More than 2.5 years after the national economy began to collapse under the weight of the housing and financial crisis, almost fifteen million Americans-nearly 10 percent of the nation's labor force-are still looking for work. Nine million more have been forced to cut back hours or have been unable to find full-time work.
At the same time, the combination of the recession, the Bush tax cuts, the wars in Iraq & Afghanistan, and government recovery efforts have driven the federal deficit to its largest share of the national economy since the Second World War.
In the midst of the prolonged jobs crisis and growing concerns about the national debt, Congress is set to begin debate on whether to extend the Bush tax cuts of 2001 and 2003. Both sides of the debate agree on extending the tax cuts for 98% of American households. Where the two sides diverge is on whether to extend the tax cuts for households earning more than $250,000 per year and individuals with an annual income above $200,000.
The Treasury Department and Joint Committee on Taxation estimate that President Obama's proposal to eliminate the Bush tax cuts for the wealthiest households would bring in almost $90 billion in additional revenue during the next two years and nearly $700 billion over the next ten years.
Letting the Bush tax cuts for the wealthiest households expire, thereby restoring the top two tax rates to the same levels as in the 1990s, represents a major opportunity for Congress to redirect those revenues towards investments that will promote much-needed job growth in the near-term and begin addressing the federal government's long-term deficits.
The non-partisan Congressional Budget Office (CBO) reports that extending the Bust tax cuts is the least effective of eleven strategies aimed at creating jobs. According to the CBO's report, using the proceeds from allowing the Bush tax cuts on the wealthy to expire to extend unemployment benefits for the long-term unemployed, temporarily reduce employers' payroll taxes, or extend federal aid to state and local governments would create three to seven times the number of jobs for each dollar spent during the next two years compared to extending all of the Bush tax cuts. The difference is even more dramatic compared to just the tax cuts for the wealthiest, which the CBO states has the lowest impact on jobs among all part of the Bush tax cuts.
Government economists are not the only ones touting the benefits of targeted job growth strategies versus tax cuts for the wealthy: Goldman Sachs recently revised its economic growth forecast downward to account for Congress wavering on whether to provide additional federal aid to struggling state governments.
Not only is letting the Bush tax cuts for the wealthy expire the right thing to do to spur job growth, it's also the right place to start addressing our nation's long-term deficits.
Renewing the Bush income tax cuts for the wealthy is projected to add more than $1 trillion to the national debt over the next decade. Combined with extending President Bush's repeal of the estate tax, the total impact of the Bush tax cuts on the wealthiest Americans will add an estimated $1.7 trillion to the debt between now and 2021-accounting for roughly one in every five dollars added to the national debt in the next ten years.
The impact of the Great Recession on our national and our personal finances requires that we make the smartest choices with the dwindling resources we have to invest. It makes little sense to spend $90 billion over two years-more than $1 trillion over ten years-on tax cuts for the wealthiest Americans. Those dollars will not create jobs or boost our economy and will present further challenges for addressing our national debt.
It's imperative that our members of Congress know that the citizens of North Carolina demand that our government make the right investments in the best interest of all North Carolinians, not just the privileged few.
Edwin McLenaghan is a policy analyst at the N.C. Budget & Tax Center