a very fragile economic recovery." he said on Fox News.
Unemployment was one point higher in May than it is today, so what gives? In an interview with HuffPost on Thursday, Connolly said he's been looking at GDP and consumer confidence.
"The economy was growing at the end of December 5.6 percent. It's now growing at 1.6 percent. Many economists say that if you raise taxes on the upper-income brackets, it will shave half a point off of GDP," Connolly told HuffPost on Thursday. "The other relevant statistic here besides the GDP thing I'm concerned about is consumer spending and consumer confidence. The top 5 percent income bracket in this country consumes 30 percent of the economy, so they have a disproportionate positive impact on consumption. Right now we need more consumption, not less."
(One recent analysis by Moody's economists found that beneficiaries of the Bush tax cuts actually saved the money instead of spending it.)
Connolly said if the economy had continued to grow at a brisker pace he wouldn't hold the same position today.
"We're growing at 1.6 percent and I'm very worried that it could go south again," he said. "And so why would you want to take the risk of something you know from economists is likely to be contractionary... You could have an undue influence without intending to that's negative. Would you really want to take the risk -- as a Democrat? I don't."