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Deborah Weinstein

Deborah Weinstein

Posted: November 18, 2010 11:32 AM

In the real world, there are millions of people out of work and getting by on an average unemployment benefit of $293 a week. And there are millionaires, who receive about $110,000 a year from the Bush tax cuts.

But where others see millions of unemployed people, Rep. Michele Bachmann (R-Minn.) sees "new massive spending." And where others see the top 2 percent of earners, with incomes of $200,000 and much higher, Rep. Bachmann, in a recent Good Morning America interview, sees "carpet layers who maybe employ two or three other guys, or a plumber, maybe himself and his brother."

Federal Unemployment Insurance will expire on November 30. It provides a lifeline to people who exhaust their 26 weeks of state unemployment benefits and still cannot find work. There are a lot of people who have been out of work that long -- more than 40 percent of all the unemployed. With only enough job openings for one-fifth of the jobless, it's not a surprise that people have to search for a long time to find work.

It's hard not to feel sympathy for people whose livelihoods were washed away during the Great Recession and who are barely staying afloat in the jobless "recovery." But Rep. Bachmann manages to do just that by directing all her "sympathies" to those everyman carpet layers and plumbers. She wants us to think they will lose their tax breaks by the end of the year if the Obama proposal to end the Bush tax cuts for the top 2 percent of earners comes to pass. Naturally, Rep. Bachmann prefers to direct our attention to them since she surely knows that the vast majority of the public thinks it would be perfectly fair for the richest 2 percent to stop getting a tax break that will cost $700 billion over the next ten years.

Only thing is, Bachman's fictional carpet layer and plumber are unlikely to ever earn enough to be subject to the top tax rates. Rep. Bachmann says their gross income from carpet-laying and plumbing is subject to the tax. But it isn't. In reality, the taxes are on net profits. Bachman's fictional plumber and his brother would need to fix a lot of toilets to reach $200,000 in net profits.

In the real world, only about 3 to 5 percent of all people with business income earn enough to be subject to losing part of their tax cut. They are, overwhelmingly, hedge fund managers, lawyers and other individuals whose business income is routed through individual income taxes, instead of the corporate tax code. Most of these earners who make it into the top brackets are in the small minority with $10 million or more in receipts, according to Citizens for Tax Justice.

So, Rep. Bachmann and others in her camp want us to think "little guy" in connection with the top tax brackets, and want us to think "massive spending" when the topic of the unemployed comes up. And if some facts get in the way-hey, they can easily be swept out of view.

The public isn't buying. In a poll of voters taken right after the election, 73 percent agree with this statement: "With unemployment at 9.6 percent and millions still out of work, it is too early to start cutting back benefits for workers who lost their jobs." On the other hand, just 24 percent agree with this statement: "With the federal deficit over $1 trillion, it is time for the government to start cutting back on unemployment benefits for the unemployed."

Here's what the choice comes down to: People like Rep. Bachmann do not care about deficits when it comes to shoveling nearly $67 billion over the next two years to those with the top incomes. But to keep $293 a week available to unemployed people who run out of state benefits-suddenly the spending becomes a problem. Enough of a problem that Rep. Bachman would vote against the tax cuts if unemployment insurance were added to the package.

This doesn't seem very persuasive, and that's because it isn't. She then rolls out the big guns of her argument-that the business people in the top brackets are "job creators." And here's the real irony. Unemployment insurance payments are the real job creators. Putting that money into the economy creates about 700,000 full-time-equivalent jobs, according to the Economic Policy Institute. Respected economists rate unemployment insurance as producing between $1.60 and $1.90 in economic growth for every dollar invested in it. On the other hand, tax cuts for the wealthy generate only 40 cents in economic activity for every dollar expended. That is, they cost more than they're worth to the economy.

Congress should reject Rep. Bachmann's views. It should continue unemployment insurance for a year and put an end to the unaffordable upper income tax cuts. Do it for the plumbers and the carpet layers. They will get more business from the economic growth generated by the unemployment compensation dollars than they will from tax breaks for the rich.